The struggling insurance giant Aviva has reported a big fall in half-year profits as foreign exchange fluctuations and restructuring costs hit the bottom line.
Operating profit (including restructuring costs) was down 10% compared to the first six months of last year, at £935m. The market had been expecting a figure of around £1bn.
Operating profit before restructuring costs was down 2% to £1.121bn.
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Gallingly for the group, it has had to write down £876m in goodwill and intangibles on its US business producing a net loss after tax of £681m compared to a profit of £465m at the same stage last year.
The interim dividend is unchanged at 10p per share.
The operating profit squeezed out of the general insurance business has "marginally improved", producing a combined operating ratio (COR) of 95.5%. COR subtracts insurance pay outs from written premiums, anything under 100% implies a profit.
The big issue for Aviva is how to revive its fortunes after a five year period in which its value has more than halved.
The company had to part with the previous Chief Executive, Andrew Moss, in May after shareholders become dissatisfied with his growing pay packet at a time of reduced stock valuations.
The firm is now targeting a £400m cost reduction proramme but as with all restructuring this will have heavy up front costs.
In his forecast for the coming months the new Executive Chairman, John McFarlane, says: "we expect second half performance trends to be broadly similar to the first six months, but with higher restructuring costs as we implement our strategic plan."
BS
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