Aviva written premiums and operating profits rise

Insurance giant Aviva posted its interim results for the six months to 30 June on Thursday, with operating profit rising 13% to £1.325bn and operating earnings per share improving 1% to 22.4p.

The FTSE 100 firm’s IFRS profit after tax was £201m, down from £545m in the first half of last year.

During the period, general insurance net written premiums were up 7% to £3.991bn, the life insurance value of new business increased 7% to £583m, its fund management operating profit grew 48% to £49m, and its UK Life assets under management were up 23% to £10.3bn.

Aviva’s Solvency II capital surplus was £9.5bn, down from £9.7bn, with its coverage ratio falling to 174% from 180% and operating capital generation of £1.2bn.

Its IFRS net asset value was up 6% to 412p per share, and its holding company liquidity was down slightly to £1.2bn from £1.3bn in February.

The board reported cash remittance of £752m, up from £495m, and declared an interim dividend of 7.42p, compared with 6.75p at the same time last year.

Aviva’s general insurance combined operating ratio was 96.2%, though the board said it was affected by 1.5% by an increase in natural catastrophe and weather claims, 0.6% by Flood Re, and 1% by commission strain from new distribution partnerships.

“Our UK businesses delivered encouraging results,” said Aviva Group chief executive officer Mark Wilson.

“We are growing in the UK, we are investing in the UK. We like the UK.

“And we are also benefitting from Aviva's diversity, with 42% of our earnings coming from outside of the UK,” Wilson added.

He said the 10% increase in the dividend, up 32% since 2013, is another step towards the board’s target payout ratio of 50% and underpins its confidence in delivering sustainable and growing returns.

“We are continuing to maintain a strong balance sheet, with a solvency ratio of 174%, toward the upper end of our working range.

“Aviva's strong financial position and diversity mean we are well insulated from external events.

“We have deliberately designed Aviva to be resilient to a low interest rate environment,” Wilson explained.

He said the company remains confident in its ability to deliver on key commitments to grow earnings, cash and dividends.