Tough love

7 March 2013 By George Hay Follow @gfhay

The UK insurer’s shares tanked after it slashed its dividend by 27 pct. A second payout cut in four years is a damning indictment of how Aviva has been run. But the necessary new cut should help its new chief executive untangle the company’s overleveraged corporate structure.

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Aviva reported a net loss for 2012 of 3.1 billion pounds, following a profit of 60 million pounds in 2011.
The UK insurer’s 1.7 billion pound operating profit was hit by a 2.5 billion pound loss on the disposal of subsidiaries such as its U.S. business, and an 842 million pound goodwill impairment charge.
Aviva cut its annual dividend from 26 pence per share to 19 pence, and used the savings along with proceeds from disposals to increase its economic solvency ratio to 172 percent, from 130 percent in 2011.
By 1200 GMT on March 7 Aviva shares had fallen 12.5 percent to 315 pence.

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