Cevian cuts Aviva stake after insurer rewards investors

An activist hedge fund targeting insurer Aviva has cut its stake after its campaign to return more money to shareholders paid off.

Cevian’s move, which has reduced his stake to less than 5 percent, is likely to be seen by the FTSE 100 giant as a vote of confidence in its strategy under CEO Amanda Blanc.

Cevian — a Swedish outfit led by Christer Gardell, known to some as “The Butcher” — revealed in 2021 that it had taken a 5 percent stake.

Gardell wasted little time in stating that the company had been “mismanaged for many years” and that its operations were held back by “a series of poor strategic decisions.” He also demanded cost savings of at least £500 million.

Last March, Aviva said it was returning £4.75bn to shareholders following a turnaround under Blanc, who became boss in 2020. She raised £7.5 billion through the sale of eight ‘non-core’ businesses in Singapore, Italy, France, Poland and Turkey.

In August, Aviva said it would return even more cash – following the unveiling of a stellar set of half-year results – with analysts speculating it could be £250m to £300m.

Aviva said it would begin the additional capital returns when full-year results are released next month.

Cevian had built up his stake to 6.6 percent. It has cut that in recent weeks, but is still Aviva’s second-largest shareholder.

Niko Pakalen, partner at Cevian, said: ‘The reduction in our holding is a rebalancing of the portfolio due to Aviva’s strong absolute and relative returns. We continue to see significant return potential.”

Cevian will also have benefited from a rising share price, up nearly 60 percent since Blanc took over, and regular dividends.

And Cevian will have earned £188m from the £3.75bn cash Aviva paid out to shareholders, and will benefit from the £1bn share buyback. Aviva declined to comment.

Insurers are hit by rising claims. But Aviva recently said its combined operating ratio — a measure of profitability — will be in line with previous guidance.