Insurer remains confident for full year profitability

Aviva has announced an 11% drop in total life and investment sales to £27bn, in its third quarter management statement released today.

General insurance figures will be provided at the end of the full year.

The group said the outlook for profitability remained good.

In UK general insurance, it said the focus remained on reshaping the book for sustainable profit, and admitted this had led to a reduction in premium. The third quarter COR was 98%.

The statement said: “The UK market remains very challenging with intense competition across both personal and commercial classes and whilst this continues to place pressure on business volumes, we have implemented a number of initiatives, such as our ‘Get the Aviva Deal’ advertising campaign, to attract and retain high quality new business and existing customers.

“Despite the difficult economic and market conditions, the improvements in our core insurance capability and enhanced risk selection mean we are confident this will translate into lower claims ratios in the future in addition to our already proven management of the distribution ratio.”

Group chief executive Andrew Moss said: ““In recent months Aviva has completed a number of strategic initiatives which, together with improving financial markets, significantly increased our capital and balance sheet strength. The outlook for the group’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.

“In the past three months we’ve completed the sale of our Australian life business, listed on the New York Stock Exchange, announced future management changes and begun to send a total of £0.5 billion to 805,000 UK customers as a result of our inherited estate reattribution.

“Yesterday’s successful IPO of part of our holding in Delta Lloyd was another significant milestone for Aviva, giving us further opportunity to reallocate capital to other parts of the group. The changes we have made increase our financial flexibility and position Aviva well for the future.”