Aviva plc 2015 Interim Results Announcement

Published: 06 Aug 2015

Aviva plc 2015 Interim Results Announcement

Mark Wilson, Group Chief Executive Officer, said:

“After three years of turnaround we are now moving to a different phase of delivery. We have improved the balance sheet, simplified the Group and we are now transforming our business. The progress is evident in these results.

“The Friends Life integration is ahead of schedule and we have delivered £63 million of run-rate synergies after three months. This is encouraging but nowhere near complete. Amidst the integration, our UK Life business continued to grow, with value of new business up 31% excluding Friends Life.

“In general insurance, premiums1 and operating profits were higher. The combined ratio was 93.1%, the best in eight years, and underwriting profits increased 45%.

“The 15% increase in the dividend is a further step towards achieving our target payout ratio and underlines our confidence in our cash flow and the business.”

HY15 numbers include Friends Life from 10 April 2015, the acquisition completion date. HY14 is Aviva standalone.

Profit

  • Operating profit2 £1,170 million (HY14: £1,071 million)
  • Underlying growth and Friends Life contribution more than offset adverse forex and disposals
  • IFRS profit after tax £545 million (HY14: £863 million) including £271 million of acquisition related integration and amortisation costs

Cash

  • Cash remittances3 £495 million (HY14: £623 million), as a result of moving the UK Life dividend to a bi-annual payment, in line with Group dividend payments
  • Holding company liquidity4 £1.6 billion (February 2015: £1.1 billion)
  • 2015 interim dividend up 15% to 6.75p (HY14: 5.85p)

Value of new business

  • Value of new business (VNB) up 25%1 to £534 million (HY14: £444 million)
  • UK Life VNB up 43% to £253 million (HY14: £177 million), +31% excluding Friends UK

Expenses

  • Group operating expenses £1,498 million (HY14: £1,399 million)
  • Operating expenses 3% lower excluding Friends Life at £1,357 million (HY14: £1,399 million)

General insurance

  • 93.1% combined operating ratio (HY14: 95.5%), the best reported in eight years
  • New UK distribution agreement with TSB

Balance sheet

  • IFRS net asset value up 12% to 380p per share (FY14: 340p)
  • Economic capital surplus5 of £10.8 billion (FY14: £8.0 billion), a coverage ratio of 176% (FY14: 178%)
  • Submitted Solvency II internal model in June and expect approval in December. Currently operating within our expected Solvency II target range
  • S&P leverage ratio of 27%6 (FY14: 28%). Comfortably within target range

Friends Life integration

  • £63 million of run-rate synergies achieved within first three months
  • £22.3 billion of AUM transferred to Aviva Investors. Agreement for additional £24 billion
  • Property rationalisation strategy announced. UK footprint to be reduced by 33% by FY16

Download the full announcement PDF (1.13 MB)

  1. On a constant currency basis.
  2. Operating profit has been restated to exclude amortisation and impairment of acquired value of in-force business, which is now shown as a non-operating item. See note B2 for further details. There is no impact on the result or the total equity for any period presented as a result of this restatement.
  3. Cash remittances now include interest remitted on internal loans and the 2014 figures have been adjusted accordingly.
  4. Holding company liquidity consists of cash, liquid assets and c£200 million of syndicated loans held in Aviva and Friends Life holding companies. This excludes amounts set aside to meet debt redemptions in Q3 2015.
  5. The economic capital surplus represents an estimated position. The economic capital requirement is based on Aviva’s own internal assessment and capital management policies. The term ‘economic capital’ does not imply capital as required by regulators or other third parties.
  6. HY15 S&P leverage ratio is on a pro-forma basis, taking account of planned redemptions, calls and other reductions of debt in Q3 2015.

Contacts

Investor contacts

Colin Simpson
+44 (0)20 7662 8115

David Elliot
+44 (0)20 7662 8048

Media contacts

Nigel Prideaux
+44 (0)20 7662 0215

Andrew Reid
+44 (0)20 7662 3131

Sarah Swailes
+44 (0)20 7662 6700

Timings

Presentation slides: 07:00 hrs BST
www.aviva.com

Analyst presentation: 08:30 hrs BST

Live webcast: 08:30 hrs BST
www.avivawebcast.com/interim2015/

Real time media conference call: 11:00 hrs BST

Download the full announcement PDF (1.13 MB)

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