Aviva sees strong profits following Friends Life merger

In its interim statement, Aviva said that headwinds including adverse foreign exchange movements and the impact of disposals were more than offset by the contribution from Friends Life of £174 million as well as £86 million of underlying profit growth.

Life insurance profit increased 5% to £1,021 million (HY14: £973 million), also driven largely by contributions from Friends Life.

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, premiums 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.”