Insurer Aviva has seen half-year earnings surge by nearly a quarter as it cheered action to “quickly” improve profitability at Direct Line since buying the firm in a £3.7 billion deal.
The group reported a better-than-expected 24% surge in operating profits to £1.33 billion for the six months to June 30.
It said the firm had already started to turn around performance at Direct Line following the acquisition in July last year, boosting price comparison website sales.
Dame Amanda Blanc, group chief executive of Aviva, said: “We are making very good progress with the integration of Direct Line.
“We have quickly improved Direct Line’s profitability, grown price comparison website sales and maintained excellent levels of customer service.
“We are well on track to deliver all the financial benefits of the acquisition.
“We are confident that we will meet our three-year financial targets in 2028.”
Aviva revealed in November last year it was doubling aims for cost savings following the Direct Line deal, having met the £100 million original cost saving target ahead of plan.
The FTSE 100 firm now expects to strip out £225 million in costs by 2028 following the deal, though it said at the time this was not set to involve further job cuts, with Aviva having already signalled last December that up to 2,300 jobs could go under the cost-cutting plans.
The results showed on a bottom line basis, interim profits nearly halved to £418 million from £819 million a year earlier due to a hit from hedging for interest rate and equity exposures, as well as Direct Line integration and restructuring costs.
Aviva also lowered the outlook for its health division, saying it now expects the division to deliver full-year operating profit of £90 million compared with its previous guidance for around £100 million.
This is due to “slowing market growth” in consumer and small business markets, according to Aviva.
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