Aviva posts �1.3bn profits

INSURANCE giant Aviva today said it was beating all of its targets as it announced half-year profits of �1.3bn, up 5pc - while increasing dividends for shareholders.

Announcing its results to the City of London, Aviva also disclosed that in the first six months of the year operating profits in Europe were up to �525m, despite the financial turmoil in the Eurozone.

Shareholders will also see a 5pc increase in interim dividends to 10p, a welcome sign of the company’s health which comes two years after the firm controversially cut dividends.

The results, which are broadly in line of expectations, also show a 14pc internal rate of return in new life insurance business, against a target of 12pc, while the �1bn sale of RAC to earlier this to the Carlyle Group, part of a strategy to focus on a dozen core markets, had also contribute to a strengthened balance sheet.

As well as the RAC sale, Aviva also sold part of its stake in Amsterdam-based Delta Lloyd NV, generating a further �381m.

The announcement comes as rival insurer RSA, whose �5bn bid to buy the Norwich-based general insurance business was rejected by Aviva last year, also announced a 22pc rise in operating profit of �467m with all eyes likely to be on whether there will be a fresh round of takeover speculation.

Andrew Moss, Aviva group chief executive, said: “This has been a successful six months. We are beating all our operational targets. Operating profits rose in the UK and have increased by 21pc in Europe despite tough economic conditions.

“After recent disposals, Aviva is fitter, stronger and well-positioned to be the undisputed leader in the UK market and to build on our strong European franchises.

“Markets may well continue to be volatile, but our strong balance sheet and capital position underpins our confidence in our continued momentum and our plans for growth.”