(Bloomberg) — Aviva Plc rallied to its highest in more than five years after profit beat analysts’ estimates and Chief Executive Officer Mark Wilson said he planned to restore bonuses at the U.K.’s second-biggest insurer by market value.
Operating income rose 6 percent to 2.05 billion pounds ($3.4 billion) in the 12 months to Dec. 31, topping the 1.99 billion-pound estimate of 21 analysts provided by the company. Cost-cutting expenses fell 21 percent and its internal loan was reduced by 1.7 billion pounds to 4.1 billion pounds, according to a statement today.
“The turnaround at Aviva is intensifying,” Wilson said on a conference call from London. “We said to the market that we will pay for performance and we talked to our shareholders and made sure they were aligned. Yes, we will be paying bonuses, and shareholders will be quite OK with that scenario.”
Wilson, 47, replaced Andrew Moss in January 2013 after shareholders rejected the former CEO’s compensation plans. Wilson scrapped directors’ bonuses for 2012 and froze pay for the firm’s top 400 managers as he sought to appease investors and rebuild capital depleted by the euro area’s debt crisis and repay the internal company loan.
The shares surged 8.1 percent to 504 pence in London to the highest since September 2008, extending gains this year to 12 percent. Panmure Gordon & Co. upgraded the shares to buy from hold as the company reached an agreement with the Prudential Regulation Authority to reduce its internal loan to 2.2 billion pounds by the end of 2015.