Aviva's value of new business rises 14 per cent in first nine months - UPDATE

7th Nov 2013 07:07

- Value of new business rises 14 per cent- Operating capital generation stable- Restructuring on track to deliver cost savingsBritish insurance company Aviva said value of new business rose 14 per cent to 571m pounds in the nine months through September driven by growth in France, Turkey, Poland and Asia. Broker Panmure Gordon described results as a "solid" performance, in line with forecasts, but added that the rise in new business "clearly bodes well for year-end profitability".The firm delivered operating capital generation of £1.3bn, in line with the prior year, as it focused on improving remittance ratios. While the company achieved strong performances in France, Turkey, Poland and Asia, the value of new business remained depressed in Italy and Spain.In October the group sold its US business, which made transaction proceeds of $2.6bn and strengthened Aviva's capital position."Progress is in line with our expectations and we remain focused on delivering cash flow plus growth," said Chief Executive Officer, Mark Wilson."Aviva remains in the early stages of turnaround. Whilst we have resolved a key issue in the disposal of our US business and have made progress in a number of areas, there remains much work to be done".Restructuring costs fell 21% to £198m during the period. The company expects restructuring costs for 2013 to be lower than the 2012 level of £461m and materially lower in 2014. Operating expenses were 10% below the 2011 baseline expense level and 7% lower year-on-year.The group is on track to deliver a cost-base in 2014 which is £400m lower than 2011, regardless of the impact of inflation.Panmure, which earlier in the week increased its target price to 440p per share, noted that the shares have rallied over the last three months even though "there is much 'heavy lifting' yet to do", maintaining its hold recommendation. "The current share price largely reflects this in our view with the shares trading on one of the lowest 2013 forecast price/earnings multiples within the insurance sector at 9.6 times, compared to the wider insurance sector trading on a 14.7 times multiple." Shares in Aviva oscillated somewhat in morning trading but were down just 0.3% at 443.55p at 12:05 on Thursday.RD