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Aviva Plc Interim Results Statement

Aviva plc (NYSE:AV):
Strong operating performance
  • Total operating profit up 5% to £1,337 million (HY10: £1,270 million); up 13% excluding impact of £84 million special distribution benefit in 2010
  • Operating profits in Europe up 21% to £525 million despite financial and economic difficulties in the eurozone
  • Operating earnings per share increased to 29.1 pence; total earnings per share of 4.1 pence are lower primarily as a result of unrealised Delta Lloyd investment variances
  • Pro forma MCEV NAV, including the impact of the sale of RAC, up 33 pence from FY10 to 575 pence per share at HY11
  • Group return on equity strong at 12.8% (FY10: 14.8% on a lower equity base)
  • 5% increase in interim dividend to 10 pence
Beating targets
  • 14% life insurance new business internal rate of return (IRR), against a target of 12%*
  • 96% group combined operating ratio (COR), against a target of 97%*
  • £0.8 billion net operational capital generation in H1 towards the £1.5 billion FY11 target; now targeting between £1.5 billion and £1.8 billion in FY11
  • On track to deliver £400 million cost and efficiency savings by FY12
Leaner and fitter
  • Significant strategic delivery and strengthening of the balance sheet provide platform for further growth:

    – Sale of RAC at 17x earnings for £1 billion will realise significant shareholder value

    – Reduced shareholding and deconsolidation of Delta Lloyd raising £0.4 billion and further de-risking our balance sheet

    – Pro forma economic capital surplus, including the impact of the sale of the RAC, up 23% at £6.9 billion (FY10: £5.6 billion)

* Excluding Delta Lloyd

Andrew Moss, group chief executive, commented:

“This has been a successful six months. We are beating all our operational targets. Operating profits rose in the UK and have increased by 21% in Europe despite tough economic conditions.

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