Aviva says “improvements” in performance still needed from Irish business

The head of quoted UK insurer Aviva said yesterday its Irish subsidiary has a lot of work to do to reach a satisfactory level of performance. This was in spite of Aviva doubling its operating profit here in the first half of this year.

In its interim results yesterday, Mark Wilson, Aviva's group chief executive, said it was "essential that we see a significant improvement in operating performance over time" at its Irish subsidiary and at Aviva Investors, its asset management arm.

“Although some progress has been made reshaping these turnaround businesses and cutting expenses, there is some way to go before product mix and efficiency levels are adequate,” he said. Aviva has categorised Ireland, Spain, Italy and Aviva Investors as turnaround businesses.

In a slide presentation to investors, Aviva said Ireland achieved an operating profit of £23 million in the first six months of 2013, up from £12 million a year earlier.

Aviva generated £1 million worth of new business in Ireland in the first half of this year. It said pricing improvements were achieved in its life and general insurance businesses. The insurer achieved cost savings of £18 million in Ireland in the first six months of the year out of a total of £147 million across the group.

Aviva has had a turbulent couple of years in Ireland, with the business significantly restructured to address a deteriorating operating performance resulting from the economic crash here.

A new leadership team in Ireland was appointed last month with Alison Burns as chief executive and John Quinlan as managing director of its general insurance business.

At a group level, Aviva increased its operating profit by 5 per cent to £1.01 billion. Restructuring costs fell 10 per cent to £164 million and it paid back £700 million of an internal loan.

“We are not where we need to be just yet, we need to be clear on that, but we are where I thought we would be at this stage of the year,” Mr Wilson said.– Additional reporting by Bloomberg