Aviva reports UK sales surge, but poor European business

Aviva reports UK sales surge, but poor European business

	Published : Fri, 27 Oct 2006 09:09 By : James Rowe Print this Story

LONDON - Britain's biggest insurer Aviva PLC said that nine-month life and pensions sales increased 18 percent as the new reforms in the UK triggered a sales surge. However weak business in France and Netherlands saw a slowdown in growth in Europe.

Sales in the UK surged on the back of the so-called A-day rule changes in April, which saw to it that the pension tax was modified and the limits on tax-fee pension savings were abandoned. Life and pensions new business at Aviva jumped to £19.1 billion, up from £16.3 billion reported at the same time last year.

Aviva also reported a surge of 22 percent in global sales to £22.7 billion. This figure also includes investments made by the company. In the UK sales jumped 39 percent to £10.5 billion during the nine months to September 30. This is already more than the sales for the whole of 2005.

"In the UK our business is growing fast, our margin is stable and we are the market leader," observed Chief Executive Richard Harvey. "Aviva is well-positioned to capture growth in the world's largest long-term savings markets where we expect demand for products to rise as private savings increases."

Aviva also said that the job cuts announced in general insurance and life insurance would bring down its UK workforce from 36,000 to 32,000. The company hoped to save £250 million annually through this move. Aviva expressed confidence on maintaining its growth in the UK since customers were recognizing the importance of saving up.

"We've achieved strong growth in new business while sustaining the profitability of these sales. This result proves the competitive advantage we're building through our worldwide business model and demonstrates Aviva's strengths of scale, balance and diversified product offerings," Mr Harvey pointed out.

Analysts said that the sales surge boded well for Aviva. Kevin Ryan an analyst at ING in London told Reuters that the profit margin remained unchanged largely due to the poor European results, "Where people will be focussing is why the two big continental businesses, France and the Netherlands, are not going forward quite as fast as we'd estimated," he added.

Aviva shares were down by 2 percent at 778.5 pence in early trading this morning.