Aviva On the Road to Recoveryhttp://www.fool.com/investing/international/2012/11/21/aviva-on-the-road-to-recovery.aspx Tony Reading
November 21, 2012
The company is a household name and has one of the fattest yields, at around 8%, of any FTSE 100 (UKX) stock. It is popular with value investors, but their hopes have repeatedly been frustrated. There was a real fear in the summer, when its languishing share price took the yield over 9%, that the company could be heading for a dividend cut.
But temporary executive chairman John MacFarlane has made monumental efforts to devise and execute a recovery strategy, and there is now a clear path to reconditioning the business that could finally lead to the share price rerating loyal investors have been waiting for.
Following Moss's departure, chairman John McFarlane took on executive responsibilities, rolled up his sleeves, and set about turning around the company, doing things that Aviva's bureaucratic and overstaffed management had just talked about.
Top of his agenda was to sell or close non-core operations, trimming the company down to focus on where it has competitive strengths. Its shareholding in Dutch Delta Lloyd has been substantially reduced, and smaller Far Eastern operations exited.
Most importantly, it appears that Aviva's U.S. operation is close to being sold. The Sunday Telegraph recently reported that the company has entered into exclusive talks with U.S. investment company Guggenheim Partners. Although this will generate a paper loss, it will boost Aviva's capital and reduce its gearing, both of which are poorer than industry peers'.
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