Aviva PLC (OTCPK:AVVIY) (AV.L) shares haven't gotten much love from the market since my last update on this top-10 global life insurance company. It hasn't been a great stretch for the group as a whole (Prudential PLC (PUK) and Legal & General (OTCPK:LGGNY) have slightly outperformed Aviva, but still underperformed the U.S. S&P 500, while Standard Life (OTCPK:SLFPY)
has been even weaker), but investors remain concerned about the
company's exposure to the slow-growth, capital-intensive British annuity
business, as well as its overall ability to generate attractive growth
and return capital to shareholders.
Some of that skepticism makes sense… to a point. The company's decision to grow its UK bulk annuity business is a curious one, and Aviva is a weakling in Asia compared to Prudential PLC, but it takes less than 5% long-term earnings growth to support a fair value about 10% above today's and a long-term annualized return in the high single digits. Given the company's improved back-book management, its growth potential in markets like Poland and Turkey, and its clean capital position, the discount to fair value seems a little, well, unfair.
Read more here:
Aviva Redeploying Capital, But The Stock Still Trades At A Discount
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