Aviva welcomes sharp rise in share price

Aviva's David Barral
Aviva's David Barral
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THE chief executive of Aviva’s life business gave a warm welcome to the sharp rise in the composite insurer’s share price after a deep turnaround programme yielded positive results.

Aviva rebounded from a loss of £2.9bn a year ago to profits of £2.2bn in 2013.

Shares rose nearly 10 per cent on the news, giving the former Norwich Union business a market capitalisation of almost £15bn.

David Barral told the Yorkshire Post: “Obviously we are very pleased about that. I am pleased about it for staff because it’s great for them to see that progress beginning to happen given just how tough the last 18 months has been for them.

“There was such huge personal uncertainty for the last year. We said to them there’s lots of things you can’t control but delivering a fantastic service to your customers is something that’s within your own gift.

“We had some of the best customer satisfaction scores last year that we have ever had despite all the change we put them through.

“To see the uplift in share price is clearly great for our shareholders - and that’s primarily why we are doing it - but of course our staff are shareholders too so I am pleased for them they can see some of the benefits coming through.”

In UK life and pensions, which is Aviva’s largest division, operating profits grew 5 per cent after costs fell 16 per cent and the value of new business rose by 4 per cent.

The division bore the brunt of a £100m savings drive, which led to the loss of 400 jobs in Yorkshire, including 300 at the York headquarters.

Aviva has 2,000 staff at York and 1,500 in Sheffield.

The UK general insurance arm grew its underwriting result to £117m, from £48m a year earlier, due to benign weather throughout most of the year. It is dealing with £60m of claims from damage caused by the UK’s recent floods and storms.

Progress has been made in its businesses of Italy, Spain and Ireland, although Aviva said there remains significant room for improvement.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “Aviva remains a recovery story which offers the potential of both income and growth

“While the stock is a fair way off its historic highs, it appears that the travails of more recent times have been parked for now.”