Aviva has reported an 18 per cent increase in the expected future profitability of new business written in the first quarter, from £162m in 2012 to £191m this year, driven by improvements in its UK business.
The insurer’s Q1 interim management statement, published today, is the first since Aviva chief executive Mark Wilson set out a strategy to focus on cash flow and growth.
Aviva says the ‘value of new business’ will be the key metric it uses to evaluate the success of this strategy.
The increase in VNB across the business is from continuing operations and so excludes the disposals the insurer has made in recent months.
Overall operating expenses were down 10 per cent in Q1, from £852m to £769m, although this figure excludes restructuring costs and costs associated with the sale of its US life insurance business.
In the UK, the VNB figure increased 33 per cent in Q1, from £81m in 2012 to £108m this year. Aviva says this figure was “positively impacted by actions on pricing and expenses”.
In August, Aviva confirmed plans to cut up to 800 jobs in the UK as part of chairman John McFarlane’s efforts to reduce costs worldwide by £400m.
A further 2,000 roles are set to be cut across the provider’s UK, Europe and Asia divisions.
Total combined expenses in Aviva’s UK and Ireland life businesses were down 11 per cent, from £192m to £171m.
Wilson says: “In the first quarter we have taken steps to deliver our investment thesis of cash flow and growth.
“Today’s results demonstrate the first steps towards delivery. I am conscious of the challenges and do not want to set expectations at an unrealistic level.
“Progress so far has been satisfactory and there is a great deal more we need to do for our shareholders.”