Ben Woods, Business writer Thursday, May 15, 2014 1:08 PM
Aviva has branded its performance as 'calm and stable' despite a slump in annuity sales and marked decline in its UK life insurance business.
The insurer's value of new business (VNB) for annuities was 43pc lower at £40m during the first quarter, as the EDP Top100 company took a double hit from the government's announced shake-up of the pension system and a decision by the group to sell fewer high-margin products.
But group chief executive, Mark Wilson, was confident that targeting the bulk annuities market would offset the impact of the chancellor's budget announcement that retirees would no longer have to buy an annuity with their pension fund.
It came as strengthening demand overseas offset a sluggish UK performance, with total VNB up 13pc to £228m, as the UK slumped 22pc to £89m, while Asia surged ahead at 96pc and Europe continue to rise at 45pc.
Mr Wilson said a 'polar vortex' in Canada had dealt a £40m blow to the general insurance business which also paid out £60m in the UK as storms and floods took their toll during January and February.
'Aviva's overall performance in the first quarter was reassuringly calm and stable in marked contrast to the weather and regulatory developments,' he said.
'Aviva still faces challenges both in the external environment and in the business as we progress our turnaround,' he added. 'The regulatory environment is constantly changing and soft conditions persist in certain general insurance lines.
'As a business we remain focused on cash flow, expense efficiency and the clinical allocation of capital to areas where we can maximise returns. There is still much to do.'
Reporting its first quarter results, Aviva revealed an operating capital generation of £0.4bn as it continues to push forward with its expenses reduction programme.
Since March, the insurer has weilded the axe on a number of its overseas ventures - disposing of its Turkish general insurance business, the US asset management boutique River Road, and a South Korean joint venture, while also carrying out a significant restructure of its Italian business.
* Do you have a Top100 story for the Eastern Daily Press? Contact business writer Ben Woods on ben.woods@archant.co.uk or call 01603 772426
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