Aviva said that the operating profits in life insurance and asset management declined due to challenging market conditions and the absence of a longevity reserve release
Image: Aviva head office in London. Photo: Courtesy of Aviva plc.
British general insurer and life and pensions provider Aviva has reported a mixed performance during the first half of 2019.
The company recorded a 1% increase in operating profit at £1,448m in the first half of 2019, compared to £1,438m in the first half of the previous year.
Releasing the interim results for the first half of 2019, Aviva CEO Maurice Tulloch said that the company recorded profit after tax under the International Financial Reporting Standards (IFRS) of £1,180m in the period under review, compared to £376m in the corresponding period of 2018.
Operating earnings per share (EPS) increased by 2% to 27.3 pence from 26.8 pence in the first half of 2018, while basic EPS rose by 3.6 times to 28.2 pence, compared to 7.9 pence in the corresponding period of the previous year.
The company’s board has declared an interim dividend of 9.50 pence per share, an increase of 3%.
Aviva has recorded a marginal decline in solvency cover ratio
During the first half of 2019, Aviva maintained a Solvency II surplus at £11.8bn, compared to £12bn in the first half of 2018.
The company aid that the solvency cover ratio declined by ten percentage points to 194% (204% in 2018) mainly due to a decline in interest rates, with the UK and European 10-year swap rates falling by 0.39% and 0.64%, respectively.
Aviva recorded operating capital generation of £0.8bn during the first half compared to £0.9bn in the first half of 2018.
However, IFRS net asset value per share increased to 432 pence, compared to 424 pence in the corresponding period of 2018.
The company’s cash remittances increased to £1,582m in the first half of the current year, compared to £1,493m in the first half of 2018 due to changes in the timing of dividend payments from various business units.
Tulloch said: “Aviva has strong foundations to build upon but there is much to do to improve our performance.
“Our performance is mixed, with operating earnings per share up 2%. We have delivered strong general insurance results with a combined ratio of 95.9%. In life insurance and asset management, operating profits declined due to challenging market conditions and the absence of a longevity reserve release.
“I am working with the Board to refresh Aviva’s strategy and we have decided to review the strategic options for our Asian businesses. Aviva’s businesses in Asia have excellent growth and earnings potential and we are considering a range of options to help these businesses reach their potential.”