Insider purchases can provide powerful insights for investors. Insiders may sell company stock for numerous reasons. Yet they only purchase their company’s shares for one reason – they expect them to rise.
Here, we are going to highlight two insider purchases at Aviva PLC (AV/:LN). Aviva provides various insurance, retirement, and savings products in the UK, Ireland, Canada, France, Italy, Poland, and internationally. It’s traded on the London Stock Exchange and currently has a market capitalization of £15.6 billion.
Aviva PLC: Insider Buying
Regulatory filings show that on 16 March an Independent Director of Aviva, James McConville, purchased 12,667 AV/ shares at a price of £3.95 per share. This purchase cost the insider just over £50,000. Then, on 19 March the Chief Risk Officer, Jan-Hendrik Erasmus, purchased 118,624 AV/ shares at a price of £3.94 per share. This purchase cost the insider approximately £465,000 and increased his holding by over 900%.
The purchase by the Chief Risk Officer is significant in monetary terms and has increased his holding exponentially. Chief Risk Officers are often risk averse in their approach so this purchase sends a strong signal to investors that he is confident the shares will rise. The Independent Director purchase adds further weight to the insider buying signal.
It’s worth noting that both of these insiders have extensive industry experience. Erasmus was previously Chief Risk Officer at NN Group for over three years. He also held senior positions at Oliver Wyman and Prudential PLC. Meanwhile, James McConville was Group Finance Director of Phoenix Group and was responsible for leading the transition program that brought Phoenix and Standard Life Assurance together. As well as this he was also CFO at Northern Rock from 2010-2012 and held senior positions at Lloyds TSB Group prior to this.
In a challenging year Aviva managed to produce a solid set of results. Profits in its core markets were only down by 3% at £2.492 billion. The company continued to sell non-core divisions to strengthen capital and liquidity and enable it to focus on growing its core markets. Record sales were achieved in group protection, as well as in bulk purchase of annuities, and it experienced record net flows in savings and retirement. The total dividend increased to 21 pence for the full year, up from 15.5 pence in the prior year. The company also announced an £800 million debt tender offer as part of its plans to reduce debt by £1.7 billion in the first half of this year.
“Aviva has responded incredibly well to the challenge in 2020 presented by Covid-19 and Brexit. Our core markets have proven to be resilient and our customer service has been very strong. We will continue to move forward with our strategy to focus the portfolio, to transform performance, and ultimately to drive sustainable shareholder returns by growing profitably in our core markets. We will also look to continue to deliver against our capital framework, by investing in the business and returning excess capital to shareholders,” commented CEO Amanda Blanc.
Given these promising results and confidence in the outlook for the company, we see the recent insider buying at Aviva as bullish. It would suggest that the insiders believe the shares will go higher in the future.