Aviva Investors, the asset management division of the UK’s largest general insurer, purchased $108m worth of Israeli government bonds in January, Middle East Eye can reveal.
Governments issue bonds to raise money for public spending or to repay debts. For Israel, those bond sales have been crucial to the financing of its wars in Gaza, Lebanon and Iran.
According to data compiled by Profundo, an Amsterdam-based sustainability research firm and seen by MEE, Aviva Investors bought into all three tranches of Israel’s $6bn international bond issuance on 30 January this year – acquiring $45.7m in five-year bonds, $25.7m in 10-year bonds, and $36.4m in 30-year bonds.
Among British investors, Aviva’s purchase was the largest captured in Profundo’s dataset – which details which international investors bought Israeli bonds between late 2024 and early 2026.
The move also appears in sharp contrast with wider trends among British institutional investors, a growing number of which have reduced their holdings of Israeli investments.
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After Aviva, the next largest UK investments in Israeli bonds came from Schroders and HSBC, but for just a fraction of the amount.
Aviva’s acquisition was the fifth largest overall at January’s issuance, behind Germany’s Allianz and a trio of American investment giants, Vanguard, Wellington Management and BlackRock, according to Profundo.
US and German investors dominate the international market for Israel bonds.
The acquisition also ranked 16th largest among investments made by non-Israeli companies between late 2024 and early 2026.
When approached for comment, Aviva plc confirmed the $108m holdings, but moved quickly to distance its parent brand from Aviva Investors, telling MEE: “Aviva plc has no exposure to Israeli government debt.”
A spokesperson added: “Aviva Investors manages funds on behalf of clients and these have a very limited exposure to Israeli government debt, which has been significantly reduced since the end of January.”
The company declined to elaborate further. However, MEE understands that Aviva Investors’ holding of Israeli government bonds now sits at around $40m, down from the original $108m.
Aviva Investors, the asset management arm of Aviva plc, manages around £262bn ($353bn) in assets on behalf of more than 25 million customers across the UK, Ireland and Canada.
According to the company’s own figures, 39 percent of UK adults hold at least one Aviva policy, making it bigger, by customer count, than most major British banks.
Bankrolling war
Investors – including banks, pension funds and insurance companies – typically view government bonds as a low-risk source of regular interest payments from stable economies.
But critics argue that Israeli sovereign debt is a different proposition entirely.
‘There is a well-documented link between the proceeds of Israeli bond deals and the country’s military spending in Gaza and beyond’
– Anne-Marie Brook, Human Rights Measurement Initiative
“There is a well-documented link between the proceeds of Israeli bond deals and the country’s military spending in Gaza and beyond,” said Anne-Marie Brook, an economist and co-founder of the Human Rights Measurement Initiative.
“This creates a substantially different risk profile from ordinary government financing – and makes continued involvement by bondholders significantly harder to defend, both in terms of ESG [Environmental, Social, and Governance] obligations and potential legal exposure.”
Israel’s finance minister, Bezalel Smotrich, has been explicit about the connection. His budget, he said last year, “is a war budget. And with God’s help, it will also be the victory budget” – a budget funded in significant part through international bond issuances of precisely the kind Aviva Investors participated in.
January’s $6bn issuance – Israel’s first major international bond sale since a ceasefire came into effect in Gaza – attracted extraordinary demand. Israel styled the sale as marking a “return to prewar spread levels” and a demonstration of investor confidence in Israel.
The order book reached $36bn, six times the amount sold, from over 300 institutional investors across more than 30 countries. This came despite Israel having been downgraded by all three major credit rating agencies over the previous two years.
A rapid reversal
The speed of Aviva’s retreat from its January purchase appears striking.
Profundo’s data indicates that Aviva Investors held no Israeli government bonds before the January issuance. It bought in, then pulled back within the space of a few weeks or months.
There are plausible financial explanations. Investors sometimes buy bonds at issuance and sell quickly if spreads tighten, locking in an early profit. Client redemptions, index rebalancing, or internal risk limits could also account for a rapid reduction.
Israel’s January bonds were priced at a premium that reflected the risks of lending to a country at war. As that premium shrank in subsequent weeks, early buyers had a straightforward opportunity to sell at a profit. Aviva might have been one of them.
It is worth noting that Aviva’s purchase moves in the opposite direction of travel to many large British institutional investors.
For example, in August 2024, the Universities Superannuation Scheme (USS) – the UK’s largest private pension fund, with more than 500,000 members – sold £80m ($108m) in Israeli assets including government bonds, following sustained pressure from its members.
Meanwhile, Aviva plc has faced sustained activist pressure over its financial ties to Israel across multiple fronts – and has, quietly, been retreating on several of them.
In January 2025, Palestine Action activists occupied Aviva’s Bristol offices over its insurance of UAV Engines Ltd, a company whose drone engines were linked to an Israeli air strike in April 2024 that killed seven aid workers, including three British military veterans.
A report in March 2025 by the Boycott Bloody Insurance campaign, endorsed by 22 civil society organisations, named Aviva among the top global insurers complicit in Gaza. Commenting at the time, an Aviva spokesperson told Insurance Portal “as a responsible company, Aviva has published its Underwriting Statement based on ESG factors, which defines the types of organisations we will not consider insuring”.
By late 2025, both Aviva and Allianz had dropped their insurance of Elbit Systems UK, following months of direct action and protests. Aviva’s employment liability insurance coverage of UAV Engines Ltd ended on 7 September.
Aviva Investors’ purchase – whatever the motivation for its subsequent reduction – means that the company was willing to buy Israeli government bonds even after other parts of the Aviva group cut ties to Israeli arms manufacturers.
A shifting regulatory landscape
The political environment around Israeli bond sales has also shifted significantly.
In September, the Central Bank of Ireland stepped back from its role as the EU’s designated regulatory authority for approving Israeli government bond prospectuses, following mounting political pressure from activists and politicians.
Israel subsequently moved its EU bond approval to Luxembourg. The episode underlined the degree to which Israeli bond sales have become a politically and legally contested area across Europe.
The International Court of Justice’s provisional finding in January 2024 that Israel’s actions in Gaza may plausibly constitute genocide has prompted a growing number of European institutions to seek legal advice on whether continued investment in Israeli government bonds is consistent with their fiduciary and human rights obligations.
Under international standards for responsible business conduct, financial institutions should not invest in bonds issued by governments potentially committing war crimes – and if already invested, should use their leverage to push for compliance with international law before considering divestment, according to a recent report from the Amsterdam-based Centre for Research on Multinational Corporations.
For UK-regulated asset managers marketing funds on ESG grounds, the legal and reputational risks of holding Israeli sovereign debt are also sharpening.
Greenwashing legislation introduced by the Financial Conduct Authority in May 2024 means that regulated firms must ensure client communications are clear, fair and not misleading.
For an asset manager like Aviva Investors, which markets funds on ESG grounds, holding Israeli sovereign debt while its parent company simultaneously retreats from Israeli arms insurance is the kind of inconsistency that could draw regulatory scrutiny.
By that standard, Aviva’s defence appears to offer limited cover as Aviva Investors, not its clients, is responsible for where it invests clients’ capital.
There is no escaping the fact that Aviva Investors bought into Israel’s largest international bond issuance in years, then cut its position within weeks. Whether that reversal was driven by markets, clients, or reputational risk – or by some combination of all three – remains unclear.