Insurer has saved more than £568m since it introduced the savings target
Aviva has exceeded its commitment to save £400m on costs across the group by the end of 2014 as it announces its results for the first six months of the year.
Group chief executive Mark Wilson said the company had already saved more than £568m at the half year stage.
“We originally set an expense reduction target of £400m by the end of this year,” he said. “Our cost savings to date are around £568m so we have clearly delivered faster than we had anticipated.
“I’ve said previously that restructuring costs were a decade long problem for Aviva and that they were too high. In the first half these costs have declined 74% to £42m, and that’s in addition to the other costs savings we’ve made.”
This means the expense ratio has now fallen a further two percentage points to 52%, and this is approaching the 50% group target that Wilson set the insurer to achieve by the year-end, and he said he was confident this would be met.
“Aviva is a turnaround business, but now it is a turnaround business with momentum,” he added.
As part of the turnaround, Wilson confirmed that the insurer had exited certain areas of business where it wasn’t finding enough profit, such as large commercial fleet.
“We have exited some areas of business we didn’t want to be in,” he said. “[The improvement in the underwriting performance] is also because of our predictive analytics, which leads to better underwriting and packaging certain products together.
“We aim to do more packaging, and I’d hope we would grow our business in the second half in the UK.”