Aviva, the UK-based life assurance, pensions and general insurance company formed by the merger of Norwich Union and Commercial Union, today announced its preliminary results for 2002.
It reported operating profits of 1,798 million, down 9 per cent on the 1,983 million in 2001.On a modified statutory basis, operating profit was 1,296 million against 1,512 million in 2001.
The life operations were down 8 per cent to 1,524 million (2001: 1,665 million) after a net charge of 123 million (2001: 78 million) arising from what the company calls “prudent annuitant mortality strengthening.”
Interestingly, the Continental European businesses contributed 49 per cent of life achieved operating. Norwich Union also claims a leading position in European bancassurance distribution, with worldwide bancassurance sales up 50 per cent to 3.0 billion (2001: 2.0 billion)
The general insurance businesses delivered higher profits at the operating level, of 959 million (2001: 924 million).
Aviva says that its capital position – a serious source of concern these days – is strong. It has equity shareholders’ funds of 9.5 billion (2001: 11.6 billion, restated) and orphan assets worth another 4.3 billion. The free asset ratio of the UK life funds is 11.8 percent.
“We have delivered a robust set of results in a difficult year where the ongoing turmoil in investment markets has affected consumer demand and investor sentiment,” says Richard Harvey, Group Chief Executive. “These results demonstrate the effectiveness of our product and distribution strategies and are a measure of the Group’s financial and operational strength. The benefits of a strong business model, where resilient long-term savings operations are allied with a cash-generative general insurance business, are evident in these tough market conditions. We expect 2003 to be a challenging year and will continue our emphasis on capital disciplines, cost management and building our bancassurance opportunities.”