UK's Aviva targets more savings after Direct Line takeover

(Refiles to fix day of the week in paragraph 1)

By Iain Withers

LONDON (Reuters) -British insurer Aviva on Thursday set itself new financial targets including nearly doubling cost savings from its combination with Direct Line, as CEO Amanda Blanc looks to convince investors the enlarged firm can deliver.

The company said it would target growth in earnings per share of 11% per year to 2028 and would resume larger share buybacks from next year, adding it would hit its existing targets a year early.

Shares were down 4% at 0940 GMT but were still up 42% compared to the start of the year. Analysts said the new targets were broadly similar to their forecasts, with RBC adding investor expectations had been high ahead of the update.

'READY FOR THE NEXT CHAPTER'

Blanc told Reuters the targets were strong and executives did not recognise the numbers in current analyst models.

"We're now ready for the next chapter of our delivery," she said.

Aviva secured the largest takeover of Blanc's tenure earlier this year when it closed its acquisition of motor insurer Direct Line for 3.7 billion pounds.

The insurer said it now expects to make 225 million pounds of cost savings from combining the two businesses, nearly twice its original estimate.

Blanc said savings would come in technology, operations and head office, adding the reduction in jobs would be between 5% and 7% of group roles, or up to 2,300 jobs, as it had previously said.

Aviva said general insurance premiums were up 12% to 10 billion pounds over the first nine months of this year, while its wealth business generated 8.3 billion pounds of net inflows.

The insurer said it expected to deliver 2 billion pounds of operating profit this year, hitting its target a year early.

CUSTOMERS CONCERNED ABOUT PENSIONS AHEAD OF BUDGET

Blanc said Aviva had fielded more calls from concerned customers about their pensions ahead of the UK's budget later this month, joining other money managers citing similar jitters amid speculation about potential tax changes.

"We have seen elevated calls into the contact centre from people asking about their pension," Blanc said, adding some had taken cash out, but that the volume was not material.

"Any uncertainty around this topic is clearly unhelpful... We would just urge the government to really think about that because what we want is for people to have good retirements and to continue to be saving."

($1 = 0.7451 pounds)

(Reporting by Iain Withers in London, additional reporting by Yamini Kalia in Bengaluru; Editing by Mrigank Dhaniwala, Jan Harvey and Conor Humphries)