Aviva Group returns to profit as turnaround gathers pace

Aviva returned to profitability in 2013, making a profit after tax of £2.15bn.

This compares with a 2012 loss of £1.93bn, which was mainly caused by a £3.3bn write-down following the sale of its US life business.

The group non-life COR increased by 0.3 percentage points to 97.3% (2012: 97%) because of weather claims, including flooding in Canada, which cost the group £129m, and the UK floods, which cost £60m.

The insurer trimmed 7% from its operating expenses and said it is now achieving £360m annual cost savings, which is ahead of the target it set itself for 2013.

The performance improvement follows progress on Aviva’s turnaround plan, launched by chairman John McFarlane in 2012, under which the company has sold or exited unprofitable business.

Aviva chief executive Mark Wilson said: “The turnaround at Aviva is intensifying

“Following our exit from a number of low margin, underperforming or non-strategic businesses, Aviva is simpler, more focused and better managed. We have significantly improved our capital surplus, increased our liquidity and have a stronger leadership team.”

But Wislon warned that there was still work to be done to get the company where it needs to be.

He said: “Although we have made progress in 2013, I want to guard against complacency. Aviva still has issues to address. Have we made progress? Yes, some. Is it a little faster than anticipated? Probably. Have we unlocked the full potential at Aviva? Not yet.”

Speaking to journalists this morning, Wilson added: “We will never be happy and we will never finish our work. When you get complacent, businesses get into trouble. At Aviva we’re trying to highlight the issues just as much as the results to guard against that complacency.”