The Aviva share price continued its strong rally this week, reaching its highest level since 2008 as the turnaround efforts by Amanda Blanc and its recent prices increase paid off. AV stock jumped to a high of 690p, bringing its year-to-date gains to 52%, making it one of the best-performing companies in the FTSE 100 Index.
Aviva reported strong earnings
In a statement, the company said that its operating profit jumped by 22% in the year’s first half to £1.06 billion. This growth was because of a price increase across its business and cost-cutting measures across its business divisions.
Consequently, the management decided to boost its dividend payment to 13.1 pence per share. Black noted that the business was doing well across its top segments, a move that will accelerate after the Direct Line buyout.
The wealth segment continued growing, with its assets jumping to over £200 billion. Sales in the general insurance division rose by 7% and the division now account for half of its business.
Most notably, Aviva’s market share in the health business expanded, with its premiums rising by 14%. Blanc said:
“We completed the acquisition of Direct Line at the beginning of July, just six months after our recommended offer, and integration is well underway. The combined business is a UK market leader with over 21 million customers, or 4 in 10 adults, and we are confident the deal will contribute significantly to Aviva’s future growth.”
Turnaround is paying off
The ongoing Aviva share price surge is a culmination of a lengthy turnaround effort. The core of this turnaround was to simplify the company into becoming an asset-light company.
It also involved exiting most of its international business so that it can become fully focused on the UK and Canada. It sold its French business to Aema Group in 2021.
Aviva then sold its Italian business to Allianz and CNP Assurance. The company sold its businesses in Poland, Singapore, and Turkey. Long before that, it exitedin businesses in South Korea, Indonesia, and Hong Kong.
Exiting international markets has benefited the company as it has helped it focus on its core markets. At the same time, its buyout of Direct Line has helped it to boost its market share in the auto industry.
It also acquired Successon Wealth, AIG Life, and Probitas. All these buyouts have helped to boost its market share in asset-light businesses in the UK.
Aviva is one of the top dividend payers in the UK, with its yield rising to 5.30%, higher than the average FTSE 100 return of 3.3%.
Aviva share price technical analysis
The weekly chart shows that the Aviva stock price has been in a strong surge in the past few years. It has remained above the 50-week and 100-week Exponential Moving Averages (EMA).
Top oscillators have continued rising this year, with the Relative Strength Index (RSI) has moved above 77. The MACD has also continued rising. Therefore, the stock will likely continue rising as bulls target the key resistance at 700p.
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