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Aviva said that it is so pleased with the progress it has made strengthening its capital position that it is planning to return cash to shareholders this year.

The insurer, which bought rival Friends Life in 2015 partly as a way to improve its balance sheet, did not elaborate on how it would return the capital although it did push the full year dividend up by 12 per cent.

Chief executive Mark Wilson said:

Aviva’s financial position has been transformed and a distinctly stronger balance sheet and excess capital give Aviva more options.

News of the cash return came as Aviva reported full year results. They showed the damage caused by last week’s change to the so-called-Ogden rate, which is the way personal injury compensation payments are calculated. The change will be mean much higher payouts to accident victims.

Aviva said that its full year net profits dropped 22 per cent because of the change to the Ogden rate.

Operating profits, which exclude the Ogden impact, were up 12 per cent to £3bn.

Mr Wilson added:

Aviva’s results are simple and clear cut: more operating profit, more capital, more cash, more dividend. And there is more to come.

Fund management delivered a breakout year with strong positive net flows and operating profit up 30%. General insurance is growing, with operating profit up 17 per cent , and in UK Digital we have doubled online registrations to 5m. We are becoming a digital disruptor for the benefit of our customers.

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