Aviva shares surge as insurer lifts dividend after 2015 profit beats expectations

Shares in Aviva jumped almost 5% early on Thursday (10 March), after the insurance company posted a better than expected annual profit for 2015 and lifted its total dividend.

In the 12 months to 31 December 2015, the FTSE 100 insurer posted a 20% year-on-year increase in operating profit to £2.7bn (€3.5bn, $3.8bn), a figure which exceeded analysts' expectations for a £2.5bn profit.

Aviva said it would pay a final dividend of 14.05p per share and total dividend of 20.8p, below a forecast of 21.2p but 15% higher year-on-year.

Meanwhile, the group's combined operating ratio, a key gauge of performance in its general insurance business, strengthened to 94.6%, the best in nine years, compared with a forecast of 96%. A level below 100% indicates an underwriting profit.

The life and general insurer said its solvency capital ratio under new European rules for insurers was 180% on a scale where a ratio of 100% shows insurers have sufficient capital to cover underwriting, investment and operational risks.

"2015 was about stability and growth at Aviva, against a background of market volatility and uncertainty," said group chief executive Mark Wilson. "Aviva is now a stronger and more focused business. We have completed the fix phase of our transformation."

The London-listed company added its integration plans with Friends Life, which it acquired last year in a £5.6bn deal, were ahead of schedule. Aviva revealed it would achieve its target of £225m in integration synergies with Friends Life in 2016, 12 months ahead of schedule, and that it forecast £1.2bn in capital synergies.