Aviva Investors sees outflows slow to £300m

Aviva Investors saw outflows drop in the first half of the year seeing net outflows of £300m, which is a reduction on the £1.7bn figure reported in the same period last year.

Overall, Aviva Investors saw a 7 per cent bump in assets in the first half of the year, from £245.9bn to £262.6bn, boosted by the transfer of funds from Friends Life Investments.

Excluding this business, funds under management dropped £5.6bn, with the company suffering net fund outflows of £300m, an improvement on the £1.7bn figure reported in the firs half of last year. 

AIMS, the firm’s flagship fund, helped to counter the outflows, seeing net external inflows of £300m since the start of the year. 

Aviva Investors generated profits of £32m, down from £41m in the first six months of 2014. This was mainly due to higher expenses and the “adverse impact” of the disposal of the River Road business in June 2014, the firm says.

Funds under management on Aviva’s UK platform have risen from £5.3bn at the end of 2014 to £6.8bn at the halfway point this year, with the firm reporting increased demand following introduction of pension freedoms in April.

Aviva group chief executive Mark Wilson says: “After three years of turnaround we are now moving to a different phase of delivery. We have improved the balance sheet, simplified the group and we are now transforming our business. The progress is evident in these results.”

Aviva has reported a surge in operating profit within its UK Life business in the first half of the year, driven by the recent acquisition of Friends Life.

However, UK Life profits rose 17 per cent, from £476m in H1 last year to £555m this year. This includes a £120m contribution from Friends Life following its acquisition in April.

When the impact of the Friends Life deal is stripped out, profits within Aviva UK Life slumped 9 per cent, from £476m to £435m, although H1 2014 included a £100m benefit from “expense reserve releases following actions taken to reduce the current and future cost base”.

The first six months of 2015 saw similar expense releases – labelled as “non-recurring” – of around £50m, including £22m linked to property restructuring and “various smaller releases” from an ongoing review of back-book business.

The business has so far made £63m of cost savings following the merger with Friends Life. The group is targeting total savings of £225m.