Barrie Cornes, analyst at international stockbroker Panmure Gordon, said the deal would enable Aviva’s UK general insurance entity to withstand the effect of a one in 200-year stress test without the need to call on the complex inter-company loan.
He added: “The reduction to £2.2bn will be driven by cash of £450m and the balance being non-cash items. We believe that the move will have no impact on the dividend or put undue stress on the Group’s overall capital position.”
Aviva is set to contribute £450m of cash to pay off the loan and will also commit to removing commercial paper guarantees and de-risking the pension scheme, amounting to £1.45bn in non-cash items that will be used to shrink the loan.
Pat Regan, the group’s outgoing chief financial officer, stressed that the actions would not have a “material adverse impact” on group profitability.
Tom Stoddard, head of the global financial institutions at international advisory firm Blackstone, will replace Mr Regan on 5 May.
Pete Matthew, managing director of Cornwall-based Jacksons Wealth, said: “Advisers will obviously prioritise customer service and good products, but providers that offer useful information for advisers will be increasingly favoured in future.”