Aviva profits up
Norwich Union insurance group Aviva unveiled a 37% rise in half-year profits today after seeing confidence return to the long-term savings market.
The improvement to £1.13bn (€1.71bn), which was ahead of market expectations, also benefited from a strong profits performance in general insurance, where Aviva has taken out costs by setting up a processing facility in India.
Chief executive Richard Harvey said Aviva – the world’s fifth largest insurance group – was now in a “strong and competitive position” following its recent drive on value and cost control.
Today’s figures for the first six months of 2004 show new business sales in long-term savings products continued to recover – with total sales, including investment products, up 7% to £7.9bn (€11.9bn).
Aviva described the improvement as gradual but said Norwich Union’s position in the UK market had “improved significantly” because a number of its rivals had closed their funds to new business in recent years.
Within life and pensions, where Aviva uses the standard industry measure of all regular premiums and 10% of single premiums, worldwide sales rose 2% to £1.22bn (€1.84bn).
However, the element of new business increased 10% to £324m (€490m) with margins up from 24.5% to 26.5% as Aviva addressed price and cost levels.
General insurance showed the strongest growth with cost savings and a low level of weather-related claims among factors helping profits to rise to £613m (€928m) from £387m (€586m) a year earlier.
In the UK, Aviva said Norwich Union had developed “competitive scale advantages” while its offices in India are now able to handle a substantial element of personal claims processing. It said service quality in the UK and India was ahead of industry benchmarks.
Aviva added it remained on track to achieve the £250m (€378m) of annual cost savings targeted in 2003 while it said further benefits were expected from the outsourcing of 950 jobs in its UK life business.
Mr Harvey said: “Efficiency remains a focus in 2004, particularly in our larger life and general insurance businesses.”
He added: “Consumers are slowly regaining their appetite for saving. The speed of recovery will be linked to investment market conditions and the elimination of regulatory uncertainty, particularly in the UK.”
