Investec has maintained its positive stance on insurance giant Aviva despite first-half operating profits falling well short of consensus forecasts.
Operating profit dropped 10% in the six months to June 30th to £935m, under estimates of £1,119m and slightly below Investec's £996m forecast. This reflected a "multitude of knocks", the broker says, including the sale of the RAC, foreign exchange losses, UK weather losses and restructuring costs.
"In the absence of the restructuring costs, operating profit would have been £1,121m. We view this as a creditable result in a difficult trading environment," said analyst Kevin Ryan.
Nevertheless, life and general insurance profits came in ahead of forecasts. Ryan said that the underlying results were "sound".
"The US business has had £876m of goodwill written off and this suggests a sale sooner rather than later, which should be viewed as positive, we think. As more disposals occur, we believe the shares have the potential to re-rate."
A 'buy' rating and 517p target price is maintained.
By 11:24, shares were trading 1.17% lower at 314.49p.
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