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Profits at Aviva rose by a fifth last year, boosted by a jump in income from insurance premiums, as the FTSE 100 group prepares to complete its £3.6bn takeover of smaller rival Direct Line.
The UK insurer reported adjusted operating profits of £1.77bn for the year to the end of December on Thursday, compared with analyst expectations of £1.7bn.
The uptick followed a 14 per cent rise in general insurance premiums, to £12.2bn, while Aviva’s wealth business took in £10.3bn of net inflows — up 23 per cent year on year. Shares in the group rose 1.6 per cent in early trading on Thursday.
The update comes after Aviva agreed to buy rival Direct Line in December, in a tie-up set to dominate the motor and home insurance markets in the UK. On Thursday Aviva said the transaction, which still needs regulatory sign-off and approval from the shareholders of Direct Line, was “on track”, and expected to complete in the middle of this year.
Aviva has previously said that it could save £125mn annually, pre-tax, within three years of completing the takeover. It expects to shed up to 2,300 jobs as a result of the takeover. On Thursday, it said further “material” cost savings would emerge over time.
The insurer confirmed its target to deliver £2bn operating profit by 2026, but said it would revisit that target once the Direct Line acquisition was completed. It added that buybacks, paused this year while the deal is completed, would resume next year.
