Aviva will offer shareholders who sold preference shares over 25 days in March a goodwill payment expected to cost the company up to £14m.
In its full-year results in March, Aviva said it could cancel existing preference shares as one option for returning capital to shareholders. However, the provider was met with criticism over the potential move by shareholders, which led to it backtracking later that month.
Aviva says the goodwill payment recognises the uncertainty for preference shareholders while it was considering its options.
The goodwill payment is offered to shareholders who sold their preference shares between 8 and 22 March inclusively, after the price had dropped but before Aviva’s announcement that it would not cancel the shares.
Aviva says fewer than 2,000 individual investors sold their preference shares between 8 and 22 March. The goodwill payment scheme could cost the company up to £14m.
Following the issues at Aviva the FCA this month stepped in to review the market for preference shares. Aviva says it is working with the regulator on its investigation.
Aviva group chief executive Mark Wilson says: “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 says preference shares remain an “industry-wide issue” and that a regulatory solution must be found before 2026 when the shares will not count as regulatory capital under Solvency II.
He says: “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.”