Aviva, the UK's largest insurer, restored some City confidence yesterday after posting a solid set of new business figures in difficult trading conditions.
The news that Aviva, formerly CGNU, had increased sales of life and pension products by 7 per cent to £1.7bn over the nine months sent shares in the company up 6.6 per cent to 484.5p.
The shares have slumped since a dividend cut was announced in February and had reached a low of 341.5p in the summer from a 12-month high of 886p.
Aviva, however, is still issuing strong words of caution over the outlook for the next quarter and is predicting another tough three months of trading ahead.
Philip Scott, a group executive director, said: "These are good sales figures in the context of very tough markets. Investor confidence was shaken at the beginning of July. We are not expecting an immediate upturn in the markets and do not expect confidence to recover quickly."
Sales in the UK, where it sells through the Norwich Union brand, were up 4 per cent to £954m on an annualised premium equivalent measure, the standard for the industry.
The figures were helped by the tie-ups Aviva has with banks. In the UK, Aviva has a joint venture to sell savings and investment products through the Royal Bank of Scotland. Sales through the bank were up 130 per cent to £677m. Aviva's bancassurance arrangements in Italy are also helping to pull in sales.
"By downplaying expectations on revenues and profits, some forecasts may be revised. That will help them to beat forecasts when the year ends," one analyst said.
The group's efforts to take market share in the stakeholder pensions market, where prices are capped at 1 per cent, are starting to eat in to the group's profits margins. New business margins in the UK were down to £231m from £242m.
Mr Scott ruled out raising capital through a share issue, saying the group was already well funded for organic growth. Cutting the dividend has saved the group in the order of £350m.
Its finances had a boost last week from the unexpected sale of its Australian general insurance business.
"We did not seek the transaction, but it never hurts to have an extra £650m in cash in the bank," Mr Scott said.
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