Aviva rebounds from restructure and regulations
AVIVA has turned a corner but still has a long way to go said chief executive Mark Wilson as the company reported a rise in profits yesterday.
The insurance giant boosted its dividend by 30 per cent and its strong figures for 2014 pushed shares up 7.05 per cent at the close.
The company has been through heavy restructuring in recent years which has seen it cut hundreds of jobs and dispense of several businesses.
More recently it has had to contend with the fallout of George Osborne’s last budget which saw demand for annuities plunge, ongoing low interest rates and currency swings.
The company has also had to review its compliance procedures after the Financial Conduct Authority (FCA) fined the firm £17.6m due to its failure to manage conflicts of interest fairly.
But the turnaround is paying off, as lower operating costs and a 15 per cent increase in the value of new business to a record £1bn saw pre-tax profits up six per cent to £2.2bn.
Confidence in the company’s recovery can be seen in the forthcoming £5.6bn merger with Friends Life, the Guernsey-based life insurer, which itself saw pre-tax profits rise 38 per cent to £556m yesterday.
The merger comes as insurance firms seek to consolidate operations as Osborne’s regulatory changes begin.
Aviva plans to make synergy savings worth £225m through the deal, which will result in about 1,500 job losses between the firms.
Wilson said the results showed tangible progress was being made at the company.