The last time Aviva (LSE: AV.) shares traded above 800p was in 2007, before the financial crash. The business looks in much better shape today, while analysts are raising their price targets, with JPMorgan at 800p and Berenberg at 820p.

So is now a good time to buy the shares? Or, after their huge run over the past five years, does the valuation suggest investors should take a more cautious approach?

Growing cash flow

The scale of Aviva’s transformation over the past five years has been impressive. General Insurance premiums have grown at a compound annual rate of 13.2%, while assets under management have compounded at 16.7%.

Management has now beefed up its three-year targets across key metrics including return on equity, cash remittances and earnings per share.

Cash remittances are one metric I watch particularly closely. This is the cash generated by Aviva’s operating businesses and paid to the group.

Between 2023 and 2025, cumulative cash remittances totalled £5.9bn. Up to 2028, management is targeting more than £7bn of cumulative remittances.

Why does that matter? Because this is the cash that helps support the company’s 5.8% forward dividend yield, while also giving the insurer the firepower to make acquisitions. The company has already been putting that money to work, including buying Succession Wealth and Direct Line.

And this is part of a much wider strategy of allocating capital towards capital-light businesses. For me, this is where the next phase of growth could come from.

Growth engines

Direct Line is undoubtedly the biggest near-term growth engine. And the early signs are encouraging.

Amid all the talk of annualised cost savings, what matters more to me is how quickly it’s turning around the struggling brand and integrating it into its portfolio.

In H1 2026, underwriting profitability improved by more than 10 percentage points. Policies sold through comparison websites also increased almost tenfold over the past year to around 500,000.

That tells me the company is doing more than simply cutting costs. It’s improving the underlying business.

The other big growth engine is Wealth. With the division adding nearly 300,000 customers over the past year, it looks well on its way to reaching its £280m operating profit target by 2027.

Indeed, it’s the company’s diversified portfolio that’s a big positive for me.

The bond market risk

This all said, there’s one risk that worries me more than anything else: the bond market.

The 10-year gilt yield has climbed above 5%, its highest level since 2007. Aviva is an insurer with huge investments in bonds, so the bond market is particularly important to its earnings and balance sheet.

I’m not saying higher gilt yields are automatically bad for the company. In fact, higher rates can benefit parts of its retirement business. But something doesn’t feel quite right when government debt is rising, borrowing costs are climbing and the government still wants to spend more.

If bond markets lose patience, investors could quickly become more cautious about highly valued shares like Aviva. With the stock trading on a price-to-earnings ratio of 41.5, that could make the journey to 800p much harder.

I remain cautiously optimistic, which is why I’m holding on to my shares. But I think better opportunities lie elsewhere for me in the FTSE 100.

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Andrew Mackie owns shares in Aviva.