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Business News

Aviva shares are leaping after it doubles profits

Aviva's straight-talking boss Mark Wilson won a few more friends in the City yesterday as signs of his company's turnaround finally began to show.

The shares jumped to their highest level for two years after the insurer announced it had doubled its pre-tax profit from £309m last year to £605m during the six months ending June 30.

Aviva shares rose 28.2p to 399p, leaving it at the top of the Footsie leaderboard.

Cash flows to the group increased by 30 per cent to £573m in the period although it lowered its dividend by 44 per cent to 5.6p, in line with the cut made at its full-year results in March.

Mr Wilson was philosophical about the performance, which was helped by a strong showing from Aviva's businesses in the UK, Poland and Turkey offsetting weaker areas like Ireland and Italy.

"I want Aviva to be as precise as a Swiss clock – we're not there yet but we're making progress," Mr Wilson said.

Aviva, formerly known as Norwich Union in the UK, parted ways with its former chief executive Andrew Moss last year following an embarrassing revolt over pay at its 2012 annual meeting.

Since then the group has outlined plans to exit underperforming businesses, cut 2,000 jobs and take out £400m in costs.

Mr Wilson hinted there may be truth in rumours that Aviva could pull out of India, where it has a joint venture with Dabur Group, thought to be worth some $500m.

Chatter in the City suggests the company is on the lookout for buyers for its 26 per cent stake in Aviva Life, as the venture is known.

"We never comment on market speculation," he said, before adding: "We will be watching with interest what India does in terms of raising foreign ownership caps from 26 per cent to 49 per cent."

The half-year update was given the thumbs-up across the square mile.

Barrie Cornes, analyst at Panmure, said: "A big positive was the reduction in internal debt from £5.8bn at the end of the year to £5.1bn.

"With all key metrics at or slightly above consensus we anticipate the results will be taken well."

Standard Life's overseas lift

Standard Life said its fund management business posted third-party net inflows of £7.1bn in the first half yesterday, with 51 per cent from overseas.

David Nish, the company's chief executive, said: "Excellent investment performance has driven exceptionally strong net inflows and the team continue to innovate, develop and launch new products."