Europe is the place to be, says happy Aviva

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The Independent Online

Insurer Aviva shrugged off rival Prudential's $35.5bn Asian expansion, saying Europe was the place to be.

Aviva posted better than expected operating profits of £3.48bn, up 3 per cent when many analysts had predicted falls. Pre-tax profits came in at £1.8bn, turning round from a £1.3bn loss the previous year.

Chief executive Andrew Moss described Prudential's move to buy AIG's Asian assets as "audacious" but pointed to figures from Oliver Wyman showing European life insurance and pension assets would grow $1.7trillion over the next five years compared with $1.5tn for Asia. "We are a very different business to them. We are very strong in Europe and that will be the fastest growing region in the world for life insurance and pensions over the next five years. We are very happy with our positioning," said Mr Moss. He described the increase as "a wall of money" and said Aviva was poised to reap the rewards. The company has kept a tight reign on costs, which helped it to surprise on the upside. Over the last two years its headcount has fallen to 46,000 from 57,000. Aviva has expanded on the continent through a series of distribution deals with banks.

The total dividend for the year of 24p is down from 33p, as the insurer acts to conserve capital. The pay out was down by 33 per cent at half year but the cut in the final payout was less so the total is down by around just over a quarter.

Aviva saw a notable pick up in sales in the fourth quarter of the year and Mr Moss indicated that the positive trend had continued into this year. "Growth prospects are reasonably encouarging. We have taken costs out of the business and our focus is relentlessly on building value," he said.