Aviva reported a 24% rise in first-half operating profit and lifted its dividend, as its acquisition of Direct Line and strong growth in general insurance powered earnings.
The insurer said operating profit rose to £1.33bn in the six months to 30 June, from £1.07bn a year earlier, with operating earnings per share up 10% to 31.8p and return on equity climbing to 20.3%.
Income investors will be pleased to see Aviva raise the interim dividend 7% to 14.0p.
“Aviva has delivered an impressive first half, with profit, cash generation and underwriting all ahead of expectations,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“General Insurance is growing while margins improve, which is the combination investors want to see, and Direct Line is already adding scale and profitability. Wealth was another standout, with strong flows into workplace pensions and the adviser investment platform. Even lower bulk annuity volumes look deliberate rather than concerning, with Aviva prioritising attractive returns over market share.”
General insurance premiums were up 29% to £8.1bn while UK and Ireland premiums jumped 42%, boosted by the Direct Line deal.
Aviva’s wealth arm saw net inflows rise 32% and assets under management climb to £261bn.
Aviva, now the UK’s largest insurer with more than 25 million customers globally, said the Direct Line integration was going well, with £100m of annual cost savings already banked and the acquired business returning to growth in motor.
There wasn’t a spectacular market reaction to results, with shares just 0.5% higher at 717p at the time of writing. But the stock has rallied from 600p to above 700p in short order, and is 5% higher on the year.