Aviva UK profits up 3%; Focus shifts to workplace savings

Aviva has reported UK operating profits up 3% for the first half of the year, and highlighted auto-enrolment as an area of opportunity.

Total operating profit across the group was up 5% for the half year to £1.33bn, compared to £1.27bn in H1 2010.

Aviva said real profits rose 13%, but this excluded the impact of an £84m special distribution benefit in 2010, made to policyholders from the inherited estate of the CGNU Life and CULAC with-profits funds.

The UK market contributed £709m to the insurer's half year performance, up from £691m in 2010.

UK life and pensions business rose 16% in the period to £5.5bn up from £5.2bn in H1 2010. Underlying operating profits, excluding last year's special distribution, were up 22% to £462m.

Aviva said its UK corporate business will be key to its future growth as employees look to their employer for endorsement of pensions and savings products as auto-enrolment of workplace pensions begins.

Chief executive Andrew Moss said: "Our clear objective is to be the undisputed leader in our home market.

"We are well-positioned to benefit from trends such as the move to auto-enrolment in work place pensions and the shift towards 'at-retirement' products as baby boomers retire."

Aviva said it is attracting over 30% of open market annuity business while also retaining 70% of its own pensions customers, and would seek to increase its share in this market.

Operating earnings per share rose to 29.1p, but total earnings per share of 4.1p were lower due to unrealised investment variances in Delta Lloyd of £820m.

The insurer said its sale of a further 15% stake in Delta Lloyd, lowering its shareholding from 58% to 43%, had raised approximately £0.4bn and significantly cut its future exposure to earnings volatility in that business.

It announced its interim dividend will increase by 5% to 10p.

Aviva's shares rose 2.2% on the results news to trade up 8.2p to 383p per share.