Aviva shares: is there upside potential amid the Q1 2021 update?

The Aviva share price is inching ever closer to pre-pandemic levels. With its Q1 2021 trading update scheduled for release on Thursday 27 May, will the latest figures maintain the bullish market sentiment towards Aviva?

  • Aviva shares up 22.5% in the last six months
  • Aviva’s debt reduction programme continues into H1 2021
  • Bold steps being taken by Aviva with net-zero carbon commitments
  • Ready to trade the Aviva share price? Open an account today

Will Aviva shares be lifted by its Q1 2021 trading announcement?

The UK’s largest general insurer is due to release its trading results for Q1 2021 tomorrow, with investors in Aviva shares waiting keenly to discover whether the first three months of 2021 represented progress for the group.

During the last week, the Aviva share price has broken the 400p barrier, reaching highs of 406.30p at the start of Tuesday’s trading session. These are prices that haven’t been seen by Aviva investors since February 2020, before the full effects of the Covid-19 pandemic were felt throughout western Europe.

If Aviva’s Q1 2021 trading update follows the same trends as its most recent full-year results, it will be good news for Aviva shares. CEO Amanda Blanc’s renewed focus on driving new business in its core UK, Irish, and Canadian markets has reaped rewards of late. New business was up 40% across the UK and Ireland as of November 2020.

Does the group’s operating profits of 2020 bring a sense of optimism to Aviva?

Overall, there was a sense of optimism regarding Aviva’s full-year operating profits for 2020. Despite the onset of the pandemic, profits defied consensus forecasts of £2.73bn, weighing in at £3.2bn – just 0.7% down year-on-year (YoY).

Aviva also confirmed the acceleration of its debt reduction programme around the time of its 2020 full-year results. It’s anticipated that the programme could slash group debt by up to £1.7bn during H1 2021.

What will investors make of Aviva’s bid to become a leaner and greener concern?

At the heart of Aviva’s short-to-medium-term growth strategy appears to be a focus on divestment and sustainability. The group has been undergoing asset disposals across the globe of late, with its Singapore arm recently sold to Singlife for £1.6bn in September 2020. In March this year, Aviva confirmed Allianz (ALVG.DE) was to acquire Aviva Italy in a deal worth €873m.

CEO, Amanda Blanc, alluded to the group’s attempts to divest and become a leaner operation by insisting Aviva will only invest ‘where [they] are sure it delivers sufficient returns’ for stakeholders. Blanc added that ‘where [they] see a valuable opportunity to invest in growth, [they] will take it’.

In March, Aviva also made bold steps to becoming the first insurer to pledge to become a fully net-zero carbon operation by 2040. This includes a commitment to achieving net-zero operations and supply chains by the end of this decade. It remains to be seen whether its Q1 2021 update will include any initial progress in transitioning the way Aviva invests, insures, and serves its customers.

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