British insurer Aviva , which raised a ruckus after declaring it has the ability to cancel its preference shares at par value, has backpedalled.
Admitting it has received strong criticism following the controversial March 08 announcement, Aviva has now “decided to take no action to cancel its preference shares,” referring to preference shares issued by Aviva plc and General Accident plc. In a statement issued this morning, Aviva said it has listened.
“Under current regulation the preference shares will no longer count as regulatory capital in 2026,” read the statement.
“ Aviva will work towards obtaining regulatory approval for the preference shares, or a suitable substitute, to qualify as capital from 2026 onwards. If as we approach 2026 Aviva needs to reconsider this position, it will do so after taking into account the fair market value of the preference shares at that time.”
Explaining how the review of the preference shares came about in the first place, Aviva said it was initiated as a result of the firm’s duty to examine what is right for the business while balancing the interests of both ordinary and preference shareholders.
“Aviva needed to address the issue of the preference shares given regulatory capital considerations and their cost,” it stated.
But following the backlash, the insurer will not be making good on its ‘threat’ – at least that’s how somehave termed the earlier pronouncement – to cancel the shares.