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 Reports and Commentary from the Investment World

Reports and commentaries are posted here on a regular basis.


Aviva Plc


Aviva Plc (AV.L)

British insurer Aviva is the world’s fifth-largest insurance group.

Aviva plc is engaged in the provision of financial products and services, focused on long-term insurance and savings, fund management and general insurance and health. The Company’s business is managed on a geographic basis through a regional management structure based on four regions: United Kingdom, Europe, North America and Asia Pacific. The company has over 53 million customers across Europe, North America and Asia Pacific, with worldwide total sales of £45.1 billion and funds
under management of £379 billion at 31st December 2009. It is the largest insurance services provider in the UK and one of the leading providers of life and pensions products in Europe. Aviva Plc has a market cap of £ 9.89 billion, so this is a BIG company!

Insurance company shares have languished in the last year, but we believe this company is about to break out of its 52 week trading range and recover strongly in the next year. The company also pays a handy dividend of 6.25%, which is attractive to income seeking investors. With interest rates in the UK at historic lows, a secure dividend over 6% makes these shares even more attractive. 

Aviva recently announced that it will re-enter Asia's general insurance business with the launch of services in Singapore and has stated its intent on rolling out the business in key markets in Asia. Starting with direct online car insurance, the company will gradually increase its portfolio of products to include home and travel insurance. The group had withdrawn from the Asian general insurance market five years ago, selling its regional non-life insurance business in 2005 to Japan's Sumitomo Mitsui, but
retained its life insurance operations. Now, Singapore will serve as a launch pad for the group in the region. This move will be the first step in Aviva's plan to penetrate the rapidly expanding general insurance market in Asia.The rising affluence of Asian consumers has led to an increasing need to insure their growing assets.

Aviva's online model enables them to pass on significant cost savings along with greater convenience and flexibility, into the Asian markets. This is a move that could bring Aviva excellent returns on their investment. Aviva is one of the most conservative of all the insurance groups, but Asia is now one of the rapidly growing rareas for insurance.

We do not see much downside to the shares at their current level and with a secure dividend of 6.25% this is a good value defensive share for 2010

Buy Aviva Plc (AV.L) up to 360p


Disclaimer: All the information above is provided as a service for individuals and institutions. It should in no way be construed as a recommendation as an investment. Investment decisions should be based on the risk tolerance and planning horizon of the investor. Market participants must understand that past performance is also not a guarantee or predictor of future results.