Aviva hits 2008 high as profit beats analysts' estimates

"We view this has hugely significant for Aviva and as a consequence, combined with better-than-anticipated results, we upgrade to buy," Barrie Cornes, a Panmure analyst, said in a note to clients today.

The reduction in the loan may also boost cash paid back to Aviva and help "secure dividend growth," according to Charles Graham, an analyst at Bloomberg Industries. Wilson, who cut Aviva's dividend by 44 percent last year, declared a final payment of 9.4 pence a share in 2013, up from 9 pence in 2012.

Aviva said 72 percent of cash generated was paid to the group in 2013, from 49 percent in 2012, boosted by its Italian and Irish units, which resumed paying dividends. The capital surplus rose to 8.3 billion pounds and net income was 2.2 billion pounds from a loss of 2.9 billion pounds a year earlier.

Wilson said Aviva Investors contributed an "inadequate" 3 percent to operating profit and had 5 billion pounds of net outflows in 2013. He said the unit's newly appointed CEO, Euan Munro, who was lured from Standard Life Investments last year, will announce a new strategy later in the year.

The insurer also took a 132 million-pound charge after two former employees at the investment unit were found to have breached its trading policy since 2006 to benefit external hedge funds. The breaches were first disclosed in a letter to clients in December.

In general insurance, Aviva's combined operating ratio, or claims and expenses as a percentage of premiums, rose to 97.3 percent from 97 percent as it took an 60 million-pound hit from the recent U.K. floods.