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This FTSE 100 stock looks ripe for a recovery. I’d buy now!

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A couple of months ago, I recommended that investors buy Aviva (LSE: AV). Since then, the FTSE 100 stock has managed to rise by 15%. But I don’t think that investors should stop buying now. In fact, I believe that now is the perfect time to be buying Aviva shares.

New management

At the start of the month, Aviva chief executive Maurice Tulloch stepped down for “family health reasons”. Amanda Blanc was the immediate replacement. While it is saddening to hear the personal reasons behind Tulloch’s departure, I believe that this new appointment will be excellent news for the FTSE 100 stock.

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Firstly, Blanc has plenty of experience. This includes being the chief executive of Axa UK & Ireland, where she was praised for helping to reinvigorate a declining business. More recently, she was also chief executive of Zurich Insurance in Europe, the Middle East, and Africa. Clearly, this is a very strong resumé, and one which puts her in good stead for the current role.

Blanc has also been on the Aviva board since the start of the year. This means that she should have a strong understanding of the business and the weaknesses that will need to be addressed. Blanc herself has promised to “look at all our strategic opportunities, and at pace”.

Does this mean a new direction for the FTSE 100 stock?

It’s been a fairly disappointing few years for Aviva shareholders, especially as it has not been able to deliver consistent growth. In many ways, I think this is due to a lack of clear strategy. Many of the other UK insurers like Legal & General or RSA focus solely on either life insurance or non-life insurance.

Nevertheless, Aviva has retained presence in both markets, arguing that there were cross-selling opportunities. While it sounds good on the face of it, it has not worked as well as many would have hoped. Tulloch himself admitted that the “far too complex” structure was “holding [the FTSE 100 stock] back”.

As a result, if the new leadership is willing to make changes, I believe that Aviva could become a more profitable business over the next few years. Along with Amanda Blanc, George Culmer (the former chief financial officer at Lloyds) also joins the company. Two new members in the boardroom should therefore help to quicken any changes and offer new ways of moving forwards.

Other reasons to buy the stock

While I believe a new direction is necessary, it’s important to note that Aviva is already a good business. Last year, the FTSE 100 stock managed to make profits of £2.5bn, and comfortably paid out £1.2bn in dividends. The insurer has also managed to reduce debts over the last few years. This means that the debt-to-equity ratio is now under 50%, compared to 82% five years ago.

As a result, the company looks in fine shape to both absorb any losses due to the pandemic and move forward with the company. I recently added more Aviva shares to my portfolio, and I think that now offers a very good time to do so.

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Stuart Blair owns shares in Aviva and Legal & General. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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