July 29 2014 Latest news:
Ben Woods, Business writer
Friday, March 7, 2014
Aviva has revealed a £132m hit to profits sparked by the alleged trading breaches of two former employees.
But chief executive Mark Wilson said the company’s internal insurance cover should help them recoup “substantial sums” in the wake of the blow, which was triggered by the “improper allocation of trades in fixed income securities” at Aviva Investors.
The update came as it deals with £60m worth of claims from the damage caused by this year’s floods and storms that have wreaked havoc across the UK.
But despite the wide-scale disruption, the company said the figure was in line with the amount it normally sets aside for weather events in January and February.
Elsewhere, the EDP Top 100 firm signalled further progress in its recovery, rebounding from a loss of £2.9bn a year ago to profits of £2.2bn in 2013.
Mr Wilson said the “improper” trading had been “highly irritating” but it was the type of issue you deal with when trying to turn a company around.
He said efforts to improve the insurer’s performance were now “intensifying,” as he focused the business on “cash flow plus growth’.
“Cash flows to the group are up 40pc, operating expenses are down 7pc, operating profit is up 6pc and value of new business is up 13pc,” he added.
“Following our exit from a number of low margin, underperforming or non-strategic businesses, Aviva is simpler, more focused and better managed. We have significantly improved our capital surplus, increased our liquidity and have a stronger leadership team.”
But he said the business was still a long way short of performing at its full potential.
“I want to guard against complacency. Aviva still has issues to address. Have we made progress? Yes, some. Is it a little faster than anticipated? Probably. Have we unlocked the full potential at Aviva? Not yet,” he added.
Aviva Investors recently revealed that it was looking to maximise the income potential of its two empty office blocks on St Stephen’s Street, Norwich.
The insurer said it was open to offers in a move that could see them turned into flats, student accommodation or event a hotel.
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