30th Oct 2014 07:54
LONDON (Alliance News) - Aviva PLC Thursday reported an 12% rise in value of new business from continuing operations, driven by increases across Europe and Asia more than offsetting a drop in the UK and Ireland.
The insurer's value of new business from continuing operations in the first nine months of the year rose to GBP690 million from GBP619 million in the corresponding period last year.
An 8% decline in the value of new business from continuing operations in the UK was more than offset by a 33% rise in France, a similar increase in Poland, a 26% boost to the value in Italy, Spain and Turkey combined, and a 36% jump in Asia.
At the group level, protection was the largest product contributor, making up 36% of the first nine months' value of new business, Aviva said.
Annuities, which have been hit by changes in the UK designed to give people more choice over how they invest their pension pots, accounted for 20%, down from 32% a year ago.
"We have actively shifted business mix to mitigate the impact of low interest rates and regulatory change," Chief Executive Mark Wilson said in a statement.
Aviva's UK life business returned to growth in the third quarter, with value of new business up 18% to GBP120 million, Aviva said.
"This has offset some of the decline caused by the new annuity legislation with total value of new for the nine months down 9% to GBP297 million," Wilson said. "Overall UK annuity value of new business was down 33% in the first nine months, an improvement on the 41% decline in the first half due to increased bulk purchase annuity volumes," the CEO added.
Wilson said he believes the diversification of Aviva's business and steps, such as hedging taken earlier in the year when market conditions were benign, position the company well in dealing with recent market volatility, which he called a "reminder" of global economic uncertainty. He said Aviva's hedging gave protection to its economic capital position going into October's market falls.
"We will continue to reallocate capital across the group to higher return businesses as we move to a group that is a focused true customer composite. This means that we will offer life, general and health insurance together with asset management in areas where we have competitive advantage and enough scale so we can win," Wilson said.
In insurance, Aviva said its combined operating ratio, a measure of underwriting profitability, improved to 95.9% from 96.9%. A combined operating ratio exceeding 100% represents an underwriting loss, with anything below that representing profit.
By Samuel Agini; [email protected]; @samuelagini
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