OREANDA-NEWS. Mark Wilson, Group Chief Executive Officer, said:

“After three years of turnaround we are now moving to a different phase of delivery. We have improved the balance sheet, simplified the Group and we are now transforming our business. The progress is evident in these results.

“The Friends Life integration is ahead of schedule and we have delivered ?63 million of run-rate synergies after three months. This is encouraging but nowhere near complete. Amidst the integration, our UK Life business continued to grow, with value of new business up 31% excluding Friends Life.

“In general insurance, premiums1 and operating profits were higher. The combined ratio was 93.1%, the best in eight years, and underwriting profits increased 45%.

“The 15% increase in the dividend is a further step towards achieving our target payout ratio and underlines our confidence in our cash flow and the business.”

HY15 numbers include Friends Life from 10 April 2015, the acquisition completion date. HY14 is Aviva standalone.

Profit

  • Operating profit2 ?1,170 million (HY14: ?1,071 million)
  • Underlying growth and Friends Life contribution more than offset adverse forex and disposals
  • IFRS profit after tax ?545 million (HY14: ?863 million) including ?271 million of acquisition related integration and amortisation costs

Cash

  • Cash remittances3 ?495 million (HY14: ?623 million), as a result of moving the UK Life dividend to a bi-annual payment, in line with Group dividend payments
  • Holding company liquidity4 ?1.6 billion (February 2015: ?1.1 billion)
  • 2015 interim dividend up 15% to 6.75p (HY14: 5.85p)

Value of new business

  • Value of new business (VNB) up 25%1 to ?534 million (HY14: ?444 million)
  • UK Life VNB up 43% to ?253 million (HY14: ?177 million), +31% excluding Friends UK

Expenses

  • Group operating expenses ?1,498 million (HY14: ?1,399 million)
  • Operating expenses 3% lower excluding Friends Life at ?1,357 million (HY14: ?1,399 million)

General insurance

  • 93.1% combined operating ratio (HY14: 95.5%), the best reported in eight years
  • New UK distribution agreement with TSB

Balance sheet

  • IFRS net asset value up 12% to 380p per share (FY14: 340p)
  • Economic capital surplus5 of ?10.8 billion (FY14: ?8.0 billion), a coverage ratio of 176% (FY14: 178%)
  • Submitted Solvency II internal model in June and expect approval in December. Currently operating within our expected Solvency II target range
  • S&P leverage ratio of 27%6(FY14: 28%). Comfortably within target range

Friends Life integration

  • ?63 million of run-rate synergies achieved within first three months
  • ?22.3 billion of AUM transferred to Aviva Investors. Agreement for additional ?24 billion
  • Property rationalisation strategy announced. UK footprint to be reduced by 33% by FY16