By Ian Walker
LONDON--Aviva PLC (AV.LN) Thursday reported a 14% rise in first
quarter new business and said its turnaround is on track and ahead
of schedule.
The world's sixth-largest insurance firm measured by net premium
income added that detailed plans to integrate Friends Life are well
underway and, while this is a challenging and complex project, the
board is confident of timely progress.
Total new business rose to 247 million pounds ($375.71 million)
for the three months ended March 31, compared with GBP224 million
in the same period a year earlier. In the U.K., it rose 15% to
GBP103 million driven by higher equity release and pensions, which
more than offset a reduction in annuities.
Aviva, which has around 34 million customers across 16
countries, added that its economic capital surplus--a measure of
financial stability--rose slightly to GBP8.1 billion, from GBP8.0
billion at the end of 2014. Its net asset value rose 2% to 349
pence a share, from 340 pence at Dec. 31, 2014.
"Value of new business is up, our general insurance combined
operating ratio has improved and our IFRS book value has grown over
the quarter. In the face of unpredictable global markets, we
continue to improve the group's resilience," Chief Executive
Officer Mark Wilson said.
In his March 2014 budget, Chancellor of the Exchequer George
Osborne shook up the pensions market with a radical overhaul of
pension laws from April 2015. At that time he said pensioners no
longer need to buy an annuity from their pension pot to provide for
their retirement and can take the whole amount in cash thereby
giving them the flexibility to seek other forms of income.
Subsequent to this, in his budget earlier this month, Mr.
Osborne said from April 2016 retirees will be able to sell existing
annuities without incurring a tax charge, enabling them to look for
a better deal.
Last month Aviva completed its GBP5.6 billion deal to buy
Friends Life Group Ltd., creating the U.K.'s largest insurance,
savings and asset-management company.
Aviva said it expected the deal to generate approximately GBP225
million of annual cost savings by the end of 2017, and allow it to
pay bigger dividends to shareholders.
Aviva has also been selling off businesses as part of its
strategy to focus on markets where it has scale or a sustainable
competitive advantage to maximize return on capital. It has sold
its 47% stake in South Korean business Woori Aviva Life Insurance
and U.S. equity manager River Road Asset Management LLC, both for
undisclosed sums.
In addition, the firm has also restructured its Italian
businesses in deals with UBI Banca S.c.p.a. and UniCredit SpA.
Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749