Aviva sees its profit leap as slashes costs
AVIVA increased its market capitalisation by almost three quarters of a billion pounds yesterday, after its London-listed shares soared on better-than-expected half-year profits.
Aviva shares, which have underperformed the sector over the course of the year so far, added 7.18 per cent over the day to close at 394.3p, valuing the group at £11.06bn.
The spike came as Aviva said it had boosted first-half operational profit by 21 per cent to £1.3bn since the first half of 2009, reflecting a 10 per cent rise in sales across its UK and European life and pensions business.
Aviva said it had generated £0.9bn of operating capital over the period, prompting it to revise upwards its full-year capital generation forecast from £1.3bn to £1.5bn.
Jean D’Herbecourt, an analyst at Cheuvreux, said: “Behind this sparkling performance, which includes some positive one-offs, Aviva has clearly improved its operating performance substantially with a very significant cost reduction.”
Aviva, which raised its interim dividend six per cent to 9.5p, said its UK life business made record operating profits of £463m over the period – the equivalent of an entire year’s profit for the division just four years ago.
The UK general insurance business returned to sales growth after a depleted second half last year, thanks to improved pricing techniques and an advertising campaign starring comedian Paul Whitehouse.