Aviva talks up outlook as sales slide in third quarter

AVIVA became the second insurer in as many days to talk up the profit outlook despite revealing a sharp slide in sales in the third quarter, led by a 25 per cent dive in UK life and pensions.<br /><br />The slump in the UK, where sales fell to &pound;6.66bn from &pound;8.84bn in the third quarter, weighed on Aviva&rsquo;s overall performance in 2009. The UK&rsquo;s second-biggest insurer said total sales fell 11 per cent to &pound;24.8bn over the nine months to 30 September. On Monday, rival Legal &amp; General (L&amp;G) said new sales slipped seven per cent over the same period. <br /><br />Aviva chief executive Andrew Moss gave an optimistic prediction of profitability in the months ahead despite question marks over the economy and little hope for a bounce in sales over the next six to nine months.<br /><br />He said: &ldquo;The outlook for the group&rsquo;s total profitability in 2009 is good despite a reduction in sales driven by continuing customer caution and active management of sales volumes to optimise profitability&rdquo;. Moss said Aviva had focused on profitable business over driving volume in the third quarter but results showed margins only inched higher to 2.1 per cent against two per cent a year ago.<br /><br />But some analysts questioned the logic of giving up volume. &ldquo;The problem is they are focusing on value over volume, but the margins are not improving,&rdquo; said MF Global&rsquo;s Peter Eliot.