Aviva reports 40% profit increase

AVIVA Ireland said it is satisfied with the rate at which premiums are set and said it is not concerned with cost-cutting measures.

Ireland’s largest insurer indicated it is not planning any insurance premium hike in the coming months, with chief executive Jim Dowdall saying the main focus for the company is to remain competitive.

In the first six months of this year Aviva Ireland reported a 40% year-on-year increase in operating profit to €115 million.

It said this was driven by the strength of its composite model, portfolio growth, and a one-off benefit from more efficient use of capital.

The results, however, were partly offset by claims resulting from weather events, with the insurer expecting to pay out a total of €100m as a result of the flooding and the big freeze.

Mr Dowdall said he is “very pleased” with overall operations in Ireland, adding that the company has seen a good start to the year.

“Strong and sustainable growth across our portfolio allied with continued focus on cost management and efficient use of capital has contributed to a strong set of results,” said Mr Dowdall. He said the life and pensions business delivered market share growth and its health insurance business has 280,000 members.

“Our strong results are proof of the strength of our model and our multi-channel distribution strategy. This strategy has proven to be particularly resilient given the significant turbulence in both the wider economy and the insurance markets we operate in,” he added.

Over the next six months, Aviva Ireland plans to achieve growth through new products in the protection and pensions area.

“We are well placed to further strengthen our business here in Ireland and to support Aviva Europe’s strategy to become the indisputable leader in every market where we operate,” said Mr Dowdall.

On a group level, it reported that operating profit increased by 21% to £1.27 billion (€1.52bn), beating the £1.17bn estimate of six analysts surveyed by Bloomberg. Net income rose to £1.08bn from £675m a year earlier.

Aviva increased its first-half dividend by 5.6%, to 9.5 pence a share.

“The macroeconomic environment will probably remain challenging, but what happens to you in those times is people respond by being more provident, more cautious, saving more money and we will be the beneficiary of that,” Aviva group chief executive officer Andrew Moss said.

“These are great numbers, ahead of expectations,” said Eamonn Flanagan, a Liverpool, England-based analyst at Shore Capital Group with a “buy” rating on the stock.

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