GROWTH in UK home and motor insurance boosted Aviva in the first three months of the year, offsetting a sluggish performance in its life division, the company said yesterday.
Aviva, the UK’s second-biggest insurer, saw global non-life insurance premiums rise nine per cent to £2.7bn in the quarter, compared with the same period in 2010, as UK insurance sales rocketed by a fifth to £1bn.
UK non-life performance was further boosted by large rises in insurance premiums, with car insurance up 24 per cent and home insurance seeing a six per cent rise. However, analysts expressed concern that the UK motor insurance market, where no-win-no-fee injury claims are causing many insurers huge losses, may affect future performance in the business.
Its life insurance division by contrast contracted in the quarter as many of its core markets delivered double-digit sales declines. Overall sales of long-term saving products fell 14 per cent to £8.8bn from 2010’s level, though profitability rose to a 13.7 rate of return, up from 12.3 per cent.
Chief executive Andrew Moss said Aviva had prioritised profitability over sales growth. “Life sales are down on 2010, primarily because we have driven new business returns higher by changing our product mix to focus on more profitable business,” he said.
Poor market conditions in Europe saw life and pension sales slump 24 per cent to £3.2bn, while action to improve US profitability caused new business sales to fall 21 per cent.
Moss said Aviva was “mindful of near-term macro-economic challenges in some European markets” but remained “confident about our long-term growth prospects.”