The market gave a warm welcome to management?s progress in reviving the fortunes of insurance giant Aviva (AV.) following its £3 billion taxable loss last year. The group traded 6.3% higher to 394.3p after posting positive interim figures.

Web - Aviva - 8 Aug

A cost-cutting drive at the FTSE 100 member helped its pre-tax profits almost double (95.8%) to £605 million year-on-year, despite a 3% drop in turnover to £11.4 billion. The group is also generating more cash. It collected £936 million in the six months to July, compared to £906 million a year earlier.

The £876 million write down on the sale of its US business was a major factor in 2012?s huge losses prompting a cut in the dividend and March?s share price slump. Concerns over performance and the level of executive pay saw shareholders force out chief executive Andrew Moss.

Mark Wilson joined from rival insurer AIA (1299: HK) in January and stepped up the group?s turnaround strategy, which included cutting some 2,000 jobs, disposing of underperforming assets and the difficult decision to rebase the dividend with the final payout reduced to 9p from 16p.

Wilson used today?s interims to further massage down expectations for the dividend slashing the half-year payout to 5.6p per share compared to 2012?s 10p. This is in contrast to rival insurer Standard Life (SL.) which has maintained a progressive dividend policy.

The Edinburgh-based insurer has also suffered from low investment returns but boosted the interim dividend by 6.5% to 5.2p, the same rise it made at the half way point in 2012.

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Issue Date: 08 Aug 2013