Is Aviva’s share price a bargain at its 52-week low?

Aviva’s share price is trading at a 52-week low right now, despite recently posting strong interim results. With the UK insurance sector a little unloved at present, this could provide an opportunity for bargain hunters. Not only do Aviva shares have a decent dividend, but the firm’s CEO sees an opportunity in growing NHS waiting lists.

• Aviva’s share price down 16.5% YTD, in a grim year for UK insurers.
• Demand for Aviva’s private health services grows 58% as pressure on NHS mounts.
•  Analysts see 28% upside on Aviva’s share price.

Aviva’s [AV.L] share price hasn’t seen much love in 2023. The stock is trading around 52-week lows, despite posting robust interim results earlier in August.

Year-to-date, Aviva shares are down over 16%, closing Friday at 369.7p. In truth, UK insurers have not been faring well this year. Along with Aviva, Direct Line [DLG.L] and Legal & General [LGEN.L] have all delivered double-digit losses.

The gloomy state of the UK economy is likely dragging on the stock, although the losses seen in the insurance industry are steeper than the FTSE 100’s 1.5% decline. But could insurers like Aviva actually be a bargain?

One opportunity for growth could be record waiting lists for NHS treatment in England.

“Customers are worried that they may not be able to get access to health treatments when they need them; they don’t want to have to wait long periods of time,” said Aviva’s chief executive Amanda Blanc.

In Aviva’s interim results, Blanc said that there had been “very strong” demand for private health insurance, with sales up 58% for the period, as the insurer expanded services to corporate and individual customers.

Blanc’s comments echo those of AXA boss Thomas Buberl who said earlier in August that the problems facing the NHS presented “business opportunities” to grow AXA’s health business.

Aviva’s Health Business Grows 58% in H1

Aviva’s first-half results on 16 August backed up Blanc’s position. Growing pressure on public health services had led to a 58% increase in sales of premiums, to £86m in the first half of the year. Over the past year, Aviva has brought on 170,000 health insurance customers, bringing the total to over 1 million. Operating profits for the insurer’s protection and health sales were up 23%.

Overall Aviva’s group operating profits were up 7% to £715m, driven by a 12% increase in Gross Insurance Performance in the UK, Ireland and Canada. Aviva’s retirement sales rose 17% to £3.2bn in the first half of the year, powered by a growth in its annuity business. Aviva said that it was forecasting a 5% to 7% increase in operating profits this year.

Shareholders were rewarded with an 8% hike in the dividend to 11.1p.

Aviva’s share price jumped nearly 2% on 16 August following the publication of interim results, but it has since slumped.

Is Aviva’s share price a bargain?

Aviva is a huge workplace pension provider, which has helped its expansion into wealth. Last year the insurer picked up Succession Wealth for £385m.

Its biggest pension funds have over £1bn in assets under management (AUM). The Aviva Pen Mixed Investment fund has £1.5bn AUM and delivered a 34.4% return over the past ten years. The Aviva Pension Retirement Distribution has £1.2bn AUM and has returned 34.6% over the past ten years.

But what about the outlook for Aviva’s share price? Analysts have a 475p, 12-month median price target on the stock. Hitting this would see a 28.5% upside on Friday’s close.

Keeping top talent will help Aviva’s cause. Sky News reports that Direct Line is holding talks with senior Aviva executive Adam Winslow, who oversees international operations at the insurer, to fill its vacant CEO seat. Direct Line has been struggling of late, having withdrawn its dividend and issued a profit warning.

Aviva’s share price is trading at its 52-week low, despite the results and forecast profit growth. The stock also carries 8.6% dividend yield. While insurers might be unloved right now, Aviva’s share price could be an opportunity for those on the hunt for a bargain.