Aviva slashes divi after swinging to a loss in 2012

Insurance giant Aviva was forced to slash to dividend after swinging into the red in 2012, after taking a 3.3bn-pound write-down on a disposal in the US.

Aviva also said that its overall situation does not warrant bonuses for executive directors for 2012 or pay rises for 2013.

The insurer swung to a loss after tax of £3.05bn last year, compared with a profit of £60m the year before, after the company sold off its US operations in December to narrow its focus on lucrative businesses and markets.

At the half-year stage, the firm recognised an impairment of goodwill and intangibles of £0.9bn related to that business and took a further impairment of £2.4bn at the end of the year. This was partially offset by positive investment variances of £0.3bn.

As such, the final dividend per share (DPS) was cut from 16p to 9.0p, bringing the full-year DPS to 19p, down from 26p previously. The company said that the move was to reduce leverage and increase retained earnings, ensuring that dividend distribution is covered by earnings and cashflows.

"The rebasing of the dividend and the elimination of the dilutive scrip is about giving certainty to shareholders, reducing debt, and putting Aviva in a sound position for the future. This is the right course of action," said Chief Executive Officer Mark Wilson.

Nevertheless, the company said that operating profit levels were healthy across its major businesses, especially in the UK, France and Canada.