Aviva brushes aside UK worries as Norwich Union regains top spot

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The Independent Online

The insurance giant Aviva brushed aside concerns that its UK operations may be faltering, as it unveiled a 43 per cent leap in first-half domestic life and pension sales, and a 6 per cent increase in profits yesterday.

The strong results come just months after analysts and investors raised concerns about the sustainability of growth in Aviva's UK business, cautioning that its failed bid for Prudential represented a negative turning point for the group.

Fears over the state of the UK life and pensions sector have been heightened over the past few weeks, with its UK rivals Prudential and Friends Provident reporting a squeezing of margins at home during the first half.

However, Aviva's chief executive Richard Harvey was upbeat about prospects for the UK, predicting double-digit growth for the industry as a whole this year, and even stronger growth within Norwich Union, the group's UK operating brand.

Norwich Union regained its place as No 1 in the life and pensions market during the half, and saw profit margins increase slightly from 2.8 to 2.9 per cent. The company's general insurance operations also performed well, delivering a combined ratio, a key measure of insurers' profitability, of 92 per cent. A ratio below 100 per cent represents profitability.

Outside the UK, the group also delivered strong results, with profits increasing 27 per cent in its international life and pensions operations. But new business margins came under pressure abroad, offsetting the improvements in the UK.

Mr Harvey said the group was pleased with its recent acquisition of AmerUs, the American life insurer, adding that the group did not feel under any pressure to chase further deals in the US. But he refused to comment on whether the company was still looking at potentially transformative acquisitions similar to Prudential.

Mr Harvey also refused to comment on what progress had been made towards the group's controversial plans to unlock the so-called "orphan" assets from its with-profits funds. He said a progress update would be given in the autumn once the regulator had considered whether to approve the company's plan. Orphan assets are surpluses within with-profits funds to which no policyholder has any direct claim.

Aviva shares fell 2 per cent to 718p, giving the company a market value of £17.3bn.

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