Britain’s second largest insurer Aviva reported a forecast-beating 1% rise in first-half operating profit on Thursday, helped by a strong performance in its general business and announced a review of its Asian operations.
In his first interim results since being appointed chief executive in March, Maurice Tulloch confirmed he was rethinking the company’s Asian businesses, the latest move to restructure after announcing a series of changes in June.
“I am working with the board to refresh Aviva’s strategy and we have decided to review the strategic options for our Asian businesses,” he said, adding there were a range of possibilities under consideration.
Last week, sources told Reuters Aviva was considering selling its Asia business at a valuation of more than $2 billion, following a review of the business due by the end of September.
Aviva’s shares were up 0.7% at 0903 GMT.
Asia’s fast-growing economies and its relatively low number of insured people make it a promising market for global insurers, but some have struggled to scale up in the face of tough competition from larger regional players.
“While Asia has significant potential as far fewer people already have insurance and savings products, Aviva likely lacks the scale to thrive in what is also a highly competitive market,” Russ Mould, investment director at retail investment platform AJ Bell, said in a statement.
In June, Aviva said it would simplify its structure, announcing 300 million pounds ($365 million) in cost savings, organizational changes to its UK business and the loss of 1,800 jobs globally.
On Thursday, the insurer said it would continue to invest in “simplification initiatives.”
Operating profit rose to 1.45 billion pounds ($1.76 billion) in the six months to end-June from 1.44 billion pounds a year earlier, just beating a company-supplied analyst forecast for 1.43 billion pounds.
Difficult market conditions, however, contributed to a fall in operating profit at the company’s life insurance business to 1.28 billion pounds, a worse performance than the 1.31 billion pounds predicted by analysts. Last year, operating profit from the life insurance business was higher at 1.39 billion pounds.
The Solvency II cover ratio weakened to 194% from 204% a year earlier, lower than the 197% predicted in the forecast.
The weather was better than expected in Britain and Canada, the company said, helping operating profit in Canada to improve to 98 million pounds and partly offset an 11% decrease in operating profit from the general insurance business in Britain.
($1 = 0.8224 pounds) (Reporting by Lena Masri; editing by Simon Jessop and David Evans)
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