Aviva share price rises as it unveils 20 per cent profit boost and hikes dividend after Friends Life buyout
What floods? Insurer Aviva said it was hiking its dividend after it completed its acquisition of Friends Life ahead of schedule.
The figures
Operating profits rose 20 per cent to £2.7bn in 2015, Aviva said this morning – seven per cent ahead of analyst expectations of £2.5bn. That allowed it to hike dividend by 15 per cent to 20.8p. Nice.
The company said the integration of Friends Life after its £6bn acquisition had gone "faster and better than expected" – and it expected to achieve its target of £255m savings this year, a year ahead of schedule. It's already made £128m of savings, it added.
For the first time ever, it unveiled its Solvency II capital ratio – the amount of capital it has to hand as a proportion of the minimum required by new Solvency II rules – was 180 per cent, at the "top end of our working range".
The company was among the FTSE 100's biggest risers on a disappointing day: its shares finished risers in mid-morning trading, with shares jumping 1.35 per cent higher, at 465.8p.
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Why it's interesting
Aviva shares have been buffeted by market volatility in recent months – and strong winter storms over the Christmas period didn't help. Last week, the company warned floods had damaged its earnings to the tune of £100m.
But the swift integration of Friends Life looks like it has saved the day: back in October chief exec Mark Wilson said the acquisition was "everything we expected it to be" – and it is continuing to bear fruit.
The company said today it had "successfully navigated" turbulent external conditions, and had delivered a "stronger, cleaner balance sheet".
Analysts were also impressed. Hargreaves Lansdown investment analyst Charles Higgins said shareholders "can feel the benefit of having a simpler group, with fewer, but larger operating units and product strategies that meld with consumers' increasing desire to transact financial services digitally".
What Aviva said
Chief executive Mark Wilson said:
2015 was about stability and growth at Aviva, against a background of market volatility and uncertainty. Aviva is now a stronger and more focused business. We have completed the fix phase of our transformation.
In short
The company may be nearing the end of its transformational period – and it's looking like it'll emerge a leaner, meaner, better-oiled machine.