CGNU slashes the dividend

INSURER CGNU is to slash its dividend by 40% this year, freeing more than £300m in cash, and change its name to Aviva in a bid to expand its overseas business.

News of the dividend cut comes less than two months after CGNU sought to play down a research note by house broker Cazenove, in which the blue-blooded bank speculated about the prospect of a reduction. Cazenove published a fresh note days later, saying newspaper reports of its original research had been 'misdirected'.

The new dividend of 23p per share will be covered 1.8 times based on the group's 2001 operating profit after tax compared with cover of only one time for the 38p paid for 2001.

Finance director Mike Biggs said the cut would finance its international growth, where CGNU would combine more than 50 brands under the Aviva name. But it will retain at least three of its existing trading names, including Norwich Union in the UK, Delta Lloyd in Holland and Hibernian in Ireland.

The change will put CGNU among the growing ranks of British companies with bizarre names, including Consignia, the re-named Post Office, engineering group Invensys and gas supplier Lattice.

CGNU said achieved profits grew by 41% last year to £2bn as earnings from general insurance soared following the heavy flood-related claims of 2000. But a £2.6bn charge stemming from the impact of weak equity markets saw the shares fall 80p to 717p.

#149; CGNU says Aviva is derived from the Latin word viva, meaning life, and is used to convey a sense of wellbeing and vitality. The insurer says its research established the name would be well accepted.