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

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