LONDON • British insurer Aviva yesterday increased its dividend and said it will return more cash to shareholders this year after higher earnings at the life insurance unit helped bolster full-year operating profit.
The company posted a 12 per cent increase in full-year operating profit to £3 billion (S$5.18 billion), boosted by growth in its fund arm, Aviva Investors as well as its British, Canadian and Irish units.
Profit after tax fell 22 per cent to £859 million, however, after adding in a £380 million exceptional charge to cover the British government's decision to lower the discount rate used to assess personal injury claim lump sum payouts.
The company said its performance was boosted by a strong rise in cash remittances from its various business units, up 20 per cent to £1.8 billion, helped by a 15 per cent rise in general insurance net written premiums to £8.2 billion.
"We've the high-quality problem of too much capital so we're going to invest in our business," chief executive Mark Wilson told Bloomberg Television. "We're saying today we're going to give some of that back to our shareholders in 2017 and we're going to pay down some pretty expensive hybrid debt as well."
The news gave a fillip to the stock, with Aviva shares up 11 per cent this year.
Life insurance operating profit increased 8 per cent to £2.6 billion, helped by growth in protection, pensions and individual annuities in Britain, protection sales and currency effects in Europe.
Fund management operating profit rose 30 per cent to £138 million, boosted by a rise in group assets under management to £450 billion, an increase in revenue margin and improved cost to income ratio.
Aviva said it would pay a total dividend of 23.3 pence a share for the year, up 12 per cent.
"Aviva's results are simple and clear-cut: more operating profit, more capital, more cash, more dividend. And there is more to come," Mr Wilson said in a statement.