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Can concerns over Aviva shares be put to rest by CEO Amanda Blanc?

There’s not a lot to be enthusiastic about when it comes to the Aviva share price. However, with solid capitalisation and a recent move to streamline the business, the insurance group could perform better than most in 2021.

  • Analysts are unenthusiastic about inconsistent Aviva share price
  • Dividend is down as Aviva struggles in 2020
  • New chief executive officer (CEO) starts streamlining process to consolidate Aviva assets

Aviva shares (LON: AV) have taken a battering for much of 2020. The impact of COVID-19 has hit the market hard and, in turn, the Aviva share price has cycled through a series of peaks and troughs. From a high of 423p in January, the price dropped by more than 50% in March to 211p. The trendline has been moving upwards ever since. However, in reaching 323p on 14 December, there have been some notable downswings.

Strategy needs to match ambition

This pattern is one investors will have to embrace over the coming months. In reviewing the recent appointment of CEO Amanda Blanc, Hargreaves Lansdown analysts were bullish on her desire to streamline the business and focus on core markets. However, there is concern the plan is 'more ambition than strategy'.

That critique is fair given that Blanc’s predecessor, Mark Wilson, promised much of the same but delivered very little during his tenure. The impact of COVID-19 couldn’t have been predicted. But it remains the case that Aviva’s dividend payment for 2020 will be 9p lower than in 2018 (21p vs. 30p per share).

The good news, however, is that the company has healthy capitalisation. Moreover, Peter Fitzgerald, chief investment officer for multi-asset and macro at Aviva, believes a return to normality after COVID-19 will prompt a new bull cycle.

'Our view is that, as you lift restrictions, the world will revert back to something more similar to what we had pre-coronavirus,' Fitzgerald told investors at the Reuters Global Investment Outlook Summit. He added the opinion that we're seeing the beginning of a 'new cycle'.

Another positive for Aviva shares is that Blanc is already putting her plan into action. Aviva announced on 14 December that it is selling its Vietnamese business to Canadian insurer Manulife. This follows the sale of its Singapore business in September and precedes a potential offloading of assets in France, Italy, Poland, and India.

Streamlining could help Aviva share price

These moves would counter the assessment that Aviva is a strong but seemingly disparate collection of businesses. Indeed, consolidating its assets could help the Aviva share price stabilise in 2021. For anyone eyeing up Aviva shares, the critical factor to look for in the coming months is consistency.

The Aviva share price recovered in the latter part of 2020, but it’s been far from a smooth ride. Certain investors don’t see this pattern changing in the short term and, as such, are finding it difficult to be enthusiastic. However, Amanda Blanc has already started to make crucial changes; changes that analysts have cited as reasons for Aviva’s recent inconsistency.

2021 is likely to pose more problems for every insurance company. Analysts have taken this into account and are, understandably, cautious on what the Aviva share price will do. However, Blanc is already shaking things up. Will that make investors more enthusiastic in the coming months?

Do you think Aviva shares are set to stabilise?

For just a small initial deposit, you can speculate on the Aviva share price with spread bets or CFDs. Spread bets are completely tax-free, while CFDs are free from stamp duty.1 You can also buy and take ownership of UK shares for just £3 with us.2

Open an account to start trading or investing in Aviva shares.

1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
2 Deal three times or more in the previous month to qualify for our best rate.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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