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Aviva’s First Half Profit Up

Built capital strength, cut dividend and announced plans for Delta Lloyd

British insurer, Aviva has exceeded estimates and reported a half-year profit of £747 million. The company also unveiled plans to cut its dividend and float part of its 92% stake in Dutch unit, Delta Lloyd on the Euronext Amsterdam exchange to boost its capital – reported in Reuters.

The group intends to sell upto 30% and retain the remaining that would enable it to take advantage from the acquisitions by Delta Lloyd, as the insurance market witnesses a period of reorganisation owing to the ongoing financial crisis.

The company’s operating profit before tax was lower by 14% on an IFRS basis at £1.04 million, and up 12% on an MCEV basis to £1.68 million. It was able to reduce underlying cost base by 9% over the last 12 months, and is ahead of its plan to deliver £500 million of cost savings by 2010.

Throughout the last eighteen months, Aviva has maintained a strong capital position in the face of the volatile external environment. In the first half of 2009, the capital surplus of the group increased substantially from £2 billion to £3.2 billion.

In an interview to the newspaper, Andrew Moss, CEO of Aviva, said: The capital-saving measures allow the company to pursue potential takeovers. I think you do have to look pretty carefully at inorganic opportunities which may be available in the coming year. We’ve seen number of opportunities come across our desk in the course of the last nine months. We haven’t wanted to take advantage of those… but I am absolutely determined that Aviva should be in a position where it will have the flexibility to take advantage of any opportunities that may come, reported the newspaper.