Insurer Aviva has posted strong results for the first half of 2014, despite a 21 percent decrease in the value of its new business in UK life.
The value of new business in the UK fell to £177 million in the first half of 2014 compared with £224 million in the same period of 2013, mainly due to a steep 41 percent fall in its annuity business.
However, the insurer posted net profits of £1.1 billion for the period, a 4 percent increase from £1 billion in the first half of 2013.
Its combined ratio improved to 95.5 percent for the half, compared with 96.2 percent in the first half of 2013.
The value of new business grew in Asia and Poland by a large amount, 62 percent and 58 percent respectively. Overall the value increased 7 percent in the first half of 2014 to £444 million.
A Morgan Stanley research report on Aviva said: “Aviva’s interim results show that the restructuring continues to build momentum – with further progress on book value, leverage, general insurance profitability and expenses.
“Aviva remains a key overweight recommendation – we see more upside as the management team continue to improve operating performance. In particular, we note that some 50 percent of group capital is still earning very low returns. A significant element of this is driven by capital locked up in various back books – we note the first signs of progress here in these results.”
Mark Wilson, group chief executive officer of Aviva, said: “The half year results show that momentum in Aviva’s turnaround continues. All of our key metrics have improved, operating earnings per share are up 16 percent, and book value has increased 7 percent.
“We have reduced our debt, decreased expenses and increased profit – this is just good business. Aviva remains a work in progress, and these results are a step in the right direction.
“While some macro–economic trends are encouraging, we are not waiting for the markets to spur improvement in results. We will drive our true customer composite and digital first strategy through our businesses, while remaining focused on markets in which we can win.”
Aviva, Europe, Second Quarter 2014 Results, Morgan Stanley, Mark Wilson