Aviva's Q3 results nearing 'predictability of a Swiss clock'

30th Oct 2014 07:49

Improvements in the value of new business and its non-life combined operating ratio helped Aviva deliver a solid third quarter result, though the slowing pace of progress in chief executive Mark Wilson's turnaround received analyst criticism.Operating capital generation was flat at £1.3bn year-on-year, while net asset value per share has increased 10% over the year to 298p.A key focus of Wilson's turnaround since he took over in January 2013 has been on cutting costs, with "adequate" progress made in the quarter, alongside ongoing "satisfactory" progress in increasing cash remittances that is expected to continue in the fourth quarter."We're getting closer to the predictability of the Swiss clock I want Aviva to be...the clock needs winding up a bit more," he said, via Twitter. "If I look at our results there are some areas of out-performance and some areas of under-performance."#Aviva CEO:"We're getting closer to the predictability of the Swiss clock I want Aviva to be...the clock needs winding up a bit more."- Aviva plc (@avivaplc) October 30, 2014Driven by powerful rises in Europe and Asia that offset an 8% fall in the UK, growth in the value of new business did accelerate to 15% in the first nine months of the year to £690m, up from the 9% growth to £453m in the first half.Protection products were the largest new business contributor, making up 36% of the figure, while new annuities business slipped to 20% of the total, down from 32% a year ago.The combined operating ratio benefitted from a strong result in the UK to rise one percentage point to 95.9%."Aviva's turnaround is delivering," said Wilson. "Our key metrics have improved again. Year to date, our net asset value is 10% higher; value of new business is up 15%1 and the general insurance combined ratio improved to 95.9%.""The steps we have taken to focus and strengthen the group mean we are in a different position to two years ago. "Notwithstanding this progress, there is still more to do before we can be satisfied we are fully delivering on our investment thesis of cash flow plus growth."Broker Shore Capital praised progress on the cost base, but said bulls of the stock "may be disappointed that the overall pace of improvements has slowed"."Our fear remains that the market has assumed a steeply sloped and linear pace of turnaround...this IMS demonstrates progress, but at a treacle like pace. The long grind continues."