LONDON (Reuters) - British insurer Aviva (>> Aviva plc) said it was closing the London head office of recently bought Friends Life as it reported rapid progress in integrating the acquisition, a key part of a turnaround led by Chief Executive Mark Wilson.
Aviva announced the agreed 5.6 billion pound ($8.5 billion) Friends acquisition late last year, against a backdrop of UK pension reforms allowing retirees more choice in spending their pension pots, instead of being forced to buy an annuity - a key source of income for the insurance industry.
Wilson, brought in more than two years ago from Asian rival AIA (>> AIA Group Ltd) with the task of restructuring the company, said Aviva's turnaround was ahead of schedule.
"This is a satisfactory set of results, in particular our UK businesses have performed well," he told reporters on Thursday. "We have started (the Friends Life) integration at pace."
Aviva said it was closing Friends Life's head office in London's main financial district and had moved to smaller premises in Exeter, southwest England. It did not say how many jobs would be lost but has signalled the loss of up to 1,500 jobs in total after the acquisition.
The company has said the Friends purchase should generate about 225 million pounds in annual cost savings by the end of 2017. "We'll be disappointed if we didn't get at least that figure," Wilson said.
Aviva, which says the merger creates a UK market leader in life insurance with 16 million customers, also said it saw first-quarter gains in the key measures of its life and general insurance businesses.
Its value of new business grew 14 percent to 247 million pounds ($376 million) from a year earlier, though the value of new business for annuities fell 60 percent. Its combined operating ratio improved by 1.3 percentage points to 96.4 percent. A number below 100 percent indicates a profit.
Aviva shares, which fell at one stage in the previous session to a near four-month low of 507.5 pence, dipped 0.2 percent to 512.5p by 0832 GMT against a 0.9 percent fall in European insurance stocks <.SXIP>.
JP Morgan reiterated its "buy" recommendation on the stock, saying Aviva was a "strong restructuring story with potential for organic growth, post-Friends Life integration".
Aviva, which completed the Friends Life acquisition after the end of its fiscal first quarter, published separate data for Friends Life, whose value of new business fell 37.5 percent to 20 million pounds.
(Editing by Sinead Cruise)
By Carolyn Cohn