Aviva reveals plans to sell off Russian equity investments

Insurance giant Aviva has become the latest fund manager to slash its exposure to Russia as it revealed plans to sell off its Russian equity investments in response to the crisis in Ukraine.

The group’s chief executive, Amanda Blanc, said it has “very minimal exposure”, with 0.1% – about £240 million – of its Aviva Investor funds in Russian equities.

She said the group has decided to divest these holdings “as soon as we practically can”.

It comes as pension schemes across the UK are looking at the levels of any direct or indirect holdings they have in their investment portfolios and taking action to comply with UK sanctions.

Aviva said its Russian holdings, which are made via its fund management arm Aviva Investors, are not affected by the sanctions, but the company made the decision in light of the situation in Ukraine.

The group, which made the comments as it reported full-year results, added that it may not be possible to sell off its holdings immediately due to restrictions in place.

Money managers Man Group and Abrdn revealed on Tuesday that they have been slashing their positions in Russia, with the latter declaring it uninvestable for the foreseeable future.

Business insurer Hiscox also confirmed in its annual results that it has some direct exposure to Russia through insurance lines, including terrorism, political violence, war and marine.

It added that it has some “negligible exposure” to investments in Ukrainian and Russian assets.

The group said managers are “actively monitoring the situation and assisting Hiscox policyholders”.

Aviva’s announcement came as it unveiled mammoth returns for investors – and a £1,000 shares windfall for its 22,000 staff despite posting a drop in annual earnings.

The group said it will make the shares payout in May as a “thank you” to employees, with all staff across its operations in the UK, Ireland and Canada receiving the same amount.

It will also hand back another £3.75 billion to shareholders, on top of a £1 billion existing share buyback programme, meaning it will return £4.75 billion to investors.

The group saw underlying operating profits fall 28% to £2.3 billion as it sold off a raft of businesses.

It said that, with these stripped out, earnings from continuing operations were 10% lower at £1.6 billion, as a strong performance in its general insurance arm was offset by lower operating profit in the UK and Ireland life business.

In further cheer for shareholders, Aviva said it will pay out a 14.7p a share final dividend for 2021 and disclosed aims to pay dividends of about £870 million in 2022 and £915 million in 2023.

It has come under pressure from activist investor Cevian, which has been pushing for £5 billion in cash returns by the end of 2022.

Also on Wednesday, Aviva announced a deal on Wednesday to buy Succession Wealth for £385 million to boost its presence in the fast-growing UK wealth market and expand its ability to offer financial advice to its six million pensions and savings customers.

Ms Blanc said: “2021 was a year of significant strategic progress, right across Aviva.

“We successfully completed the sale of eight non-core businesses, generating excellent value for our shareholders.”

She added that the company is “delivering on our promise to shareholders” by returning more than £4 billion.