Aviva shares dive as insurer cuts dividend
Shares in the insurance firm Aviva have fallen 12.5% after it announced it would cut its dividend to shareholders by more than a quarter.
The cut will help fund a turnaround strategy at the company, which has struggled with poor performance in recent years.
Aviva shareholders will get 19 pence per share in total for 2012, down from 26 pence the year before.
It also reported a post-tax loss of £3bn ($4.5bn) in its full-year results.
Chief executive Mark Wilson said the loss was driven principally by writedowns related to the sale of its US business, agreed last year.
Mr Wilson joined Aviva in January after his predecessor Andrew Moss was forced to resign following a shareholder rebellion over pay and performance.
"2012 was a year of transition at Aviva," Mr Wilson said. "Aviva has many strengths to build on. My intention is that Aviva will be a simpler business with a robust balance sheet that delivers sustainable cash-flows and growth."
Aviva said the dividend cut would help the company to pay down debts and build up its capital reserves.
Since it implemented its recovery plan last year it has cut costs and raised more than £2bn by offloading less profitable businesses.
Aviva shares had risen by a third since the revamp plan began.
Richard Hunter, head of equities at brokers Hargreaves Lansdown said Wednesday's share price fall reflected the "major disappointment" of the dividend cut.
"The company's euphemistic description of the past year having been one of transition cannot mask the difficulties it is facing," he said. "The previously announced hit on the US disposal sits uncomfortably alongside the challenges which the wider economic environment brings."