UK: ‘Satisfactory half-year for Aviva
- Credit: PA
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.
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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.”
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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.