Aviva posts forecast-beating first-half operating profit

By Simon Jessop

LONDON (Reuters) - British insurer Aviva (AV.L) posted a forecast-beating half-year operating profit on Thursday, boosted by both its general and life insurance businesses and sending its shares higher.

Aviva, which bought life insurance rival Friends Life in April for 5.6 billion pounds, was now in a "transforming and growing phase" after beating consensus forecasts by 7 percent, said Chief Executive Mark Wilson.

Heped in part by higher premiums in its general insurance unit, the company's first-half operating profits rose to 1.17 billion pounds from 1.07 billion last year, ahead of the consensus forecast of 1.09 billion pounds given in the company's own survey of analysts.

Its combined operating ratio - claims and costs as a percentage of premium income - stood at 93.1 percent, against forecasts for 95.2 percent, its best result for eight years.

Shares in Aviva were up 1.7 percent in early trade at 537 pence a share, when the FTSE 100 (.FTSE) was down 0.4 percent.

"I see Aviva as a turnaround story... I think you've seen some fairly satisfactory outcomes in today's numbers," Wilson told Reuters, adding, "I don't think the market's really recognised the growth we've had yet."

The value of new business over the period, another key measure of the firm's performance, was up 25 percent at 534 million pounds, from 444 million a year earlier, while in the UK life business it was up 43 percent.

Aviva said its underlying growth and the contribution from Friends Life more than offset the impact of adverse currency moves and disposals.

Profit after tax was 545 million pounds, down from 863 million pounds a year earlier, including 271 million pounds of acquisition-related integration costs. On the integration, Aviva said it had achieved 63 million pounds in run-rate synergies so far and was targeting more.

The company said its planning for the introduction of Europe's new capital rules for insurers, known as Solvency II, was on track and it was currently trading within its expected range.

Barrie Cornes, analyst at Panmure Gordon, said the results were ahead of expectations on most measures and he maintained a "buy" recommendation and 660 pence a share target.

(Editing by Greg Mahlich)