FLG.L Share News (FLG)

Ahead of its proposed takeover by larger peer Aviva, insurance group Friends Life Group (FLG) smashed expectations with its 2014 results on Thursday as profits surged and cash generation exceeded guidance.FLG's shares surged in London, buoyed further by forecast-beating full-year numbers from Aviva.Chief executive Andy Briggs said he was "pleased" with the company's results, "in spite of the unprecedented regulatory and legislative challenges Friends Life, and the UK life insurance industry as a whole, have faced in 2014".Sustainable free surplus, one of FLG's key performance indicators (KPIs) for its current cash position, improved by 15% over the year to £373m, ahead of its own forecasts for "low double-digit percentage growth" and the consensus estimate of £361m.Meanwhile, the value of new business, a KPI for future cash, dropped 26% to £132m on the back of changes to the annuity market in last year's Budget, though this still topped consensus at £127m.IFRS operating profits jumped 38% to £556m, well ahead of the City's £352m estimate due to a number of one-off items.FLG declared a full-year dividend of 31.15p per share, up from 21.14p per share, though this is subject to the completion of the Aviva takeover.The deal, in which Aviva has offered 0.74 new Aviva shares for each FLG share, will be voted on by shareholders on 26 March and is expected to complete some time in the second quarter.Briggs said: "I have the utmost confidence in our standalone position, but I'm excited by the opportunity the Aviva deal offers to accelerate our proven, successful strategy."The stock was up 5.7% at 429.2p by 13:13 on Thursday.Given the share-exchange deal proposed by Aviva, FLG's stock is now tied to its counterpart, which jumped 6% after Aviva exceeded expectations with a 6% increase in operating profits in 2014.