7th Mar 2019 07:51
LONDON (Alliance News) - Aviva PLC on Thursday reported a rise in operating profit, a key financial measure for the firm, and hiked its dividend but changed its payout policy in order to give new Chief Executive Maurice Tulloch flexibility to put his stamp on the company.
Aviva hiked its final dividend by 9.2% to 20.75 pence per share, leading to a 9.5% bump in its total dividend to 30.0p from 27.40p the year before.
Moving forward, Aviva said it is moving to a progressive dividend policy from its current policy of targeting a payout of 50% of earnings per share. Aviva said the new policy will afford new Chief Executive Maurice Tulloch "greater flexibility" to implement his own strategy.
Pretax profit slipped to GBP1.65 billion from GBP2.37 billion. The general insurer's operating profit increased 1.6% to GBP3.12 billion, slightly ahead of consensus GBP3.10 billion.
Aviva's core business, Life Business, saw its operating profit increase 5.3% to GBP3.00 billion from GBP2.85 billion.
Gross written premiums totalled GBP28.66 billion in 2018, up 3.8% from GBP27.61 billion in 2017, with net earned premiums increasing 4.1% to GBP26.25 billion from GBP25.22 billion.
Aviva reported a flat combined ratio of 96.6%. A ratio below 100% indicates that the company is making underwriting profit, while a ratio above 100% means that it is paying out more money in claims that it is receiving from premiums.
Aviva's combined ratio was slightly behind consensus of 96.8%.
Its Solvency II cover ratio rose to 204% from 198% the year prior. Aviva's capital surplus decreased to GBP12.0 billion from GBP12.2 billion the year before.
"We increased profit in the UK, where we won more workplace pension schemes and bulk annuity deals, and across our international businesses, where we expanded and diversified our distribution. Aviva Investors had a more challenging year due to difficult investment markets and we have continued to invest in our asset management expertise," said Chair Adrian Montague.
Aviva's net written premiums in the UK increased 2.7% to GBP4.19 billion with operating profit rising 7.4% to GBP2.32 billion.
"I am excited to be taking over as CEO of Aviva. We have strong foundations but we are only scratching the surface of our full potential. There's a huge opportunity here. At the heart of it, it's all about insurance fundamentals, delivering excellent customer experience, tackling complexity and injecting a different pace of change into Aviva. And that will be just the start. I am determined to re-energise Aviva and deliver long term growth for our shareholders," said Chief Executive Maurice Tulloch.
Aviva veteran Tulloch replaced Mark Wilson, who led Aviva from 2013, on Monday. Tulloch has been at Aviva since 1992, holding several senior positions, most recently as head of its International Insurance arm.
Montague added: "Looking forward, our capital management plan will prioritise debt reduction for the foreseeable future. We plan to reduce debt by at least GBP1.5 billion by the end of 2022, saving approximately GBP90 million per year in interest expenses. This builds on the GBP1.4 billion of debt repaid over the past two years and will further enhance our financial flexibility."
Related Shares:
Aviva