Aviva boss notes “satisfactory progress” in turnaround plan as general insurance profits rise 5pc
- Credit: Copyright Archant Norfolk Ltd
New Aviva boss Mark Wilson today said the business had made 'satisfactory progress' in its turnaround strategy aimed at saving £400m and cutting 2,000 jobs across the group.
Hundreds of jobs are at risk at the firm's Norwich offices as part of the shake-up, which aims to reduce staff numbers by about 6pc.
But announcing the company's interim results for the first of the year, Mr Wilson said pre-tax profits for the whole group were £776m - in contrast to last year's £624m loss.
Meanwhile Aviva said that overall performance in UK general insurance business, which is largely based in Norwich was 'solid with operating profit of £239m, up 5pc, despite a £45m reduction in investment return following the intercompany loan reorganisation.'
For the UK Life business, which is mostly based in York, operating profit was down by £31m at £438m . But value of new business (VNB), which Mr Wilson said was one of the group's key indicators, as opposed to top-line growth, was 16pc higher year–on–year, mostly driven by 're–pricing our annuities book'.
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But he said the overall results were offset by some businesses in the group still underperforming.
He said: 'I see Aviva as a portfolio of businesses grouped into three areas: cash flow generators, future cash flow generators and turnaround businesses. Within each of these groups there are areas of underperformance which are being addressed.
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'Our cash flow generators are UK, France and Canada and our objective in these markets is to improve cash flow and profitability. The turnaround businesses are Italy, Spain, Ireland and Aviva Investors. In Spain and Italy we are focused on managing their back books to release free capital and improve cash remittances to group. Aviva Investors has underperformed from a shareholder perspective and we expect it to play a more prominent role in the group going forward. .
'Future cash generators are Poland, Turkey, South East Asia and China. These are attractive markets which offer growth potential. In Poland, we are the second largest life and pensions provider. Turkey has demographic and economic characteristics similar to high growth Asian markets and is a key focus for VNB growth. In Asia we are making progress with a more focused approach, concentrating on China and South East Asia.
Mr Wilson said: 'In the first half we have taken a number of steps to deliver our investment thesis of cash flow and growth. These results show satisfactory progress in Aviva's turnaround.
'We have achieved profit after tax of £776m, in contrast to the £624m loss last year. Cash flows to the Group have increased by 30pc to £573m. Our key measure of sales – value of new business – has increased 17pc, driven by the UK, France, Poland, Turkey and Asia.
'Although these results continue the positive trends of the first quarter, tackling our legacy issues will take time. I am committed to achieving for investors what we set out to do: turning around the company to unlock the considerable value in Aviva.'