It’s in time-honoured tradition that Aviva’s chief executive today cut the dividend.
Three of the last four CEOs did the same when they arrived, and the one who didn’t — Maurice Tulloch — was out after a year.
But Amanda Blanc isn’t just copying her predecessors because she can.
She’s doing it because it’s right.
Aviva’s debts are higher than its rivals, and Blanc needs some of the £350 million she’ll save on the divi to pay them down.
More importantly, the central plank of her strategy is to sell its businesses in far-flung parts of the world.
Singapore and Italy are gone already, and more will follow.
With a smaller company generating less cash, dividends have to be reduced.
Aviva’s 500,000 UK shareholders may not be happy to see returns fall, but they shouldn’t despair: Blanc has promised one-off payments in the future once she gets the finances on a steadier footing in a couple of years.
Now we have clarity on the dividends, shareholders must ponder meatier matters.
Namely, will Blanc succeed where Aviva has failed in the past and grow sales in its core UK operations?
Not just in line with the market — but ahead of it.
That’s an important distinction.
Today’s figures were strong on life and commercial insurance and bulk purchase annuities (where it takes on companies’ pension risks).
But the same is happening all down the street. Blanc has to beat her rivals, not just float high on the same tide.
She says Aviva will win as it uniquely offers all products to all men.
It’s not yet clear that logic will hold true.