Aviva beats expectations

However, that better than expected outcome also reflected a strong general insurance performance. Despite the impact of UK flooding, and a £40m hit from harsh winter weather in Canada, the unit’s operating profit - at £403m - beat analysts’ expectations by around 8 per cent. Indeed, the unit’s overall combined ratio (of claims to premiums) improved by 0.7 percentage points to a solidly profitably 95.5 per cent.

But while the value of new business (VNB) at the life operation rose 9 per cent, Aviva has been hit by the Budget day decision to scrap the compulsory purchase of individual annuities. Annuity VNB actually slumped 41 per cent, which drove a 21 per cent fall overall in the UK life unit's VNB. Moreover, Aviva has only been partially able offset that by picking up more bulk annuity business.

Still, chief executive Mark Wilson reckons that Aviva’s diversified product range - in such areas as equity release - has kept the annuity-related impact “to less than 4 per cent of operating profit”. And the overseas life operations are growing fast. In France, for instance, VNB rose 27 per cent, while in Asia it rose 76 per cent (in constant currency terms). But Aviva’s international presence remains modest: Asia, for instance, generated an operating profit of just £35m.

Progress has also been made with reducing intercompany debt. That had ballooned to worrying proportions after years of using capital generated in one part of the group to finance activity elsewhere. The balance fell to £3.6bn - from £5.8bn in early 2013 - and should drop to £2.2bn by end-2015.

JP Morgan Cazenove expects adjusted full-year EPS of 46.5p and adjusted embedded value of 450p a share (from 60p and 418p in 2013).