Aviva Plc, the UK’s second largest insurer had a big first half of the year. Its profit is up 21%, beating analysts expectations and surpassing 1.27 billion pounds in operating profit.
Bloomberg surveyed analysts were projecting Aviva to report somewhere around 1.7 billion pounds for the H1. Instead, they added almost 10% to that figure. Aviva also reported net income rose to 1.08 billion pounds compared with 675 million pounds at the same time last year.
Chief Executive Officer Andrew Moss said: “Aviva grew sales for third consecutive quarter and improved the group’s margin. We remain alert to the macroeconomic environment and risks in financial markets.”
Aviva is looking to raise its dividend after a 33 per cent cut last year. The plan is to increase sales of life and pension products in Europe. By selling products with fewer guarantees to customers, it can reduce the amount of capital its required to hold in reserve. The funds can in turn be used to raise dividend amount.
They have risen 12 per cent in the past three months alone. In doing so, Aviva is at the top of the risers list in the FTSE ASX Life Insurance Index. Investors estimated they would raise their dividends.
Aviva raised its H1 payout from 9 pence a share last year, to 9.5 pence per share this year. In comparison, the six month dividend was 13.1 pence in 2008.
Profit margins for the group have increased from 2.1% to 2.4%, “largely due to improvements in the UK,” Aviva said.
The rival of Aviva, Legal and General, raised its dividend yesterday 20% as it beat the analysts estimates. The two predominant reasons are higher earnings from annuities and increased sales at its fund management division.