Activist hedge fund that targeted insurer Aviva slashes its holding after campaign to return more cash to shareholders pays off
‘The Butcher’: Hedge fund boss Christer Gardell
An activist hedge fund that targeted insurer Aviva has slashed its holding after its campaign to return more cash to shareholders paid off.
The move by Cevian, which has cut its stake to less than 5 per cent, is likely to be seen by the FTSE 100 giant as a vote of confidence in its strategy under chief executive Amanda Blanc.
Cevian – a Swedish outfit led by Christer Gardell, known by some as ‘The Butcher’ – revealed in 2021 that it had taken a 5 per cent stake.
Gardell wasted little time declaring the company had been ‘poorly managed for years’ and that its businesses had been held back by ‘a series of bad strategic decisions’. He also demanded cost cuts of at least £500 million.
In March last year, Aviva said it was returning £4.75 billion to shareholders after 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 money – after unveiling a bumper set of half-year results – with analysts speculating it could be £250 million to £300 million.
Aviva said it would commence the additional capital returns when full-year results are published next month.
Cevian had built up its holding to 6.6 per cent. It has cut that in recent weeks but is still Aviva’s second biggest shareholder.
Niko Pakalen, partner at Cevian, said: ‘The reduction of our holding is a portfolio reallocation following 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 per cent since Blanc took over, and regular dividends.
And Cevian will have earned £188 million from the £3.75 billion cash that Aviva has distributed to shareholders as well as benefiting from its £1 billion share buyback. Aviva declined to comment.
Insurers have been hit by rising claims. But Aviva recently said its combined operating ratio – a measure of profitability – will be in line with previous guidance.