Aviva has seen its value of new business in UK life fall 21 per cent to £177m in the first half of this year, primarily due to a 41 per cent drop in the value of new annuity business.
Like other providers who have witnessed similar decreases, Aviva said this was due to the reforms announced in the Budget.
The drop was announced in annual results which showed group operating profit of £1.1bn, up 4 per on 2013. This was driven by an increase in the value of new business of 9 per cent to £453m, which it achieved in spite of the poor life performance.
Aviva said it has seen “strong” net inflows onto its IFA platform, with assets under management now exceeding £4bn, compared to £1.9bn in the first half of last year. The value of new protection business also increased 25 per cent to £45m “as some bancassurance partners reinvigorated sales of this product”.
In corporate pensions, Aviva said its focus was on the small and medium sized enterprises segment, and it expected to see “further benefit” from auto-enrolment schemes in the second half of the year.
Furthermore, Aviva said the “turnaround” at Aviva Investors is likely to take time, but the launch of the Aviva Investors Multi Strategy fund range is an “important milestone”.
Operating profit in the unit increased 32 per cent to £41m in the first half of this year, due to higher performance fees and the transfer of some of the retail fund management business from UK Life.
The business had assets under management of £234bn at the end of June, with £1.7bn of net external outflows excluding the impact of the River Road disposal experienced in the period, primarily due to rotation out of global high yield, convertibles and emerging market debt.
Mark Wilson, group chief executive of Aviva, said: “The half year results show that momentum in Aviva’s turnaround continues. All of our key metrics have improved, operating earnings per share are up 16 per cent, and book value has increased 7 per cent.
“We have reduced our debt, decreased expenses and increased profit – this is just good business. Aviva remains a work in progress, and these results are a step in the right direction.”
