Aviva defies market slump

Aviva yesterday posted a 5.5 per cent rise in worldwide first-quarter sales despite the stock market slump that kept many UK customers away.

Britain's largest insurer said new business in Britain fell as customers turned away from savings and investment products linked to equities.

But sales, which came in at £3.8bn, held up due to a strong performance in Europe.

While total sales were in line with expectations, life and pensions sales of £601m in the first three months of 2003 were better than most analysts had expected, and were up from £598m in the same period last year.

Life and pension sales were on an annual premium equivalent basis – a standard industry measure designed to strip out the impact of one-off premiums.

Aviva is attempting to steal a march on competitors by expanding rapidly on the Continent, compared to Prudential, which is focusing on Asia for growth, and Legal & General, which is still mainly based in the UK.

Richard Harvey, chief executive of Aviva, said: "The development of our distribution capability across Europe and our broad product range has offset the contraction in demand for equity-linked savings products." Despite a slump in UK sales, Norwich Union – Aviva's brand in Britain – maintained its market share at 12 per cent. Total new business sales for life and pensions business were £26m, down from £339m last year.

The company said it had obtained a waiver from the financial regulator, the Financial Services Authority, over its solvency tests.

The FSA has granted waivers to a number of large insurers, including Prudential and Standard Life, so that the sustained falls in the value of their assets has not meant they have been forced to sell shares.