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Aviva confirms mulling options for Asian ops, reports higher H1 profit

U.K. insurer Aviva PLC said first-half operating profit increased 1% to £1.45 billion from £1.44 billion in the prior-year period, as it confirmed it is examining options for its Asian operations.

Profit after tax jumped to £1.18 billion from £376 million a year earlier. Basic EPS climbed year over year to 28.2 pence from 7.9 pence. The increase was attributed to positive investment variances from the company's life and general insurance businesses. This more than offset amortization of acquired value of in-force and other intangibles.

The life business' operating profit fell 8% to £1.28 billion from £1.39 billion, while the fund management business' operating profit declined 18% to £61 million from £74 million.

The general insurance and health business' operating profit gained 29% to £391 million from £302 million a year ago. Aviva said that across all its general insurance businesses, benign weather has contributed to better results in the first half. Partly offsetting this was a smaller contribution from prior-year reserve development and increase in earned expenses in the U.K. of £34 million that arose from the alignment of the company's digital operations under U.K. general insurance.

Operating expenses increased 2% to £1.96 billion from £1.93 billion. The increase in operating expenses from the first half of 2018 mainly reflects higher expenditure on targeted simplification initiatives in IT and finance change, mandatory requirements such as IFRS 17 and increased regulatory levies in the U.K. and Ireland. These increases were partially offset by savings, including cost reduction programs in the U.K. businesses.

The group has commenced a program to reduce expenses by £300 million, net of inflation, by 2022.

The board of directors has declared an interim dividend of 9.50 pence per share, representing a 3% increase compared with the interim dividend in 2018.

Confirming an earlier report, Aviva has decided to examine strategic options for its Asian businesses. The company is evaluating a range of options to enhance the value of the businesses to shareholders.

Looking ahead, Aviva said the challenging macroeconomic backdrop, particularly very low government bond yields, is expected to persist in the second half with ongoing uncertainty in the political environment and a softer outlook for economic growth in Europe and the U.K.