Aviva sees operating profits rise to £1.05bn
Aviva has hailed further progress in its turnaround despite the dual impact of flooding and the surprise reform of annuity rules on its UK operations.
The group, which has 31 million customers in 16 countries, reported a 4% rise in half-year operating profits to £1.05bn as it benefits from a continued drive to improve efficiency.
The cost savings have been offset by winter storms in Canada and the UK, where it faced more than £60m of claims from flooding and storm damage at the start of the year.
It has also been impacted by a strong pound and the lower sale of annuities for pensions following the Chancellor's surprise Budget announcement that pensioners no longer have to buy an annuity to draw their pensions.
In Aviva's UK life and pensions division, the value of new business was down 21% in the half year to £177m, reflecting a 41% reduction in annuity sales following the reforms. Aviva also reported a general market decline as customers choose to defer taking their pension.
Chief executive Mark Wilson admitted the overhaul by the Chancellor was a surprise but that the group was working to take advantage of the changes.
He said: "I think giving consumers flexibility is a good thing, not a bad thing and we need to adapt. It provides opportunity for new products and we've developed those new ways of distribution and we are developing those as well."
In the UK general insurance business, weather claims were worse than the previous year but "marginally favourable" against the long term average.
It meant the company's combined operating ratio – a measure of underwriting profitability, with anything below 100% representing a profit and anything above representing a loss – to a seven year low of 94.3% in the UK.
Mr Wilson took charge in January last year after the departure of predecessor Andrew Moss in the wake of a humiliating shareholder revolt over his pay and the faltering pace of the business.