Aviva profit beats forecasts, to return more cash this year

Fund management operating profit, meanwhile, rose 30 percent to 138 million pounds, boosted by a rise in group assets under management to 450 billion pounds, an increase in revenue margin and improved cost to income ratio.

Aviva, however, unveiled that its Solvency II capital surplus had climbed to £11.3 billion in 2016, as compared with £9.7 billion in the prior-year period, and hiked its total dividend per share by 12 percent to 23.3p.

The biggest contributors to group performance was its life insurance unit followed by general insurance, health insurance and fund management. Gross written premiums rose to GBP25.44 billion from GBP21.93 billion.

Panmure Gordon analyst Barrie Cornes said this 9% gap equated to about £1 billion, some or all of which Aviva will now look to return to shareholders.

The company noted that a number of milestones were reached in 2016. The result, however, excludes the impact of the change in the Ogden discount rate in United Kingdom general insurance. The company exceeded its target for the integration of Friends Life, delivering GBP270.0 million of run-rate synergies.

General Insurance net premiums were up 15% in 2016, new business from Life Insurance was worth GBP1.35 billion after rising 13%. And it acquired RBC General Insurance (RBCI), increasing its scale and strengthening distribution in the attractive Canadian general insurance market.

He added: "Aviva's financial position has been transformed and a distinctly stronger balance sheet and excess capital give Aviva more options".

That gave a surplus of 11.3 billion pounds, up from 9.7 billion pounds past year, and as it is above the firm's flagged range of 150-180 percent, Aviva said it was "actively planning to return additional capital to shareholders and reduce hybrid debt in 2017".

"Aviva's results are simple and clear-cut: more operating profit, more capital, more cash, more dividend".

"The numbers speak for themselves".

Group operating profit, excluding exceptional items, was up 12% in 2016 to £3 billion, with chief executive Mark Wilson touting Aviva Investors - its asset management business - as one of the key contributors in its full-year results released today. We will maintain our focus on simplifying the group, further strengthening core businesses and growing operating profits and dividends. "We are becoming a digital disruptor for the benefit of our customers".

  • Zachary Reyes