The U.K.’s largest insurer, Aviva Plc reported strong first half results with worldwide operating profit up 21 percent to 1.318 billion pounds ($2.38 billion), compared to 1.076 billion pounds ($1.94 billion) in the first half of 2004. The record earnings exceeded most analysts’ forecasts.
Aviva also announced the retirement of Board Chairman Pehr Gyllenhammar who has served in the position since the 2000 merger between Norwich Union and CGU created Aviva. Lord Colin Sharman of Redlynch, OBE, currently chairman of Aegis Group plc., will succeed him.
Other earnings highlights included the following:
— Life operating profit up 5 percent to 857 million pounds [$1.55 billion], with more than 60 percent coming from businesses outside the UK;
— Group margin up at 3.6 percent (2004: 3.5 percent);
— Strong long-term savings sales growth, up 13 percent to 12.078 billion [$21.8 billion], with bancassurance a major driver for growth in continental Europe and Asia;
— Sustained excellent general insurance performance, with general insurance and health profits up 18 percent to 694 million pounds[$1.25 billion), and worldwide combined operating ratio ahead of target at 95 percent (2004: 97 percent)
— Strong performance from fund management with profits up 94 percent to 33 million pounds [$59.5 million] (2004: 17 million pounds [$30.6 million]) and assets under management up to over 290 billion pounds [$523 billion] (31 December 2004: 280 billion pounds [$505 billion])
— Interim dividend increased by 5 percent
Group CEO Richard Harvey commented: “”This is a very good set of results, delivered by managing our business for value. Our balanced international portfolio of life and general insurance businesses has enabled us to sustain real growth momentum.
“We’ve delivered strong and profitable life growth, reaping the benefit from our growing position in continental Europe and managing our UK business for profit. In Asia we continue to develop our footprint for the long-term with new distribution in India and access to new regional centres in China.
“In general insurance, we’ve delivered another excellent result, once again delivering strong and resilient returns. Our integration of RAC in the UK is moving quickly and we are on track to deliver our targeted cost savings for 2006. Our shareholders continue to see healthy dividend growth, backed by strong statutory profits. Our continuing aim is profitable growth in all our businesses.”
Gyllenhammar was first appointed to the board of Commercial Union in 1997, becoming chairman in 1998. He chaired Commercial Union during its merger with General Accident in 1998 to form CGU and following CGU’s merger with Norwich Union in 2000, became Board Chairman of Aviva. He will retire from the board at the end of the year.
Lord Sharman, 62, joined the Aviva board in January 2005. “He has wide international experience gained largely through his career at KPMG where he became chairman of KPMG International before his retirement in 1999,” said the announcement. “In addition to his post at Aegis Lord Sharman is an independent non-executive director of BG Group plc and Reed Elsevier plc and a member of the supervisory board of ABN AMRO NV. He is currently deputy chairman of Group 4 Securicor plc and will retire from this role later this year, as previously announced.”
Commenting on Lord Sharman’s appointment, Gyllenhammar stated: “Colin has an outstanding track record in international finance. The board and I are confident that a combination of his wide-ranging experience and Richard Harvey’s proven leadership skills will ensure that a first rate team is in place.”
Lord Sharman responded that he is “delighted to have been asked by the Aviva board to become the Group’s chairman. It’s a company with drive, ambition and the highest standards of professionalism. I am looking forward with much enthusiasm to contributing to Aviva’s continued growth.”
Harvey noted: “Aviva’s industry position owes much to the vision of Pehr Gyllenhammar in bringing together businesses to form what we know today as Aviva. I have valued the support Pehr has given me personally during this time and I, together with my colleagues at Aviva, wish him well for the future. We are fortunate in having Colin as our next chairman and are delighted to be able to work with him on the next phase of Aviva’s development.”
The Group’s complete financial results and additional commentary may be obtained on its Website at: http://www.aviva.com.
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