Flood claims fail to sink insurer Aviva as profits rise 1 per cent to £3.3bn

Aviva beat full-year profit forecasts yesterday as strong growth in life insurance sales offset the impact of the summer floods on its general insurance business.

Britain's biggest insurer set itself a target of doubling earnings per share by 2012 and said it could accelerate the pace of its dividend increase. Andrew Moss, the chief executive, unveiled a plan to combine Aviva's 15 asset management businesses around the world to increase cross-border sales as part of the drive to boost earnings

Aviva also provided comfort for investors worried about potential losses from investments in US sub-prime assets and other racy products hit by the credit crisis.

Aviva's operating profit for 2007, on a European embedded value basis, rose 1 per cent to £3.29bn, ahead of analysts' expectations. The insurer, which owns Norwich Union in the UK, increased the full-year dividend by 10 per cent to 33p as expected.

Mr Moss said: "We will double it [earnings per share] by 2012 at the latest. If we are successful in delivering our goals, it potentially creates room for accelerating the dividend increase."

He added that he could not make a promise on the dividend.

Mr Moss took over as chief executive of Aviva in July, replacing the company's long-time boss Andrew Harvey. He launched a "one Aviva, twice the value" strategy but with little detail. Analysts said Mr Moss, formerly the finance director, was now putting some meat on the bones that could help drive the insurer's ailing share price. Having risen more than 6 per cent during trading, Aviva's shares closed up almost 1 per cent at 616p.

Aviva last month announced a higher-than-expected £475m cost from the summer floods. The hit from the floods pushed operating profit at the general insurance unit down 39 per cent to £1.03bn.

Mr Moss gave an upbeat outlook for the prospects of Aviva's core life business, where the US, UK and European divisions increased profit by 35 per cent to £2.75bn. "People need to save money, and in many parts of the world they are. That is why life insurance is a very attractive business to be in," he said.

The company said less than 1 per cent of its assets were at risk of writedowns from the collapse in the credit markets. Debt has been dispersed around the world in complex structured products and investors have been worried billions of pounds in toxic assets could be sitting on insurance companies' books. "We have put out very extensive disclosure today which outlines asset exposures," Mr Moss said. "It will give assurance to shareholders that we do not have issues."

Aviva is locked in a tussle with Clare Spottiswoode, the policyholder advocate, over reallocating surplus capital in two of its with-profits funds. Mr Moss said he expected her to respond to its latest proposal early in March.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there