LONDON, May 24 (Reuters) – Aviva (AV.L) has sided with Britain’s proposal to force pension funds to support more British start-ups in a bid to keep London competitive with rival financial hubs such as New York. I am against it. The CEO of FTSE 100 companies told Reuters on Wednesday.
UK officials are drawing up a blueprint for a proposed £50bn ($63bn) ‘future growth fund’ for local start-ups, with pension funds to invest some of the money, they said. May be supported by government obligations.
CEO Amanda Blanc said: “We are very much in favor of investing in the UK…but we are not in favor of compulsory participation.” “We do not believe that creating a complex, bureaucratic fund is the right way to go.”
Mr. Blanc’s comments came after insurers and asset managers reported mixed first-quarter trading that sent stocks down 5%.
But its recent performance improvement was enough to win the backing of activist investor Cevian Capital, which was piling up in a bid to raise its dividend to investors. A spokeswoman for Sevien said the company has completely withdrawn from its position.
Bran’s remarks about the Future Growth Fund are likely to be seen as a setback for the project, which aims to stop technology companies from choosing New York over London.
Veteran banker and current London mayor Nicholas Lyons told Reuters earlier this month that he was in preliminary talks with the FTSE 100 asset manager about setting up the fund, but did not expect the government order to hinder the deal. Said he didn’t think so.
The UK government is expected to develop plans to expand pension investments in the coming months. The Financial Times reported this week that it was prepared to force pension funds to invest in the fund if the opposition Labor Party took power.
NHS concerned about stepping up private cover
Aviva has restructured under Mr. Blanc to pay more dividends to investors, but like many of its rivals, it is battling insurance claims inflation and volatile market conditions.
The company reported growth in its key business lines in the first quarter, including general insurance premiums rising 11% to £2.4bn, but net inflows into wealth after a period of market volatility reported a slowdown.
Analysts at JPMorgan said the numbers were “mixed” and that the company’s capital ratios, including a 196% solvency ratio, were slightly lower than expected.
Aviva shares were down 4.9% at 1044 GMT, while the FTSE 100 index was down 1.8%.
The company also said it was on track to meet its target of £750m in cost savings by 2024. “Costs are coming down over time, but that’s not an easy feat in today’s inflation environment,” said Matt Blitzman, an analyst at Hargreaves Lansdowne.
The 25% increase in private health care sales in the quarter reflected concerns over the UK National Health Service’s ability to provide free or discounted health and dental care.
“This is what we’re seeing with the NHS, and customers are basically saying that if they could control their health, they would,” Bran said.
(1 dollar = 0.7923 pounds)
Reporting by Iain Withers, Editing by Sinead Cruise
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