AVVIY Aviva PLC (PK)

LONDON--Aviva PLC plans to increase its dividend to prop up its share price in the turmoil after the U.K.'s vote to leave the EU, which this week led to the suspension of one of the British insurer's property funds.

The firm, whose asset-management arm stopped worried investors from pulling money out of its £ 1.8 billion ($2.3 billion) Aviva Investors Property Trust, said Wednesday that it plans to increase its dividend payout ratio to 50% next year from 42.3% last year and 37.5% in 2014.

"A sustainable and growing dividend is paramount," Chief Executive Mark Wilson said.

"Aviva's fundamentals are sound. Our balance sheet is strong and resilient," Mr. Wilson said in a statement. "Although it is too early to quantify the precise impact of Brexit, we are confident we can continue to grow," he said.

Aviva's shares, which are down 30% this year and which fell sharply last month after the U.K.'s shock vote to exit the European Union, were down 3.6% at £ 3.60 in late morning trading on Wednesday.

A number of large insurers and asset managers, including M&G Investments and Standard Life, have taken action in recent days to stop investors yanking money from property funds in the wake of the Brexit vote. Firms hope to avoid a fire-sale that could drive prices lower in the commercial property sector.

The news comes as insurers, which manage huge amounts of sovereign bonds, face growing pressure from negative interest rates. Such firms have often made long-term guarantees on products they have sold, and the longer rates are in negative territory the greater the pressure on their profits.

Aviva said it will aim to generate £ 7 billion of cash over the coming three years and for mid-single-digit precentage growth in the medium term.

Write to Laurence Fletcher at laurence.fletcher@wsj.com

(END) Dow Jones Newswires

July 06, 2016 08:15 ET (12:15 GMT)

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