Aviva focuses on Europe as rivals go east

AVIVA’S heavy cost cutting and its successful flotation of Delta Lloyd has paid off as it announced a three per cent rise in operating profits for 2009.

The British insurer recorded an end of year operating profit of £3.48bn, up from £3.37bn in 2008. Its Life business arm was a particularly strong performer increasing 11 per cent to £1.89bn.

Chief executive Andrew Moss said that despite having a surplus capital of £4.5bn he would not be pressured into making acquisitions. Aviva will stick to growing its business in Europe and expects the European life and pensions markets to reach $1.7 trillion by 2015, a result of the baby boomer generation moving into retirement.

Aviva’s conservative strategy is in stark contrast to rivals Prudential who agreed to buy Asian insurer AIA for $31.5bn (£24bn) this week. Moss wished Pru chief executive, Tidjane Thiam, luck in pursuing AIA – a deal he described as “audacious”. He added that Asian assets were rare on the market and always expensive.

Moss didn’t rule out the prospect of acquisitions but said they would come in the form of small bolt on assests.

“We have never been historically shy of investing,” he added.

Moss said further job cuts in 2010 were a possibility.

Shares in the company tumbled three per cent to 380p, a reflection of worries over Aviva’s pension deficit.