Aviva earnings pick up after Eurozone blow

Aviva reported a bigger-than-expected six per cent rise in its 2011 earnings, helped by better profit margins in its life insurance business, and said capital reserves had recovered from a hit they took last year as a result of the Eurozone debt crisis.

The company, Britain's second-biggest insurer, had an operating profit for the year of £2.5bn ahead of the £2.41bn pencilled in by analysts in a company poll.

Aviva also said its Insurance Groups Directive capital surplus, a key measure of capital strength for European insurers, had risen to £3.3bn as of 29 February, up from £2.2bn at the end of last year.

In November, Aviva said falling Eurozone government bond prices had cut its surplus by 30 per cent to £2.7bn between July and September last year, prompting a steep fall in its share price.