Aviva Swings To Profit In First Half, New Business Up 17%; Shares Climb

(RTTNews) - Insurer Aviva Plc (AV, AV.L) Thursday reported a profit for its first-half compared to a loss last year, reflecting 17 percent increase in value of new business as well as reduced operating expenses. The company also announced a lower interim dividend.

The shares are currently up about 7 percent in the morning trade on the London Stock Exchange.

Operating expenses for the half year fell 9 percent to 1.53 billion pounds, while total expenses were significantly down at 14.74 billion pounds compared to 18.6 billion pounds in the prior year. Restructuring costs were 10 percent lower at 164 million pounds. The company sees restructuring costs in 2013 to be significant, but expects it to be lower than the 2012 level of 461 million pounds, with material reductions in 2014.

Mark Wilson, group chief executive officer of the company said, "In the first half we have taken a number of steps to deliver our investment thesis of cash flow and growth. These results show satisfactory progress in Aviva's turnaround."

The company said its key measure of sales - value of new business - increased 17 percent to 401 million pounds, driven by the UK Life, France, Poland, Turkey and Asia. Value of new business in the UK grew 16 percent to 211 million pounds. It expects the overall growth rate in value of new business to moderate during the second half of 2013.

According to Aviva, it saw solid performance in some areas, but several areas were underperformed, which are being addressed.

"Although these results continue the positive trends of the first quarter, tackling our legacy issues will take time," Wilson said.

For the six months ended June 30, the company posted profit before tax attributable to shareholders' of 1.11 billion pounds, compared to a loss of 403 million pounds in the previous year. The company said it has restated its prior-year results.

Profit after tax was 776 million pounds, against a loss of 624 million pounds reported last year. On a continuing operations basis, half-yearly profit attributable to equity shareholders totaled 693 million pounds, compared with the prior year's loss of 688 million pounds.

On a per share basis, earnings were 22.5 pence, compared to a loss of 24 pence per share in the previous year.

Operating profit improved to 1.01 billion pounds from 959 million a year ago, mainly due to lower expenses.

Total income from continuing operations fell to 15.34 billion pounds from 18.91 billion pounds in the first half of last year. Net earned premiums declined to 10.55 billion pounds from 10.76 billion pounds a year earlier. Net investment income was 3.96 billion pounds, down from 7.63 billion pounds last year.

Net Asset Value or NAV per share as at June 30, 2013 was 281 pence, up from 278 pence as at December 31, 2012.

The company also announced an interim dividend of 5.6 pence per share, down from 10 pence per share paid last year, consistent with the percentage reduction in the 2012 final dividend.

In London, Aviva shares are currently trading at 395.10 pence, up 24.30 pence or 6.55 percent, on a volume of 15.35 million shares.