* MCEV profit 1.69 bln sterling vs 1.29 bln consensus
* H1 dividend cut by 31 percent
* Plans partial float of Delta Lloyd on Euronext
(Adds CEO comment, analyst reaction, more detail)
By Myles Neligan
LONDON, Aug 6 (Reuters) - British insurer Aviva Plc reported a stronger-than-expected half-year profit on Thursday, helped by cost cuts, and announced plans to slash its dividend and partly float Dutch unit Delta Lloyd to bolster its capital.
Shares in Aviva, Britain's second-biggest insurer, were up 5.75 percent at 377.6 pence by 0900 GMT, making them the third biggest riser in the FTSE 100 share index.
Aviva Chief Executive Andrew Moss said the capital-saving measures would allow the company to pursue potential takeovers.
"I think you do have to look pretty carefully at inorganic opportunities which may be available in the coming year," he told reporters.
"We've seen number of opportunities come across our desk in the course of the last nine months. We haven't wanted to take advantage of those... but I am absolutely determined that Aviva should be in a position where it will have the flexibility to take advantage of any opportunities that may come."
Aviva said it planned to float part of its 92 percent stake in Delta Lloyd on the Euronext Amsterdam exchange "as soon as conditions allow." Moss said the group would aim to sell 25-30 percent of the business, with Aviva retaining a majority stake.
That would enable Aviva to profit from potential acquisitions by Delta Lloyd as the Benelux insurance market undergoes a period of reorganisation following last year's global financial crisis, Moss said.
"This will be seen as positive," Oriel Securities analyst Marcus Barnard wrote in a note.
"Delta Lloyd has always seen itself as an independent company with one large shareholder. There have been various disagreements over governance in the past."
DIVIDEND CUT
Aviva added that it was cutting its interim dividend by 31 percent, reducing the payout to 9 pence per share.
Aviva, which suffered steep share price falls in March on concerns rising corporate bond defaults might erode its capital, had been widely expected by analysts to cut its shareholder payout to preserve cash.
On Tuesday, capital pressures forced rival British insurer Legal & General to cut its interim dividend by 45 percent, having already halved its final 2008 payout.
European insurance stocks fell steeply in the first quarter of the year on concerns that falling equity markets and rising corporate bonds could eat into insurers' capital but shares have since rebounded, helped by a broader financial market recovery.
Aviva had an operating profit on a Market Consistent Embedded Value (MCEV) basis of 1.69 billion pounds ($2.9 billion) for the six months to June 30, up from 1.51 billion in the same period last year.
Analysts had expected a profit of 1.268 billion pounds, according to an average of 13 estimates compiled by the company.
Profit on the International Financial Reporting Standards (IFRS) measure fell 14 percent on the year to 1 billion pounds, marginally ahead of analysts' expectations of 936 million according to an average of 12 estimates it collected.
Aviva said its profits performance had been helped by an efficiency drive that had reduced its cost base by 9 percent year-on-year, partly offsetting the impact of a 4 percent decline in life and pensions sales.
Aviva also said stronger markets had reinforced its financial strength, with its regulatory capital cushion rising to 3.2 billion pounds by June 30 from 2 billion at end-2008.
The capital buffer will get a 400 million pound boost when Aviva completes in the third quarter the sale of its Australian operations to National Australia Bank, Aviva said.
(Editing by Lin Noueihed)