Aviva has ‘very high bar’ for M&A, CEO bets on organic growth

UK insurer  Aviva is unlikely to be tempted into any acquisitions as it presses forward for efficiency and organic growth, its chief executive officer Amanda Blanc (pictured) told the third quarter investor call today (Thursday, November 11).

“It is largely going to be an organic strategy, but we are very thoughtful about where M&A could enhance,” Blanc said when asked if the net of shareholder payouts, disposals, debt reduction and growth would leave room to capitalise on any potential targets.

“There will always be a very high bar” for M&A, she said. “Our priority is transforming the performance of Aviva.”

Potential M&A would have to take a back seat to a series of commitments for the group’s capital, she indicated. A promised minimum shareholder remuneration at £4 billion and debt reduction will take priority, along with select investments into operations, including those enabling OPEX reductions.

Efficiency gains at the insurer include a target for £300 million in cost cutting in 2022 net of inflation, including over £225 million cumulative to end-2021. Management claims the group remains on track to hit that target.

Even those cuts won’t be the end of the efficiency gains at Aviva, Blanc noted.

“We will still have some work to do once we reach that £300 million,” she said. “As we get closer to achieving that number, we have much more clarity about the types of things we will need to do.”

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