Insurance giant Aviva reported better than expected annual profits and confirmed plans to axe around 1,500 jobs when it completes its £5.6bn takeover of rival Friends Life.
Aviva, which employs 2,000 people in York and 1,300 in Sheffield, said it was too early to say where the job losses will hit, but said it wants to complete the process as quickly as possible.
Chief executive Mark Wilson said: “I’ve committed to our people we will create certainty as quickly as we can. I’m going to be discussing it with them before we discuss it with the media.”
His comments came as Aviva reported a six per cent rise in 2014 operating profit, but warned it has more work to do to complete a turnaround in its performance.
The group is now two years into a recovery plan launched by chief executive Mark Wilson following a City revolt over its performance.
The company’s profits rose six per cent to £2.17bn last year, with a 15 per cent rise in the value of new business helping to offset currency and regulatory headwinds.
Mr Wilson said Aviva is repaying the faith of shareholders by increasing the dividend by 30 per cent, but he said there is much work still to be done.
“We’ve come a long way in two years. Two years ago we were in a large boat with a lot of leaks and you didn’t know which leak to put your hand over first.
“But as we’ve stopped those leaks and strengthened the boat all of a sudden we’ve found that the boat’s starting to go a whole lot faster,” he said
“It would be wrong to assume that our turnaround is nearing completion as we have further to travel than the distance we have come.”
Mr Wilson said Friends Life would be the catalyst for the next phase of the turnaround, but admitted the company is braced for a difficult period as it looks for 1,500 job losses through the combination of the two companies.
“We want to take the pain, take it very quickly and get over it and move on and that’s what our people want as well,“ he said.
The deal is expected to bring £225m in annual savings.
Mr Wilson highlighted progress in UK general insurance, where its measure of profitability improved despite the impact of floods at the start of the year.
Aviva’s shares hit their highest level since September 2008 and closed up 7.1 per cent, a rise of 37.5p to 569.5p.
Shareholders will vote on the Friends Life transaction on March 26 with the completion of the deal expected on April 13.
The deal will be the biggest in the industry since the merger of CGU and Norwich Union created the company now known as Aviva in 2000.
Friends Life also reported forecast-beating yearly profits. Its operating profit jumped 38 per cent to 556m, beating forecasts of £352m.
Aviva said the value of new business for its UK annuity business fell 16 per cent, as bulk annuity sales failed to outweigh a drop in individual annuity sales.
Profits rose nine per cent to just over £1bn at the UK Life operation, which is head-quartered in York, despite a tough year.