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Operating profits fall 7% for Aviva’s UK life business

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Aviva’s UK life business saw operating profits fall 7 per cent from £469m in the first six months of 2012 to £438m this year.

In its half-year results, published today, the global business saw pre-tax profits grow 5 per cent from £959m to £1bn on the back of a cost-cutting programme.

Aviva says UK life operating profits would have grown 11 per cent without one-off costs of £74m. The firm says its life arm has saved £50m from cost-cutting and higher prices.

The results show UK group protection business grew but some individual protection business fell.

In terms of total funds under management, its UK savings business increased by 9 per cent to £50.3bn, driven by  “market movements”.

The value of new life business grew 16 per cent in the UK to £211m driven chiefly by “re-pricing” of annuities.

The results also admit Aviva investors has underperformed and it expects it to play a more prominent role as a “turnaround business”.

In April the firm announced 2,000 job cuts after shedding hundreds of jobs in the past year.

The job losses were driven by a £2.7bn loss for 2012. after the firm sold its US business for £1.1bn with a £3.3bn write down.

Chief executive Mark Wilson confirmed the sale of the US business is on track to complete by the end of the year.

Wilson says: “Although these results continue the positive trends of the first quarter, tackling our legacy issues will take time.

“I am committed to achieving for investors what we set out to do: turning around the company to unlock the considerable value in Aviva.”

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