Shares in RSA Insurance may be drifting lower after it said severe weather cost it £255m last year, there was a better story from erstwhile target Aviva.
In a presentation to the City, Aviva said it planned to reduce its debt by £700m over the next three years, it had cut its pension deficit from £1.7bn to £0.4bn and it reported a net asset value of 617p. Ever since a £5bn approach from RSA for some of its businesses last year, Aviva has been keen to show its growth potential, and today's update has helped lift its shares 5.5p to 433.8p. Eamonn Flanagan at Shore Capital said:
The European embedded value, as opposed to the market consistent one, was 617p at the end of September 2010, well ahead of our 470p [market consistent] figure, with the figure boosted by around 45p in respect of the pension scheme moves. We suspect this presentation will be taken well – trading at a discount of around 30% to the [617p] net asset value, with a 6.1% 2010 forecast yield, we reiterate our buy recommendation.
Of course, there was less positive news for Aviva yesterday, with a surprise management reshuffle which saw the departure of Andrea Moneta as the head of its European business.
