Aviva is a Nasty Company – Boycott it
Dr Vernon Coleman MB ChB DSc FRSA
Warning: This story may sound boring. It isn’t. It’s very important to us all.
Most people won’t know this but the insurance company Aviva recently planned to cancel £450 million worth of high yielding preference shares.
Aviva wanted to do this to save money.
When the shares were first sold by Aviva, at 100 p each, they were issued with a dividend of around 8% – interest rates were higher then. They were sold as irredeemable – i.e. they would last forever.
Recently the shares were selling at a much higher price – around £1.70 – because investors (mostly pensioners) were happy to pay a premium for a decent dividend.
(Those who paid £1.70 for the shares were receiving about 5% interest but were happy with this because the Bank of England has destroyed interest rates on savings accounts.)
Pensioners also bought the special shares because they thought they were safe.
However, the nasty Aviva bosses thought they could buy back the shares at 100 p and make some quick money.
Legally, the shares were described as ‘irredeemable’. This meant that Aviva could never buy them back.
But the Aviva bosses thought ‘fuck the pensioners’ and decided they would ignore the word ‘irredeemable’ because it was inconvenient.
And Aviva thought they make some extra quick money.
(Lloyds Bank did something similar a couple of years ago. Unbelievably, Lloyds argued that it had intended to write something different to what it had put in the prospectus for the investment. And that because it had intended something different it should be allowed to do what it wanted. Even more unbelievably, the Supreme Court agreed with Lloyds that the bank could change its mind after it had sold something and the poor sods who had lost money because of that change of mind were merely fodder. Thank you, Supreme Court, nice to know you’re there.)
When Aviva announced their evil intentions the share price collapsed closer to 100 p per share. Lots of other, unconnected but similar shares also crashed.
Lots of pensioners sold their shares and lost a good deal of money. They were upset and angry.
But the pensioners weren’t alone in their anger.
Some big city companies also held the shares.
And they told Aviva that if they carried on with their plan then in future Aviva would be punished whenever it wanted to borrow money.
So Aviva changed its mind.
Not because they realised that what they were planning was an evil thing to do.
They back down because it looked as if the company might lose money.
But there is one group of investors who might well be forgotten: the pensioners who sold their holdings when the price collapsed.
Aviva owes them all money: it should recompense them for their losses.
And the company can afford it.
How do I know?
Because the boss of Aviva is called Mark Wilson - who was paid £4.3 million last year and £4.5 million in 2017.
Why should anyone be paid over £4 million a year to be boss of a bloody insurance company?
Is there anyone reading this who doesn’t believe that Mr Wilson would do the job (and be pleased to have it) for £100,000 and a BMW 5 series?
Then there would be some cash left over to reimburse the pensioners who lost their money.
Copyright Vernon Coleman 2018
Vernon Coleman’s book Moneypower is available as an ebook on Amazon. It is packed with honest investment information – and warnings.