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Aviva writes off £876m of US assets as profits drop 10%

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Aviva’s pre-tax operating profits fell 10 per cent in the first half of 2012 as the provider was forced to write down £876m of “goodwill and intangible assets” in its US business.

Aviva’s half year results, published today, reveal pre-tax operating profits fell from £1.035bn in the first half of 2011 to £935m this year.

Aviva says this figure was affected by costs associated with the group’s restructuring, referred to as its “simplification programme”. The provider has appointed investment banks to advise on its exit from 10 markets worldwide.

Restructuring costs in in the first six months of 2012 were £186m, compared with £111m in the first half of 2011. This was driven by by costs associated with Solvency II implementation and the costs of merging the UK and Ireland businesses.

Pre-tax operating profits in Aviva’s UK Life business increased 2 per cent, from £460m to £469m.

Chief financial officer Pat Regan says: “Including restructuring costs, operating profit was down 10 per cent, partly as a result of our simplifying programme.

“We took a decision at the half year to write down £876m of goodwill and intangibles in our US business, which we concluded are no longer recoverable.

“We have identified 16 market segments that are non-core, out of 58 segments in total. We have appointed investment banks to 10 of those segments to help us exit those markets.”

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