Insurer Aviva is hit by poor life revenues

City A.M. Reporter
Insurer Aviva yesterday reported weaker 2009 life sales, held back by tough economic conditions in the UK, and said its general insurance arm had been hit by hefty bad weather claims in the final quarter.

Aviva had total 2009 life and pensions sales of £32bn, down 12 per cent from £36.24bn the previous year, the company said yesterday.

Analysts had expected sales of £31.3bn, according to the average of 11 forecasts collected by the company.

Britain’s second-biggest insurer, behind Prudential, said its general insurance profits for 2009 would be dented by £100m of claims for damage from storms in Ireland and the UK during the final three months of the year.

Aviva had a capital surplus of £4.5bn pounds at the end of 2009, compared with £2bn a year earlier, the company added.

Insurers’ shares fell steeply in early 2009 because of worries that sliding financial markets could erode their solvency capital, prompting companies across the sector to build up their reserves.

But Aviva said its life sales rose 21 per cent in the final quarter of 2009, and added that it was well-placed to benefit from an economic upturn in its major markets.

“We start 2010 in a strong position,” chief executive Andrew Moss said. Aviva shares closed at 398p, valuing the company at about £11bn.

The stock closed down 4.2 per cent at £381.2p.