The shares of Aviva (LSE: AV) (NYSE: AV.US) climbed 6% to 394p during early London trade this morning, after the FTSE 100 insurance giant announced a 17% boost in new business, as its turnaround plan begins to take shape.
Aviva’s cost-cutting measures delivered a 9% reduction in its operating expenses to £1.5bn, but the firm was quick to remind investors that its legacy issues would take longer to tackle. Aviva’s debt load remained steady at around £7.2bn, but the insurer said it plans to reduce its leverage using the proceeds from selling its US life insurance division.
The group’s operating profits were 5% higher than last year at £1bn. As expected, Aviva will pay out an interim dividend of 5.6p per share, reduced from 10p in 2012.
Aviva chief executive Mark Wilson added:
“In the first half we have taken a number of steps to deliver our investment thesis of cash flow and growth. These results show satisfactory progress in Aviva’s turnaround… I am committed to achieving for investors what we set out to do: turning around the company to unlock the considerable value in Aviva.”
With a market cap of £12bn, Aviva’s shares trade at 12 times expected earnings, and offer a prospective dividend yield of 4%.
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> Mark does not own any share mentioned in this article.
