Aviva profits up 21%, signs new distribution deal with RBS

Aviva operating profits have jumped 21% to £1.27 billion in the first half of this year. The insurer is also entering a new distribution agreement with RBS, replacing their current joint venture.

Under the proposed terms of the new agreement RBS will receive all of the profits from the distribution of Aviva protection and selective pension products and will see the provider take commision on all Aviva products RBS sells. Under the current joint venture profits are split equallly between RBS and Aviva.

It is expected that discussions will be completed in the second half of this year and that the existing joint venture relationship will terminate on 31 December 2010. 

As a result of terminating the joint venture, including the re-purchase of Aviva's right to share in distribution profits which Aviva acquired from RBS at inception of the joint venture, RBS will recognise a one-off loss of £235 million in its interim results which will be announced tomorrow.

Brian Hartzer, chief executive of UK retail at RBS subsidiary Wealth & Ulster, said: 'The changes we are proposing to make to our partnership with Aviva will give us added flexibility to ensure we help customers to make the right choices for them and their money, while maintaining and building on the strong record of service and product excellence that we have built together as partners.’

In its interim results announced today Aviva recorded IFRS operating profits of £1.27 billion, 21% up from the same period last year, driven by strong growth in its European, UK, and US Life divisions.

Net operating capital generated in the same period was £0.9 billion which the Aviva said represented strong progress towards its expected £1.5 million target for the year.

The interim dividend share was 9.5p, up 6% from 9p for 2009 and the IFRS net asset value per share was 394p, up from 353p in 2009.

Long-term savings sales grew 4% to over £20 billion.

General insurance and health operating profit reduced to £525 million from £545 million in 2009.

Worldwide long-term business sales, including investment products reached £20.2 billion, up from £19.4 billion during the same period last year, an increase of 4%, with significant rises in Europe, UK and Asia Pacific sales.

Aviva shares gained 15p, or 4.2 per cent, to 383.5p.