Thursday 8 August 2019 7:34 am

Aviva confirms strategic review of Asia units as UK life insurance profits fall

Aviva confirmed it is reviewing its Asian insurance arms with the potential for a sale as it revealed what its chief executive called a “mixed” bag of half-year results today.

The figures

The insurer saw operating profit climb one per cent year on year to £1.45bn in the first six months of 2019, beating forecasts of £1.38bn.

Earnings per share also beat a forecasted dip to rise two per cent to 27.3p while the interim dividend climbed three per cent year on year to hit 9.5p per share.

Debt remains unchanged at around £9bn as the group is lumbered by the costs of a string of mergers, though the firm enjoyed a capital surplus of £11.8bn.

The insurer also lowered its combined operating ratio to 95.9 per cent, an improvement on last year’s 97.4 per cent.

Why it’s interesting

Aviva’s rise in profits masked weakness in the UK, where life insurance profits dropped 10.5 per cent to £187m. A surge in Canadian profits to £98m offset the drop.

Aviva has since separated management of its life insurance in the UK and merged UK digital and general insurance.

The insurer’s fund management group also saw profits slip, down from £74m this time last year to just £61m.

New chief executive Maurice Tulloch also confirmed it is considering options for its Asian units, which boosted operating profit to £161m in the six months to June.

“We have decided to examine strategic options for our Asian businesses,” he said. 

“Our Asian operations are strategically and financially attractive, however, we are evaluating a range of options to enhance the value of the businesses to shareholders.”

What Aviva said

Chief executive Maurice Tulloch said:

Aviva has strong foundations to build upon but there is much to do to improve our performance. 

Our performance is mixed, with operating earnings per share up two per cent.

In life insurance and asset management, operating profits declined due to challenging market conditions and the absence of a longevity reserve release.

I am working with the board to refresh Aviva’s strategy and we have decided to review the strategic options for our Asian businesses. Aviva’s businesses in Asia have excellent growth and earnings potential and we are considering a range of options to help these businesses reach their potential.

I am confident that our combination of excellent insurance skills, a strong balance sheet and world class distribution and partners provide a strong foundation for Aviva’s future success.”

Main image credit: Getty