Aviva CEO Says New Business Should Allay Friends Life Skeptics

  • Value of new business jumps 25 percent in nine months
  • Aviva Investors remains outlier with more client redemptions

Aviva Plc Chief Executive Officer Mark Wilson said a 25 percent jump in new business in the first nine months of the year should allay concerns that his 5.6 billion-pound ($8.6 billion) acquisition of Friends Life Group Ltd. was a bad idea.

The value of new business, a measure of future sales, reached 823 million pounds in the period on a constant currency basis, led by a 36 percent increase in the U.K., Aviva said Thursday. With profitability also improving in general insurance, the asset management unit remains the outlier after 4.5 billion pounds of client redemptions.

“The strategic benefits of Friends Life are coming through loud and clear,” Wilson said on a conference call with journalists. “We can finally put to bed the continued question of whether Friends Life could be a distraction for the business, in fact it’s been far from it. We have clear evidence that Aviva’s transformation is working.”

Wilson, who joined in 2013 to turn around the insurer, surprised investors last year when he agreed to buy Friends life, the biggest deal the U.K. insurance industry had seen in 15 years. The CEO reiterated on Thursday’s call that any future acquisitions would probably be smaller deals in the “low hundreds of millions” across Europe and Asia.

Aviva generated 91 million pounds in cost synergies from the integration of Friends Life through September, Wilson said. That’s up from 28 million pounds at the half year and compares to Aviva’s 225 million-pound target.

Aviva Investors, which is run by Euan Munro, reported net outflows in the period as client redemptions outweighed 4 billion pounds of gross sales. Wilson said the firm was making progress on its turnaround with Munro’s flagship fund range now overseeing 1.9 billion pounds of assets, including the CEO’s pension.

In general insurance, Aviva’s combined ratio, or claims and expenses as a percentage of premiums, improved to 94 percent from 95.9 percent boosted by lower weather-related claims. The unit also won a five-year distribution deal with HomeServe Plc after signing a similar deal with TSB Bank earlier in the year.

The shares were up almost 1.2 percent at 485 pence at 10:28 a.m. in London.

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