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Aviva up 5% on opening following best results in years

10th March 2016 Print

As Aviva reports its full year results Helal Miah, investment research analyst at The Share Centre, explains what they mean for investors.

“This morning, life insurance company Aviva reported a good set of full year results which pleased the market, with the shares rising 5% in early morning trade. The group’s operating profits rose by 20% to £2.7bn which investors should acknowledge was ahead of expectations. Furthermore, despite the volatile market conditions the ratio of insurance pay-outs to premiums fell to 94.6%, the best in nine years.

“Management have said that the company has completed the fix phase of its transformation, reporting good Solvency II ratios with a surplus of £9.7bn and a strong balance sheet. The group also reported that the investment management business grew profits by 33% despite volatile market conditions. Investors should also note that the acquisition of Friend’s Life has progressed well with cost synergies so far coming in earlier than expected. Aviva expects the merger to deliver £1.2bn of capital benefits over the next three years.

“These numbers demonstrate that the transformation of the group is progressing well. We have a high degree of faith in the company’s recovery outlook and the recent hike in the dividend now also makes Aviva look very attractive for income investors. Subsequently, we recommend Aviva as a ‘buy’ for investors seeking a mixture of growth and income and willing to accept a medium level of risk.”