Aviva courts City support after failed Pru bid

The insurance giant Aviva, which owns the Norwich Union brand, launched a charm offensive on the City yesterday, setting itself demanding growth targets for its international business, to try to restore credibility after its failed pursuit of its rival Prudential earlier this year.

Speaking to analysts and investors in London, the group unveiled plans to grow its international sales and profits organically by 10 per cent a year for the next five years, while making a more concerted effort to hunt down suitable bolt-on acquisitions which enhance its distribution network.

Although there were no specific details of its strategy for the UK, the group said it planned to set itself equally tough targets in its home market later this year, once its new UK management team had settled down.

The announcement comes two months after Aviva's reputation was bruised by its failed takeover bid for Prudential. After it withdrew its offer just a week after it was made public, analysts and investors suggested that Aviva had left itself open to a bid.

Philip Scott, the group's executive director responsible for the international division, said the investor day had been planned before the company's pursuit of Prudential was made public. However, analysts suggested setting such bold targets was part of its plan to win back City sentiment. Aviva has never set itself specific public growth targets before.

Mr Scott said there were three key elements to yesterday's announcement. "First, we're going to aim to grow our international life business by at least 10 per cent a year over the next five years - both at a premium level and new business profits," he said. "Secondly, we believe we can achieve further life growth through future joint ventures and distribution deals, funded from our internal capital generating abilities.

"Finally, we also want to continue to grow our international general insurance business, but in a way which ensures we meet our combined operating ratio of 98 per cent."

The combined ratio is a key measure of a general insurer's profitability. A figure under 100 per cent represents an underwriting profit.

Mr Scott said the group had not ruled out making a larger acquisition and said the company was keeping a "watchful eye" on the market. He added that Aviva was not wedded to any particular region for expansion. Last year, the group made an offer for the US insurer AmerUS. Aviva's chief executive, Richard Harvey, is known still to be keen to grow the business on the other side of the Atlantic.

Commenting on Standard Life's decision to float on the London market, Mr Scott said Aviva had always preferred the idea of having one of its main competitors subject to the disclosure and transparency requirements of a quoted company.