UK: 'Satisfactory half-year for Aviva
PUBLISHED: 08:57 08 August 2013 | UPDATED: 08:57 08 August 2013
Insurance giant Aviva reported a "satisfactory" first half after cost-cutting boosted earnings by 5%, but delivered another blow to investors as it almost halved its interim dividend payout.
The group confirmed a cut in its divi from 10p to 5.6p, having already warned earlier this year it would be reduced in line with the mammoth cut to its full-year payout.
But recently-appointed boss Mark Wilson offered further signs that his turnaround efforts are gaining traction as he reported underlying operating profits up 5% to £1billion for the six months to June 30 and said new business rose 17% to £401million.
The increase in earnings was largely driven by cost-cutting, which includes plans revealed in April to axe around 2,000 jobs, equivalent to 6% of its global workforce.
Costs came down by 9% or £147m to £1.5bn as part of its aim to save £400m and the group said there was scope for more savings as it looks to push through new initiatives in digital and automation.
It said there may be further reductions in roles, but these were likely to come through natural turnover rather than redundancies.
Mr Wilson said: “Although these results continue the positive trends of the first quarter, tackling our legacy issues will take time.”
He added that performance was still “far from satisfactory” across Spain, Italy, Ireland and its asset management arm Aviva Investors.
New business levels slumped by 57% in Italy and 38% in Spain.
The UK business delivered a 16% rise in new business, with its general insurance division seeing earnings rise 5% to £239m as it was helped by lower weather-related claims.
UK life and pensions earnings took a knock, down £31m to £438m, due largely to an exceptional gain of £74m a year earlier.