Aviva’s UK and Ireland life business increased its operating profit by 37% to £1.4 billion in 2015 as the company continued to benefit from its acquisition of Friends Life.
The deal, which was completed in April 2015, boosted the life businesses’ operating profit by £358 million to take it from £1 billion in 2014 to £1.4 billion last year.
Without the Friends Life business the UK and Ireland life business would have posted a 2% increase in operating profit.
The life business took a higher margin on the pension business and bulk annuity deals it wrote in 2015, pushing the value of its new business up from £473 million to £609 million.
Without Friends Life the value of new business increased 10% to £518 million, as a dip in annuity sales slightly offset other pension deals.
Aviva was also boosted by investment in its platform. Last year it launched an execution only platform alongside its existing adviser platform.
Over 2015 the platforms attracted £3.2 billion in net inflows, boosting the total assets under administration by 59% to £8.4 billion.
This increase was partly due to people moving from traditional pension businesses onto the platform.
‘Positive net flows in group pensions have been more than offset by higher claims and redemptions in traditional pension and savings products due to customers switching to adviser and consumer platforms, including the UK life platform, and taking advantage of pension freedom,’ Aviva said.
Across Aviva as a whole the Friends Life deal saved the company £168 million in 2015. Aviva originally planned to save £225 million by 2017 as a result of the deal, but the life company now expects this to be achieved a year earlier in 2016.
Aviva Investors saw £300 million of outflows across the year, but increased operating profit to £105 million.
Mark Wilson (pictured), chief executive of Aviva group, said the company benefitted from its scale in the pension market.
‘We have seen significant pension reforms in the UK and we are benefitting from scale and diversity as the largest insurer here’ he said.
Source: New Model Adviser