Insider: chief backs Aviva with big share purchase

Aviva (LSE:AV.) boss Amanda Blanc has disclosed dealings worth £160,000 after her company’s 5.6% yielding shares slipped 8% from their two-decade high at the end of August.

Her purchase of Aviva shares worth £41,100 and an investment of £119,250 by husband Ken took place at the height of last week’s gilt market volatility at a price of 623p. Aviva had been trading at 678p prior to the shares being marked ex-dividend on 28 August.

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A calmer end to the week and the support of Goldman Sachs after it backed Aviva with a Buy recommendation and price target of 736p, meant the shares closed on Friday at 656p.

Customers of interactive investor also continue to show strong support, even though the insurer’s price has risen 38% year-to-date and has doubled the level at the start of 2021.

On the day the Blancs bought shares, Aviva was the fourth most traded stock on our platform.

The majority were buy orders as investors increased their exposure to an income play whose dividend growth and regular capital returns have topped £10 billion since 2020.

A 10% higher interim dividend of 13.1p is due on 16 October after Blanc reported “outstanding” half-year results on 14 August, including forecast-beating operating profit growth of 22%.

Blanc said: “Trading has been very good right across Aviva. We are the number one UK wealth player, with more than £200 billion of assets, and net flows are up 16%. In general insurance we remained disciplined, growing sales by 7%, and operating profit by 29%.”

The results did not include Direct Line after the acquisition of the Churchill and Green Flag insurer completed on 1 July. Aviva will publish more details on the integration and targets for the business in a presentation to the City on 13 November.

The deal has increased the proportion of profit from property and casualty insurance, meaning that Aviva is increasingly considered a European composite insurer rather than a UK life stock.

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Bank of America said recently it expects this will prompt Aviva to adjust its dividend policy towards the earnings per share payout ratio used by the likes of Zurich and Axa.

The bank, which has a price target of 710p, also believes that the integration of Direct Line will “turbocharge” Aviva's earnings per share growth.

UBS expects a new look Aviva to target a payout ratio in the region of 80% of earnings, split 15% share buyback and 65% dividend. This takes the all-in yield to 8% on a one-year forward basis, above the 7% or below of the European composites.

Blanc and her husband have been regular buyers of Aviva shares, even though the chief executive’s shareholding is already well above the required 300% of her £1.2 million salary. It stood at 590% in the most recent annual report.

They also bought £62,000 of shares last autumn at 499p, having also made a combined purchase of £80,000 in March when the insurer’s shares were about 470p.

A B&M bounce?

New chief executive Tjeerd Jegen has bought B&M European Value Retail SA (LSE:BME) shares worth £265,000 as he begins the task of reviving the fortunes of the former FTSE 100 company.

His first and largest investment took place on 29 August at a nine-year low price of 241.8p before further dealings on Tuesday and Wednesday at prices nearer to 230p.

The 6% yielding shares closed last week at 240p, having been above 400p last autumn.

Jegen, who is required to build a shareholding equivalent to 200% of his £928,000 a year salary, started in the role in June.

He has 25 years of leadership experience from roles in Europe, Asia and Australasia across the grocery, general merchandise and value sectors, including Tesco.

Jegen told investors at July’s first quarter results that his initial focus is on sharpening “commercial and operational execution” ahead of B&M’s Golden Quarter.

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The scale of the turnaround challenge was highlighted by the reaction to the figures as B&M’s return to like-for-like sales growth in the UK failed to prevent a 9% reverse for shares.

The slide reflected concern over lower average selling prices in general merchandise and a negative quarter for underlying sales in food, drink and household cleaning goods.

Panmure Liberum described the update as disappointing, adding that fears of a margin reset are likely to persist. However, with shares trading on 6.8 times forecast 2026 earnings it believes much of this risk appears to be priced in.

The bank, which has a 600p target price, said: “We leave our forecasts unchanged and continue to believe the shares offer good long-term value but trading momentum and earnings need to fundamentally turn, for the shares to do better.”

Graeme Evans owns shares in B&M.