Aviva Fully Committed To A Simpler, Lower-Return Model

I don't want to push the similarities too far, as they're very different businesses, but the U.K.'s Aviva (OTCPK:AVVIY) certainly seems to have taken a few pages from MetLife's (MET) playbook - simplify the business, cut costs, and focus on core operations.

Aviva's strategic pivot should create a more consistent business that generates cash flow to support a healthy dividend, but there's no escaping the fact that the new Aviva will be a lower-return, slower-growing business than the prior iteration. That's not necessarily a bad thing - it's better to be a well-run slower-growing business than an ineffectively-run business with faster growth potential - but it does mean that investors should adjust their expectations accordingly.

I do believe that the "new Aviva" is undervalued, with a long-term total annualized return potential in the high single-digits, but with a long-term earnings growth potential more likely to be in the low-to-mid single-digits at best.

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Aviva Fully Committed To A Simpler, Lower-Return Model