British insurer Aviva reassures on profits

 

Friday, Aug 07,2009, 1:28:49 PM   Click:

LONDON_British insurer Aviva PLC saw its share price spike around 6 percent Thursday cut its dividend, although the company posted better results than expected and announced plans to float off its Dutch unit to collect more money for bailout bankruptcy.

Aviva said it made a net profit of 747 million pounds ($ 1.27 billion) in the first half of the year, in contrast to a loss of 84 million pounds sterling to the same period in 2008, as margins of life and improvement of corporate pensions.

On an operating basis, profits rose to 1.69 billion pounds from 1.51 billion pounds last year. The increase was unexpected was that analysts predict a decline of about 1.30 billion pounds.

The better than expected performance helped the company's share price rally in early trading on the FTSE index of leading British shares _ it was up 5.7 percent at 377 pence, its highest level this year.

Despite improving profits, Aviva confirmed plans that it is to cut its dividend to improve its capital position, as rival Legal & General PLC did earlier this week.

Its decision to reduce its half-yearly payout to shareholders by 31 percent to 9 pence a share follows the scrapping earlier this year of a 1 billion pound special payout promised to about a million policyholders because of the sharp fall in stock markets.

"Our overriding priority now is to continue to build a position of strength from which Aviva can exploit market opportunities," said Andrew Moss, Aviva's chief executive.

As part of that strategy, Aviva announced plans to float part of Delta Lloyd, its Dutch subsidiary, on the Euronext exchange in Amsterdam when "market conditions allow."