Life insurance giant Aviva (AV.) leaps 7.3% to 500.5p on its return to profit in 2013 after losing £2.9 billion in 2012.

The FTSE 100 member made £2.1 billion before tax in 2013 – 3% ahead of consensus – and collected 40% more cash to almost £1.3 billion. A 7% cut in costs and a 12% rise in new business to £835 million were contributing factors.

The figures justify Mark Wilson’s plan to turnaround the struggling pensions and protection specialist after he was named chief executive officer early last year. He replaced Andrew Moss who was ousted by his shareholders following the group’s poor performance, which saw it loss some 60% of its value.

Wilson has cut some 2,000 jobs, sold under-performing assets and re-based the dividend. Indeed, shareholder returns were 21% lower than the 15p a share it paid in 2012.

Web - Aviva - 6 March 2014


The turnaround strategy does not end here. Wilson intends to use big data to improve the group’s analytics, will reduce its £4.1 billion debt pile to £2.2 billion in the next two years and grow its digital business, while looking to boost its flagging Italian and Spanish businesses.

Panmure analyst Barrie Cornes welcomed the group’s plan to cut its liabilities. ‘We view this has hugely significant for Aviva and as a consequence, combined with better than anticipated results we upgrade to buy from hold and increase our target price to 540p per share from 440p.’

The group has, as expected, endured a difficult start to 2014. The floods that hit parts of England at the start of the year have sliced £60 million off its profits.

Issue Date: 06 Mar 2014