Insurer Aviva raises dividend after jump in half-year profit

[LONDON] British insurer Aviva raised its interim dividend on Thursday (Aug 14) after reporting a 22 per cent jump in half-year operating profit, driven by strong growth in general insurance premiums and inflows into its wealth business.

Aviva, which closed a £3.7 billion (S$6.43 billion) takeover of smaller rival Direct Line in July, gave the first insight into its performance, including that premiums were flat and the number of policies fell in the half-year period.

“This is exactly as we expected,” Amanda Blanc, CEO of Aviva told reporters. She said the FTSE 100 company would provide more details on the acquisition in November.

Direct Line cost-cutting had helped it to increase its margin, CFO Charlotte Jones said.

“Aviva’s recent run of success appears to have continued,” analysts at Jefferies said in a note, adding that they were encouraged by the margin improvement at Direct Line.

Aviva said it expected some areas of rate softening in the second half of the year for its general insurance business, but it expected more growth at its wealth and health divisions.

The insurer also sees a potential slowing in the pension buy-out market, after companies offloaded £45 billion worth of pension pots to insurers last year, a key revenue driver for the industry.

“Given the exceptional market conditions in 2024, those volumes may not be repeated,” the company said.

Aviva struck £2 billion worth of pension buy-out deals in the first half, down on £2.3 billion the prior year, although this rose to £3.1 billion after the period-end.

“Whilst the bulk (pension buy-out) market is important to Aviva… it’s not everything,” Blanc said, adding it would benefit from being a diversified business.

Aviva posted an operating profit of £1.07 billion for the six-month period ended June 30, compared with the £875 million it reported for the year-earlier period.

The insurer raised its dividend by 10 per cent to 13.1 pence per share. REUTERS