Aviva’s back in the black with profits of £2bn
INSURER Aviva announced a strong set of annual results yesterday, following a £2.9bn loss in 2012.
Profits rebounded to £2.1bn in 2013, allowing the company to issue a final dividend of 9.4p per share. The value of new business to the group rose by 13 per cent.
Although the insurer estimates the cost of UK flooding in December and January to be £60m, it said this was broadly in line with expectations.
Group chief executive Mark Wilson said the group is on the mend. “Aviva is simpler, more focused and better managed. We have significantly improved our capital surplus, increased our liquidity and have a stronger leadership team,” he said.
Wilson added: “Aviva still has issues to address. Have we made progress? Yes, some. Is it a little faster than anticipated? Probably. Have we unlocked the full potential at Aviva? Not yet.”
The group has plans to further bolster its bottom line in 2014, including generating more revenue from the Aviva Investors arm of the business which currently contributes just three per cent of group operating profit.
Wilson added that life businesses in Italy and Spain also need to be shored up after declines.
As part of its latest reports, Aviva also announced the biggest pension trade in history in which it hedges on death rates attached to its pension book. The group sold £5bn of pensioner payments to the reinsurance market, the largest trade of its sort ever, in what is known as a a longevity swap.
Shares shot up by more than eight per cent yesterday.
THREE KEY NUMBERS FROM THE AVIVA RESULTS
1 £2.1bn
The group’s profits – up from a loss the year before
2 9.4p per share
The final dividend that the company plans to pay to shareholders on 16 May 2014
3 £5bn
The amount raised by selling on the risk of members of its staff pension scheme living longer than expected