Aviva Newsroom - 5 March 2015

2014 Preliminary Announcement
5 March 2015

Aviva plc 2014 Preliminary Results Announcement

Mark Wilson, Group Chief Executive Officer, said:

“These results show tangible progress, with all key metrics moving in the right direction. Cash is up 65%, operating earnings per share is up 10%1, value of new business is up 15%2 and book value is 26% higher. Operating expenses are £571 million lower than our 2011 base-line, debt ratios are down and our full year combined ratio of 95.7% is the best in eight years.

“We have increased our final dividend by 30% to reflect the progress made during the year and our improved financial position. We have entered 2015 in a position of strength.

“Nevertheless, it would be wrong to assume that our turnaround is nearing completion as we have further to travel than the distance we have come.”

Cash flow
  • Holding company excess cash flow3 up 65% to £692 million (FY13: £420 million), vs. 2016 target of £800 million
  • Cash remittances up 11% to £1,412 million (FY13: £1,269 million)
  • Final dividend up 30% to 12.25p. Total dividend 18.1p (FY13: 15.0p)
  • Operating profit1 6% higher at £2,173 million (FY13: £2,049 million)
  • Operating EPS1 up 10% to 47.0p (FY13: 42.6p)
  • Life back book actions contributed £282 million to operating profit (FY13: £116 million)
  • IFRS profit after tax1 up 91% to £1,680 million (FY13: £878 million)
Value of new business
  • Value of new business (VNB) grew 15%2 to a record £1,009 million (FY13: £904 million)
  • Growth markets of Poland, Turkey and Asia4 grew 25%2 and now make up 22% of VNB4
  • UK Life VNB was constant at £473 million (FY13: £469 million) despite changes to annuity market
  • Operating expense ratio of 51.5% (FY13: 54.1%1), vs. target of <50% by the end of 2016
  • £571 million of operating expense saves achieved against original target of £400 million
Combined operating ratio
  • Combined operating ratio (COR) of 95.7% (FY13: 97.3%)
  • UK COR of 94.8% (FY13: 97.0%)
  • Canada COR of 96.1% (FY13: 94.6%)
Balance sheet
  • IFRS net asset value per share increased 26% to 340p (FY13: 270p), benefiting from retained earnings and a gain in the pension surplus
  • External leverage ratio 41% of tangible capital (FY13: 48%), 28% on an S&P basis (FY13: 31%)
  • Intercompany loan balance of £2.8 billion at end of February 2015 (February 2014: £4.1 billion)
  • Economic capital surplus5 £8.0 billion including £0.4 billion deduction from dividend proposed in December 2014 (FY13: £8.3 billion)
  1. On a continuing basis, excluding US Life.
  2. On a constant currency basis.
  3. Excess centre cash flow represents cash remitted by business units to Group less central operating expenses and debt financing costs. It does not include non-operating cash movements such as disposal proceeds or capital injections.
  4. Poland includes Lithuania, Italy excludes Eurovita, Spain excludes Aseval and CxG and Asia excludes Malaysia.
  5. The economic capital surplus represents an estimated position. The economic capital requirement is based on Aviva’s own internal assessment and capital management policies. The term ‘economic capital’ does not imply capital as required by regulators or other third parties. Following the announcement that the Group made an offer to acquire Friends Life Group Limited on 2 December 2014, the directors have proposed a final dividend for 2014 of 12.25 pence per share, amounting to £0.4 billion in total. Although subject to approval by shareholders at the AGM, the dividend is considered foreseeable and is therefore deducted from FY14 economic capital surplus. In contrast, 2013 final dividend of 9.40 pence per share amounting to £0.3 billion was not foreseeable as at 31 December 2013 and was not deducted from FY13 economic capital surplus.