The British insurer expects to pay out a total dividend of 21p for 2020

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Aviva to slash its total 2020 dividend by almost a third. (Credit: Raysonho @ Open Grid Scheduler / Grid Engine /

Aviva expects its total 2020 dividend to be almost a third less than what it had paid prior to the Covid-19 pandemic, besides revealing plans to consider options for its remaining businesses in continental Europe and Asia.

During its third quarter update, the British insurer said that the expected 2020 total dividend of 21p per share will be increased by low to mid-single digits.

The insurance group did not pay a final dividend last year owing to the pandemic. As a result, Aviva’s total dividend for 2019 came to 15.5p, which is nearly half of the 30p it paid in 2018.

Aviva’s board declared an interim dividend of 7p per share in respect of the 2020 financial year, which will be paid by the company in January 2021.

At present, its board is likely to recommend a final 2020 dividend of 14p per share, which will be subject to a final decision due to be made in March 2021.

Aviva CEO Amanda Blanc said: “Our trading performance is robust and our financial position is strong with a capital surplus of £11.8 billion. The first nine months have demonstrated Aviva’s ability to grow in core markets where we have attractive, long-term growth prospects.

“Bulk purchase annuities sales increased to £5 billion, which is a record for Aviva and commercial insurance premiums are up 9% across the UK, Canada and Ireland.”

As per the trading update, Aviva’s new life insurance business sales in the UK and Ireland were up by 40% to £9.2bn, driven by large bulk annuity transactions.

The insurance group also slashed its estimate of the cost of Covid-19 related claims in its general insurance unit from £165m to £100m. The reduction was brought about by lower claims frequency during Q3 in light of the reduced economic activity, stated Aviva.

Recently, the British insurer signed a deal to sell its entire stake of 80% in Italian life insurance company Aviva Vita to its joint venture partner UBI Banca for €400m.

Earlier this month, the insurance group wrapped up the sale of its stake in Indonesian life insurer Astra Aviva Life to a subsidiary of its joint venture partner Astra International.

In September 2020, the British insurer agreed to divest its majority stake in its Singaporean subsidiary to a consortium led by Singapore Life (Singlife) for nearly $2bn.