Aviva plc: 2014 Interim Results Announcement

LONDON, UNITED KINGDOM--(Marketwired - Aug 7, 2014) - Aviva PLC (LSE: AV) (NYSE: AV)

Mark Wilson, Group Chief Executive Officer, said:

"The half year results show that momentum in Aviva's turnaround continues. All of our key metrics have improved, operating earnings per share are up 16%, and book value has increased 7%.

"We have reduced our debt, decreased expenses and increased profit - this is just good business. Aviva remains a work in progress, and these results are a step in the right direction."

Cash flow

• Cash remittances up 7% at £612 million (HY13: £573 million)
• Operating capital generation¹ stable at £910 million (HY13: £933 million²)
• Interim dividend per share up 4.5% at 5.85p (HY13: 5.60p).

Profit

• Operating profit¹ 4% higher at £1,052 million (HY13: £1,008 million)
• Operating EPS¹ 16% higher at 23.6p (HY13: 20.3p)
• IFRS profit after tax¹ up 113% at £863 million (HY13: £406 million) due to lower restructuring costs and positive investment variances

Expenses

• Operating expenses^1,3 £1,399 million, down £129 million (HY13: £1,528 million)
• Expense reduction equivalent to £568 million annualised savings vs. £400 million target
• Operating expense ratio¹ of 52.1% (HY13: 54.8%)

Value of new business

• Value of new business⁴ up 9%⁵ at £453 million (HY13: £428 million²)
• Poland, Turkey and Asia⁴ grew 54%⁵ and contributed 25% of Group VNB (HY13: 19%)

Combined operating ratio

• Combined operating ratio (COR) improved to 95.5% (HY13: 96.2%)
• UK COR of 94.3%, best in 7 years

Balance sheet

• IFRS net asset value per share up 7% at 290p (FY13: 270p)
• MCEV net asset value per share up 3% at 478p (FY13: 463p²)
• External leverage ratio 46%⁶ of tangible capital (FY13: 50%), 30% on S&P basis
• Intercompany loan reduced to £3.6 billion at end of July 2014 (Feb14: £4.1 billion)
• Economic capital surplus⁷ £8.0 billion (FY13: £8.3 billion), coverage ratio 180%

¹ On a continuing basis, excluding US Life.
² Comparatives have been restated to reflect the changes in MCEV methodology. See F1 - MCEV Basis of Preparation for further details.
³ Operating expenses excludes integration and restructuring costs.
⁴ Poland includes Lithuania, Italy excludes Eurovita, Spain excludes Aseval and Asia excludes Malaysia.
⁵ On a constant currency basis.
⁶ External leverage ratio excludes the impact of the debt raised in July 2014.
⁷ The economic capital represents an estimated position. The economic capital requirement is based on Aviva's own internal assessment and capital management policies. The term 'economic capital' does not imply capital as required by regulators or other third parties.

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