LONDON (ShareCast) - (Sharecast News) - Investors should buy shares in Aviva to benefit from the insurer's strengthening balance sheet, Jefferies analysts said.


Aviva is the insurer most sensitive to changing life expectancy assumptions and more people dying could be worth 11% of the company's market value, Jefferies' Philip Kett and Mark Cathcart said. The analysts kept their 'buy' recommendation on the shares and nudged up their price target to 520p from 500p.

The question for the FTSE 100 company is whether it releases reserves freed by higher death rates quickly, over time, or holds onto the money to weather financial market risk and protect its dividend.

"To our mind, Aviva should take this opportunity to bolster its balance sheet strength," the analysts wrote in a note to clients.

"Aviva is undergoing a revolution in its balance sheet strength that will leave the group with more equity, less debt and more prudent asset and liability valuations than consensus expects, thus ensuring long-term dividend sustainability."

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE