Aviva first-half profit rises 24%, beats forecasts on Direct Line gains

Aviva reported a 24% increase in first-half profit on Thursday, surpassing market expectations as gains from its stake in Direct Line and stronger underwriting performance offset weaker investment returns.

The UK’s largest insurer by market value said pre-tax profit rose to £922 million ($1.19 billion) in the six months to June 30, up from £744 million a year earlier. Analysts polled by Reuters had forecast a profit of £850 million.

Operating profit, which excludes one-off items, climbed 11% to £1.1 billion, also exceeding the £1.03 billion consensus estimate. The company cited a 14% rise in general insurance premiums, driven by its 40% stake in Direct Line, as a key contributor to growth.

Aviva’s underwriting performance improved, with a combined operating ratio—a measure of claims and expenses relative to premiums—of 92.8%, compared with 95.1% a year ago. The insurer also highlighted cost efficiencies and a reduction in its exposure to volatile financial markets.

Investment returns fell 11% to £435 million, reflecting lower equity and bond market performance. However, the company maintained its interim dividend at 10.3 pence per share, in line with expectations.

Chief Executive Officer Amanda Blanc said the results demonstrated progress in executing Aviva’s strategy, including cost savings and operational improvements. The insurer reaffirmed its full-year outlook, targeting operating profit growth of 9-13% and a dividend payout ratio of 40-50% of earnings.

Shares in Aviva were up 1.2% in early trading on Thursday as investors reacted to the better-than-expected earnings.