Aviva boosts payout target

Indeed, cash generation increased by a third to £2.4bn. That was thanks mostly to its UK business, which extracted a further £500m from integrating Friends Life, while the core UK insurance operations grew operating profits 15 per cent. And despite a reduction in the value of new business, long-term savings benefited from a rise in assets under management. That progress was mirrored in workplace pensions, although new business mandates here acted as a catalyst, boosting assets in its adviser platform by more than half. The value of new annuities and equity release business increased by the same proportion, after the business completed bulk annuity deals worth £2bn, treble the previous year. And despite lower prior year releases, general insurance managed its best underwriting result in more than a decade.

The group disposed of three European businesses, which dampened life operating profits on the continent. However, France and Poland grew life operating profits by 8 per cent. The European combined ratio – of claims to premiums – improved by 2 percentage points to 93 per cent, but Canada let the side down on that basis, with its combined ratio swinging to a lossmaking 102 per cent, which was partly due to an increase in weather-related claims.  

Aviva Investors generated a 14 per cent uplift in fee income, as £14bn in Friends Life assets were transferred, thereby expanding assets in its flagship multi-strategy funds by 40 per cent. Overall, external net inflows were £1.2bn, which along with market returns took assets under management up a mediocre 3 per cent to £353bn.

Analysts at Goldman Sachs expect adjusted pre-tax profit of £3.1bn during the 12 months to December 2018, giving EPS of 55.2p.