Friends Life cost savings boost Aviva profits

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Aviva has posted a 13 per cent increase in pre-tax profit for the first half of the year, driven by growth in its UK life and fund management arms and cost savings from its merger with Friends Life.

Operating profits have gone from £1.17bn as at the end of June 2015 to £1.3bn. Aviva’s life business has seen a 20 per cent rise in profits from £1.02bn to £1.2bn, while fund management profits are up 48 per cent from £33m to £49m.

Aviva says the integration of Friends Life has generated cost savings of £201m to date, and is on track to deliver its targeted £225m in cost savings by the end of the year.

In the UK life business profits have increased to £711m, up 25 per cent from £569m at the same time last year.

The provider says protection and long-term savings have seen “positive momentum”. But it adds this has been partly offset by a 27 per cent fall in annuity sales, with higher individual annuity sales brought down by a decline in bulk annuity deals.

Platform assets under administration are 23 per cent from the end of last year, from £8.4bn to £10.3bn.

Aviva UK & Ireland Life chief executive Andy Briggs says: “We’ve seen strong growth in key areas including protection, pensions and platform.

“In pensions, we’ve seen higher sales of group personal pensions.  We are also progressing at pace with digital initiatives which will make Aviva simpler and more convenient for our customers.”

He adds: “Along with the savings made due to the integration of the Friends Life business, this set of results builds on the progress we made in 2015.

“Aviva has a leading position in growing segments of the UK life market and this, together with the advantages of our scale and diverse products and distribution, sets us up well for future sustainable growth.”