Aviva Beats Analysts First-Half Profit Estimates on Lower Costs
Aviva Plc (AV/), the U.K.’s third-biggest insurer by market value, reported a 5 percent increase in first-half profit as restructuring costs fell.
Operating profit climbed to 1.01 billion pounds ($1.6 billion) in the six months to June 30, compared with 959 million pounds a year earlier, the London-based company said today in a statement. That beat the 933 million-pound forecast of 18 analysts provided by the company. Restructuring costs fell 10 percent to 164 million pounds.
“Progress in the first six months of 2013 has been satisfactory,” Chief Executive Officer Mark Wilson said in the statement. “There are a number of areas that must be addressed, in particular leverage, expenses and under-performance in some of our markets.” He added that it’s “essential” that performance its fund management and Irish operations improve over time.
Wilson, who took the job in January, is seeking to appease investors by selling assets, eliminating jobs and cutting costs to rebuild capital that was depleted by the euro area’s debt crisis. The New Zealander cut the firm’s dividend by 44 percent in March as the insurer posted a full-year loss and wrote down the value of its U.S. business.
Aviva’s combined operating ratio, or claims and expenses as a percentage of premiums, rose to 96.2 percent in the first half from 95.5 percent a year earlier, indicating no improvement in underwriting. Operational capital generation climbed to 936 million pounds from 906 million pounds.
Aviva said it will pay a first-half dividend of 5.6 pence a share compared with 10 pence a year ago. Analysts had also estimated 5.6 pence, according to the company survey.
The company said today it expects to complete the sale of its U.S. business by the year-end.
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