Aviva's shares have been volatile en route to a 23% gain during the course of 2012. But nowhere near as volatile as the company's boardroom.
We've seen the retirement of a chairman and the selection of a new one, the departure of a chief executive, the appointment of the chairman designate in an interim executive role, the arrival of a new chief executive who will take up his duties on 1 January, and the stepping down of three independent non-executive directors. Phew!
Reading this year's news releases by financial companies, I get more clarity from even Royal Bank of Scotland and Lloyds Banking than I do from what seems to me to be the sprawling mess that is Aviva.
We know the insurer's broad strategy: Dispose of non-core businesses and uneconomic products, build capital strength and reduce the risk and volatility of the balance sheet. The problem at the moment is there's a dearth of hard numbers -- but plenty of hyperbolic directorspeak -- on the various actions being taken to implement the strategy.
In Aviva's Q3 statement in November, for example, the chairman told us: "A key initiative is the turnaround of our 27 'amber' business cells. In the quarter we assigned our most talented high-potential executives to each cell and they produced a plan for each ... We are now in the process of refining and implementing these plans and building the results into our 2013 and 2014 plans." In the same Q3 statement, there were also no numbers on next year's planned disposals of non-core businesses.
In all honesty, I have to say that I find it impossible to form a view on whether the outlook for Aviva in 2013 is good, bad or indifferent.
For what it's worth, let's have a quick look at the company on the basis of the classic "value" metrics of price-to-earnings (P/E), dividend yield and price-to-book (P/B).
At a recent share price of 370 pence, Aviva trades on a 12-month forward P/E of less than 10, ostensibly putting it in value territory. However, analysts' earnings-per-share forecasts vary from 12 pence to 58 pence around a consensus of 40 pence, showing just how little idea anybody really has about the company's earnings for the year ahead.
The rise in Aviva's shares in 2012 has compressed the dividend yield from 8.6% at the start of the year to 7% today -- still well above the market average. So, the yield looks good, though I think we have to assume a flat dividend at best for the foreseeable future.
As far as P/B goes, the share value has raced up toward the net asset value (NAV) per share over the year, while the NAV per share has raced down to meet the share value: The discount has narrowed from over 30% to just 7%.
Furthermore, there looks to be a high probability that Aviva will manage to dispose of its U.S. life and annuities business in 2013 -- "at a substantial discount to IFRS book value." I reckon there'd probably be no discount at all to NAV for the shares at their current level if the sale had already happened.
In summary, I believe there are few blue chips where visibility on the outlook for 2013 is foggier. Aviva seems to me to be little more than a punt -- and a less attractive one today than the half-decent one it may have been at the start of 2012.
One top-drawer investor who doesn't do punts is Neil Woodford. The City wizard, who famously got out of financials before the credit crunch, is still steering clear of banks and big blue-chip insurers. Woodford's funds have trounced the market over the past 15 years, so his views and approach to investing are certainly worth considering.
You can do exactly that by helping yourself to a free and exclusive Motley Fool report that tells you all about the master investor's enormously successful strategy and eight of the blue-chip companies he currently favors in these uncertain times.