Shares in Aviva hit eight-week highs on Thursday after the British insurer said it will return at least 4 billion pounds ($5.5 billion) to shareholders, following pressure from activist investor Cevian.
Cevian Capital in June said Aviva should return 5 billion pounds of excess capital in 2022, after revealing it had built up a near 5% stake in the British insurer.
Aviva has raised 7.5 billion pounds from selling eight businesses across the globe since the appointment of Blanc as CEO in July 2020.
The life and general insurer, which has its main businesses in Britain, Canada and Ireland, had previously said it planned to return money to shareholders, without naming the sum.
“We’ve provided guidance earlier than expected…we are accelerating the timing of the capital return,” CEO Amanda Blanc told a media call, adding that relations with Cevian were “constructive”.
Aviva said it intended to return the capital by the end of the first half of 2022, starting with an immediate 750 million pound share buyback.
Aviva’s shares were last up 1.5% at 412.8 pence per share at 0722 GMT, making it the top performer on the FTSE 100.
JPMorgan analysts said the buyback announcement would likely lead to a re-rating of the stock in the next six months, reiterating their “overweight” rating.
Aviva said it was on track to achieve a targeted 300 million pounds in cost savings in 2022.
The insurer has reduced its property portfolio by 30% this year, generating savings of 20 million pounds, Blanc said, and was also making savings through digitisation.
Cevian has called for at least 500 million pounds in cost savings by 2023.
Aviva reported a 17% rise in first-half operating profit from continuing operations to 725 million pounds, below a company-provided consensus of 781 million pounds.
The insurer said it would pay an interim dividend of 7.35 pence per share, up 5% but below a forecast 7.37 pence.