Aviva shares slump after big dividend cut Shares in Aviva tumbled more than 15 per cent on Thursday after the FTSE 100 insurer made a surprise cut to its dividend. The company reduced its total payout for 2012 to 19p a share, from 26p a share, having reduced its final dividend from 16p to 9p, saying it would instead use the money to pay down debt. It also reported a loss of £3.1bn after a £3.3bn writedown relating to the disposal of its US business. Aviva also froze the pay of its senior executives and stopped board-level bonus payments for the year. "These results look ghastly," said Marcus Barnard, analyst at Oriel Securities, "but this shouldn't be too much of a surprise." While the market reaction to these results could be quite ugly, we continue to believe there is longer-term value in this business but this will take some time to be realised. We therefore retain our "hold" recommendation and price target of 400p." Kevin Ryan, analyst at Investec, said: "The 2012 results were worse than consensus expectations and the 27 per cent dividend cut makes Aviva's record the worst among major UK insurers this century. Each of the last three chief executives has cut the dividend. As a consequence of what we regard as a very poor performance, our sum-of-the-parts target price and recommendation are under review. The real disappointment is that unless something exceptional happens, Aviva will not regain the dividend level it used to pay in recent times. Aviva's stock lost 16 per cent to 302.1p. It was also one of the most actively traded on the index, with 55m shares trading hands by late morning. Standard Life made a better impression, announcing a special dividend of 12.8p a share as well as increasing its regular payment 6.5 per cent to 14.7p a share. The news came as the earnings at the insurer beat forecasts, rising 65 per cent to £900m, ahead of the £853m forecast. The stock rose 2.8 per cent to 384.8p. Overall, the FTSE 100 was 12 points higher at 6,439.84, a rise of 0.2 per cent, led by riskier banking and mining stocks, in line with cautious optimism on global markets. Aggreko made the best single gain on the benchmark index after its annual numbers beat forecasts at £365m, up 11 per cent. The provider of temporary power generators lowered its outlook at the end of last year due in part to a lack of major sporting events in the year ahead, at which its facilities are widely used. But it was able to raise its dividend 15 per cent to 23.9p a share. The stock rose 14.3 per cent to £20.09. Fund manager Schroders rose after its annual profits did not fall by as much as analysts had feared. The stock was 2.3 per cent higher at £20.82 after its annual earnings came in at £360m, down from £407.3m a year earlier. Consensus forecasts predicted a profit of £351.7m. Traders were absorbing news the Bank of England's Monetary Policy Committee voted against increasing its spending on economic stimulus measures. There was a chance that it could add to its quantitative easing budget, after its outgoing governor, Mervyn King, was one of three members of the nine-strong committee to vote for more asset purchases at the previous meeting. The February vote surprised traders with the extent of its dovishness, after expectations of an 8-1 split. The pound moved higher against the dollar after the news, having been showing losses against it before hand. Sterling hit a session high of $1.5070 after the news.