No major changes to group structure Having announced on Monday that the bulk of the Asian businesses would be retained, it should not be a surprise that there is no material change in the scope of operations in today’s Capital Markets release. There will be a new operating segment ‘Investment, Savings and Retirement, which implies a bigger investment in bulk annuities going forward. Cost saving targets are also unchanged. We think this lack of material change will be disappointing to some. New targets focused on cash, downplaying IFRS earnings Key new targets are Solvency II return on equity of 12% by 2022 and group operating capital generation (OCG) of £7.5bn 2019-2022. We forecast £5.4bn of OCG between 2019E and 2021E, so this new guidance looks only marginally better than our expectation (£1.9bn pa vs INVe £1.8bn). While this year’s IFRS operating earnings are expected to be ‘broadly in-line with management expectations’, highlighting lower management action contributions going forward (£0-200m pa vs £3-400m), taking software amortisation above the operating line (£112m in 2018) and the planned sale of FPIL (£151m, but no cash – this should be in consensus) implies consensus IFRS operating profits will fall, perhaps materially. Aviva remains committed to a progressive dividend – on our first take of the maths, the 12% SII ROE implies c.£2.8-3.0bn of cash profit, comfortably covering the c.£1.2bn annual dividend cost. Valuation undemanding, but message underwhelming Key from the strategy day today will be detail on the underlying drivers of cash generation to give confidence in targets and sustainability of the dividend strategy. The shares trade on a c.15% discount to FY19E Solvency II Own Funds, a small discount to Phoenix, for a 7%+ dividend yield, again a discount.