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Insurer Aviva posts huge 2012 loss, slashes dividend

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(Globalpost/GlobalPost)

British insurer Aviva on Thursday said it tumbled into a net loss of £3.0 billion ($4.5 billion, 3.5 billion euros) last year and slashed its shareholder dividend, sparking a slump in the group's share price.

The loss after tax, owing mainly to a massive writedown following the sale of its US business, contrasted with a net profit of £60 million in 2011, Aviva said in a results statement.

The company meanwhile reported underlying operating profit -- an indicator of its day-to-day business -- of £1.78 billion.

However, shares plunged in value after Aviva cut its full-year shareholder dividend by 27 percent to 19 pence a share, as it sought to cut debt and improve performance.

In early afternoon deals, Aviva's share price sank 12.81 percent to 313.7 pence on London's FTSE 100 index of top companies, which was 0.44 percent higher at 6,456.01 points. The stock had earlier dived as low as 295 pence.

Chief executive Mark Wilson insisted in the earnings release that the group had achieved major progress in its turnaround programme.

"2012 was a year of transition at Aviva. There has been solid progress against the turnaround plan set out last year. Our capital strength has improved materially and we have completed the vast proportion of the disposal programme. We have made progress reducing costs and we also have a strong new management team in place," he said.

Wilson added: "The £3 billion loss after tax is driven principally by writedowns we have previously announced due to the agreed sale of our US business.

"Operating profit levels were healthy across our major businesses, especially in the UK, France and Canada."

Aviva -- Britain's second-biggest insurer after Prudential -- said last July that it would withdraw from 16 non-core business areas following a major strategic review of the group.

The review was launched last year to strengthen its capital base and share price after the shock resignation of chief executive Andrew Moss in May 2012 amid spreading shareholder revolts over pay for top managers viewed as underperforming.

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http://www.globalpost.com/dispatch/news/afp/130307/insurer-aviva-posts-huge-2012-loss-slashes-dividend