Timing is everything. So it was no coincidence that at 4.51pm on Thursday, after Aviva chairman John McFarlane had spent the day telling the City about his plans to shrink the insurer, it announced a disposal. The sale of a 21 per cent stake in Dutch financial services group Delta Lloyd, likely to generate about €370m, is part of a wider move to improve Aviva’s capital position, focus on fewer businesses and improve its financial performance.

The first two parts of the plan are linked. The sale of up to 16 non-core businesses, which take up £6bn of capital and produce a weak return, should improve Aviva’s capital position. The US business is widely believed to be on the block, although Aviva will not confirm this.

But selling businesses into these markets will not be easy, especially within the 18 months that Aviva has given itself. Any failure to sell one of them will slow the capital-strengthening and hurt the group’s already shaky credibility. Hence the importance of demonstrating progress with Delta Lloyd, even if the mooted price suggests a 14 per cent discount to the market value of the stake.

Even if Mr McFarlane were to achieve everything he wants, however, there is no guarantee that he could rebuild the investment case for Aviva. Although it would be financially stronger and better-focused, it would still be a collection of businesses in fundamentally unexciting markets. The shares trade on 5 times forecast earnings for a reason.

For many investors, the main attraction is the dividend. A maintained payout of 26p this year would give the shares a yield of 9 per cent. But any slip in the disposal programme would threaten the capital improvement plans, which in turn would put the dividend at risk. Although there is a lot to like about its restructuring plan, investors should approach Aviva with caution.

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