Aviva's (AV.) shares rose by around 7 per cent on the back of these half-year figures after the life assurer reported a 5 per cent rise in half-year operating profit to £1bn. But that substantially reflected lower costs alongside a performance that chief executive Mark Wilson described as merely "satisfactory" - leaving the share price upswing looking like a relief rally.
Mr Wilson, who took the helm in January, did reduce group operating expenses by 9 per cent. The heavy intercompany debt burden was also cut, by £700m to £5.1bn. But Aviva's performance looked lacklustre - new business volumes (on an annual premium equivalent basis) in the UK and Ireland, for example, fell 16 per cent. Moreover, Mr Wilson described Aviva's performance in Spain and Italy as "far from satisfactory", with the value of new business (reflecting likely future cash flow from existing policies) having slumped 38 per cent and 57 per cent, respectively, in the two countries.
Meanwhile, claims relating to flooding in Canada led to a deterioration in the general insurance arm's combined ratio (of claims to premiums) of nearly a percentage point to a still profitable 96.2 per cent.
Prior to these figures, JPMorgan Cazenove was expecting full-year EPS of 43.2p (from a 109p loss in 2012) and embedded value of 486p a share.
AVIVA (AV.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 396p | MARKET VALUE: | £11.7bn | |
| TOUCH: | 395.9-396p | 12-MONTH HIGH: | 399p | LOW: 293p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | NA | |
| NET ASSET VALUE: | 288p* | EMBEDDED VALUE: | 441p | |
| Half-year to 30 Jun | Gross life premiums (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 11.8 | 309 | 1.0 | 10.0 |
| 2013 | 11.5 | 605 | 10.2 | 5.6 |
| % change | -3 | +96 | +920 | -44 |
Ex-div: 09 Oct Payment: 15 Nov *Includes intangible assets of £2.6bn, or 88p a share | ||||
