30th Apr 2018 09:37
LONDON (Alliance News) - Aviva PLC on Monday said it will make a "goodwill payment" to shareholders who sold preference shares during the period from March 8 and March 22, a period of uncertainty for shareholders caused by Aviva's plan at the time to redeem the shares.
The FTSE 100 insurer said it believes fewer than 2,000 individual investors did so during the period and thus the cost of the payment should not be more than GBP14.0 million.
Aviva originally had announced its plan to cancel the preference shares at the time of its 2017 results early in March, but the plan was met with widespread criticism, and it backtracked on March 23.
Aviva said Monday it recognises "the uncertainty" created for preference shareholders and noted the impact the move had had on its reputation.
As a result, the goodwill payment is to be made to put shareholders who sold those preference shares in the period back into the same financial position as if they had sold them after the March 23 announcement.
Chief Executive Mark Wilson said: "Our announcement on March 23 meant that Aviva's preference shareholders could rest secure in their holdings. However, we recognise that whilst we were considering our options for the preference shares this caused uncertainty and led some investors to sell their shares.
"The board and I want to do the right thing and make this goodwill payment."
Wilson continued: "Preference shares remain an industry-wide issue and it is clear now that the best way forward is to seek a regulatory solution before the 2026 deadline when the shares no longer count as regulatory capital under Solvency II.
"We accept that whatever action we take, we will continue to hear divergent views on this topic from various stakeholders. However, together with our previous announcement not to proceed with the cancellation of the preference shares, we hope this goodwill payment goes some way to restoring trust in Aviva."
Shares were up 0.7% on Monday morning at 528.60 pence each.
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