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Aviva posts rise in operating profits

8th Mar 18 10:22 am

But concerns remain 

Aviva saw operating profits rise 2 per cent in 2017 to £3.1bn, driven by exceptional gains in life insurance and fund management businesses.

The board has announced a final dividend of 19p per share, taking the full year payment to 27.4p, an 18 per cent increase on last year.

The shares fell 2.4 per cent in early trading.

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:

“There are some good things in Aviva results. Rapidly growing general insurance premiums, increasing scale at Aviva investors and new business growth in life insurance. Substantial cash generation means the group is well capitalised and can afford to splash on more bolt-on acquisitions, reduce debt and make significant returns to shareholders. An 18 per cent increase in the dividend is not to be sniffed at.

However, it’s not all plain sailing. Underwriting performance has deteriorated somewhat (driven by poor performance in Canada) and Life expenses are climbing sharply.

Mark Wilson’s move to simplify Aviva has done wonders. However, with the ground work now complete the next job is to prove a slimmed down diversified insurer can deliver long term growth as well as cash today. The group’s targeting over 5 per cent earnings growth a year from 2018, if that’s deliverable there’s scope for the already sizeable 5.8 per cent dividend yield to swell over the years to come.”

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