Aviva hints at disposals as profits surge

INVESTORS welcomed Aviva’s forecast-beating results yesterday as the insurance giant reported a 35 per cent jump in pre-tax profit.

Achievements included eliminating its £1.7bn pension deficit in the year, and returning its net asset value to a £12.8bn pre-crisis level.

Aviva said its 2011 strategy was “to concentrate on the markets where we have strength and scale” and chief executive Andrew Moss hinted at disposals in less profitable markets.

“We are going to focus on and invest in 12 key markets; on the positive side, you will see that investment in those markets,” he said. “It will mean de-emphasising certain other markets and, over the course of the next 6-12 months, I think that will become clear.”

Keefe, Bruyette & Woods analyst Greig Paterson said its US business “will likely be sold” as it looked like an “in-demand asset”.

Aviva’s pre-tax profit hit £2.4bn from £1.8bn in 2009, while IFRS operating profit rose 26 per cent to £2.6bn from £2bn, boosted by strong UK growth and cost-cutting.

Net asset value per share rose 21 per cent to 454p from 374p in 2009, while its 55.1p earnings per share came in well ahead of the 50.5p earnings per share market forecast.

Aviva shares closed up 1.69 per cent at 457.3p. “On virtually every valuation methodology Aviva appears very attractive compared to its peer group,” said Panmure Gordon analyst Barrie Cornes.