Aviva Expects To Double Excess Cash Flow By 2016, But Stock Dips - Update

(RTTNews) - British life and health insurer Aviva Plc (AV.L, AV) Wednesday announced new targets to support its business strategy for a turnaround, expecting to double excess cashflow by the end of 2016, and to reduce the operating expense ratio as it moves to the next phase of the turnaround. In London, the stock is currently down 4 percent.

In its capital markets day for analysts and investors, Group Chief Executive Officer Mark Wilson will set out the three central elements of Aviva's business strategy. These include 'true customer composite' - as it offers life, general and health insurance and asset management, 'Digital first' - which means digital across all distribution channels, and 'Not everywhere' - as it has reduced its footprint to 17 today from 28 markets in 2011, and improved its return on capital.

In its new targets, the company expects to double holding company annual excess cashflow to 800 million pounds by the end of 2016 from 400 million pounds in 2013. The company also projects to reduce the operating expense ratio to below 50 percent by the end of 2016 from 54 percent in 2013.

In addition, Aviva reiterated its deleveraging targets to reduce the inter-company loan balance to 2.2 billion pounds by the end of 2015, and to reduce the gross external leverage ratio to below 40% of tangible capital over the medium term Wilson, who was hired 18 months ago, said, "We have made some progress at Aviva and it is time to move to the next phase of the turnaround. With a clear strategy and targets in place, the size of the opportunity for Aviva is compelling. We acknowledge the challenges ahead, but we now have an exceptional leadership team to enable us to deliver." In the meeting, Wilson will set out the business strategy and how it supports the investment thesis of cashflow and growth, while Tom Stoddard, chief financial officer, will outline how Aviva will further improve efficiency and increase cash flows.

In London, Aviva stock is losing 21.54 pence or 4.20 percent, and trading at 490.96 pence.