By Juliet Samuel
LONDON-- Aviva PLC has reported a 9% rise in first-half profit
and increased its interim dividend after a robust performance from
its enlarged life-insurance business following last year's
acquisition of smaller rival Friends Life.
The British insurer said on Thursday that operating profit, the
group's preferred measure of its performance, rose to GBP1.17
billion ($1.83 billion) in the six months to end-June from a
restated GBP1.07 billion in the same period the year before.
Net profit fell sharply to GBP464 million from GBP1.57 billion
last year, but most of the decline resulted from changes in
investment returns on its customers' products and GBP271 million in
costs related to the integration of Friends Life.
"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," said Chief Executive Mark
Wilson.
Aviva said it has managed to save GBP63 million in annualized
costs from the acquisition. Friends Life's cash pile also helped to
improve its surplus capital to GBP10.8 billion at June 30 from GBP8
billion even as regulators assess the risk models being used by all
major U.K. insurers ahead of introducing new capital rules.
Aviva increased its dividend 15% to 6.75p per share.
The company's cash flow fell to GBP495 million from GBP623
million, fall which Mr. Wilson attributed to a change in when its
business units throw off cash to the holding company.
Operating profit was steady excluding the impact of the Friends
acquisition, except in the U.K. where the value of Aviva's new
business at its life insurance activities rose by nearly a
third.
The group said that the earnings contribution from its
asset-management business, Aviva Investors, is still "inadequate"
and that it is investing in the business to improve it.
Write to Juliet Samuel at juliet.samuel@wsj.com
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