Aviva share price rises as it unveils 20 per cent profit boost and hikes dividend after Friends Life buyout

Emma Haslett
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Crushing it: shares in the company rose more than five per cent in early trading (Source: Getty)

What floods? Insurer Aviva said it was hiking its dividend after it completed its acquisition of Friends Life ahead of schedule.

The figures

Operating profits rose 20 per cent to £2.7bn in 2015, Aviva said this morning - seven per cent ahead of analyst expectations of £2.5bn. That allowed it to hike dividend by 15 per cent to 20.8p. Nice.

The company said the integration of Friends Life after its £6bn acquisition had gone "faster and better than expected" - and it expected to achieve its target of £255m savings this year, a year ahead of schedule. It's already made £128m of savings, it added.

For the first time ever, it unveiled its Solvency II capital ratio - the amount of capital it has to hand as a proportion of the minimum required by new Solvency II rules - was 180 per cent, at the "top end of our working range".

The company was among the FTSE 100's biggest risers on a disappointing day: its shares finished risers in mid-morning trading, with shares jumping 1.35 per cent higher, at 465.8p.

10 March 2016 @ 4:30pmAviva (AV.)

Why it's interesting

Aviva shares have been buffeted by market volatility in recent months - and strong winter storms over the Christmas period didn't help. Last week, the company warned floods had damaged its earnings to the tune of £100m.

But the swift integration of Friends Life looks like it has saved the day: back in October chief exec Mark Wilson said the acquisition was "everything we expected it to be" - and it is continuing to bear fruit.

The company said today it had "successfully navigated" turbulent external conditions, and had delivered a "stronger, cleaner balance sheet".

Analysts were also impressed. Hargreaves Lansdown investment analyst Charles Higgins said shareholders "can feel the benefit of having a simpler group, with fewer, but larger operating units and product strategies that meld with consumers' increasing desire to transact financial services digitally".

What Aviva said

Chief executive Mark Wilson said:

2015 was about stability and growth at Aviva, against a background of market volatility and uncertainty. Aviva is now a stronger and more focused business. We have completed the fix phase of our transformation.

In short

The company may be nearing the end of its transformational period - and it's looking like it'll emerge a leaner, meaner, better-oiled machine.

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