Aviva gets back on track – and gets its mojo back
British insurer Aviva unveiled a forecast-beating 6 percent rise in operating profit on Thursday, one year into a turnaround drive that has seen 2,000 lay-offs and sales of underperforming businesses.
Operating expenses were down 7 percent and cost saving targets for the year were ahead of plan, Aviva said in an earnings statement on Thursday, although it noted a 60 million pound hit from flood losses in Britain during the first two months of 2014.
Investors cheered the performance and Aviva’s shares jumped more than 8 percent, making it the top gainer on the blue-chip FTSE 100 index.
Chief Executive Mark Wilson acknowledged progress since he joined at the start of 2013 with a remit to revive Aviva’s fortunes after a shareholder rebellion that led to the departure of his predecessor.
He said top performing staff could expect bonuses to be reinstated a year after they were cut and senior employees saw pay frozen in a move to appease shareholders after half of them had voted against remuneration proposals.
“We’ll pay for performance… We will be paying bonuses for this year and I think the shareholders will be quite OK with that scenario,” Wilson said.
He cautioned, however, that he still saw room for improvement, particularly at divisions such as fund management arm Aviva Investors which saw 5 billion pounds of net outflows during 2013.