8th Mar 2018 08:05
LONDON (Alliance News) - Aviva PLC hiked its dividend and said it planned further shareholder returns Thursday after reporting profit expanded significantly on the back of written premiums growth despite its combined ratio weakening slightly during the year.
In 2017, pretax profit widened by a third to GBP2.4 billion from GBP1.8 billion the year prior. Gross written premiums advanced 8.5% to GBP27.61 billion from GBP25.44 billion the year before. Net earned premiums also advanced 10% to GBP25.22 billion from GBP22.87 billion.
Aviva reported its combined ratio weakened to 96.6% from 94.2%. A figure below 100% shows the FTSE 100-listed insurer was making a profit from its underwriting.
Its Solvency II cover ratio, however, rose to 198% from 189% the year prior. This is after its capital surplus grew to GBP12.2 billion from GBP11.3 billion the year before.
Aviva hiked its final dividend 20% to 19.00 pence per share from 15.88p the year prior. For the full year, its dividend was improved 18% to 27.40p from 23.30p the year before.
"In 2017, Aviva delivered growth in profits, in dividends, in capital and in cash," Aviva Chief Executive Officer Mark Wilson said. "Aviva grew operating earnings per share by 7% and our full year dividend by 18%, the fourth consecutive year of double-digit dividend growth."
"Our largest market, the UK, has gone from strength to strength, growing sales, market share and profit. For Aviva, the UK is a dependable and growing business," Wilson added. "Aviva has broad-based growth, with six of our eight major markets delivering double-digit profit improvement. We now have a collection of strong and growing businesses."
"This year," Wilson continued, "we expect to deploy GBP2 billion of excess cash, including GBP900 million in debt reduction, in excess of GBP500 million of capital returns to shareholders and about GBP600 million for bolt-on acquisitions."
In particular, Wilson explained the company was looking to target expensive hybrid debt in its debt reduction plan. Of the GBP600 million to be spent on acquisitions, GBP130 million has already been allocated to its Friends First acquisition in Ireland.
Capital returns will be delivered either through buybacks, special dividends or liability management.
"We continue to invest in our businesses and in particular on priorities such as digital to make our products and services easier for our customers," Wilson continued. "Aviva is now a simpler, stronger group and we are growing. Our strategy is paying dividends."
Aviva share were down 2.5% at 494.75 pence at the open on Thursday.
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