Aviva focused on turnaround despite profits jump
Insurer Aviva has insisted its turnaround has much further to go, despite a rise in annual profits and a big jump in its shareholder dividend.
The group, which is on the brink of completing a takeover of Friends Life in a £5.6 billion deal, is now two years into a recovery plan launched by chief executive Mark Wilson following a City revolt over its performance.
The company's profits rose 6% to £2.2 billion last year, with a 15% rise in the value of new business helping offset currency and regulatory headwinds.
Mr Wilson said Aviva was repaying the faith of shareholders by increasing its dividend by 30% but he said there was much work still to be done.
He added: 'It would be wrong to assume that our turnaround is nearing completion as we have further to travel than the distance we have come.'
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Mr Wilson said Friends Life would be the catalyst for the next phase of the turnaround but admitted the company is braced for a difficult period as it looks for 1,500 job losses through the combination of the two companies.
He said: 'We want to take the pain, take it very quickly and get over it and move on - and that's what our people want as well.'
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Mr Wilson highlighted progress in UK general insurance, where its measure of profitability improved despite the impact of floods at the start of the year.
Among areas for improvement, Mr Wilson said the company's products per customer was 'entirely inadequate' and that costs were still too high.
He added: 'If you go back to two years there were a lot of people in the market who thought that Aviva was unfixable. And I can understand why.
'It was like being in a huge boat with a whole lot of leaks and you don't know which leak to put your hand over first. But as we've stopped those leaks and strengthened the boat all of a sudden we've found that the boat's starting to go a whole lot faster.'
Shareholder votes on the Friends Life transaction will take place on March 26, with the completion of the deal anticipated on April 13.
The EDP Top100 firm employs around 28,000 staff worldwide, including 12,000 in the UK and 5,000 in its UK life and pensions division. Friends Life has 3,550 UK staff, largely in offices in Bristol, Dorking, Manchester and London.
Aviva's UK staff are in York, Norwich, Sheffield and Glasgow, although there is no overlap between Friends and Aviva's general insurance arm.
The deal with Friends is the biggest in the industry since the merger of CGU and Norwich Union created the company now known as Aviva in 2000.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: 'The results are both broadly pleasing and in stark contrast to the travails of recent years, most notably the financial crisis and subsequent dividend cut in 2013.'