Aviva operating profits on rise

Aviva has pledged to hand more cash to shareholders after announcing a hefty jump in profits despite taking a hit from UK government changes to personal injury claims.

The insurance giant cheered a 12 per cent rise in operating profits to £3.01 billion for the year ending in December, as it saluted a “breakout year” for its fund management arm.

Aviva Investors’ assets under management grew by close to a fifth at £345 billion, with fund management operating profits climbing 32 per cent to £139 million.

Net written premiums in the general insurance business lifted by 15 per cent to £8.21bn, while the value of new businesswithinlifeinsurancerose 13 per cent to £1.35bn.

It came as the insurer said it would suffer a £380m blow from the government’s proposed changes to the Discount Rate calculation, which is expected to increase payments given to victims of lifechanging injuries through medical negligence, car crashes and other incidents.

Chief executive Mark Wilson said the firm was now tightening its focus on driving down debt and investing in growth.

“Aviva’s results are simple and clear-cut: more operating profit, more capital, more cash, more dividend. And there is more to come,” he said.

“Aviva’s financial position has been transformed and a distinctly stronger balance sheet and excess capital give Aviva more options. We are now actively planning a capital return to our shareholders and debt reduction in 2017 and will invest further to grow our businesses.”

The insurer said it had beaten its cost-savings target one year ahead of schedule following its £5.6bn merger with Friends Life in April 2015. It has secured £270m in run-rate synergies following the tie-up.