UK’s biggest insurer makes pre-tax profit but after-tax loss

Aviva has announced pre tax profits up 4% to £2.3bn but posted an after-tax loss of £885m – but it claimed that by using accounting rules adopted by many European insurers its pre-tax profits were up 10% to £3.4bn.


(IFRS = international financial reporting standards, MCEV = market consistent embedded value basis

  • IFRS operating profit up 4% to £2,297m
  • IFRS loss after tax of £885m
  • IFRS net asset value per share of 416 pence
  • Total dividend per share maintained at 33.00p
  • MCEV operating profit up 10% to £3,358m
  • MCEV loss after tax of £7,710m
  • MCEV net asset per share of 486 pence
  • General insurance and health turnover £1,198m up 17% from £1,021
  • Combined operating ratio 98%
  • £340m of £500m 2010 cost savings target achieved

Andrew Moss, chief executive, said: “In a tumultuous year, our underlying business has shown great resilience. Operating profits are up and we have maintained our dividend. Bottom line earnings have been affected by investment markets which have predictably created significant unrealised losses during the year.

“Aviva remains financially strong. We’ve undertaken a thorough review of the value of our assets and liabilities, and have made cautious provision for future losses so that we are in good shape to withstand the ongoing volatility and uncertainty in world markets. Maintaining our capital strength has been a priority for us and remains so this year.

On general insurance the company said: “General insurance and health profits improved by 17% as a result of more normal weather conditions when compared to the exceptional 2007 UK floods. This was partly offset by lower prior year reserve releases and the impact of increasingly competitive markets. We are pleased to report a combined operating ratio (COR) of 98%. The COR is a measure of the profitability and efficiency of our general insurance business and this result is in line with our ‘meet or beat’ worldwide COR target of 98%.”

For the UK it said: “Whilst we believe that market conditions will remain challenging into 2009, there are signs of the market hardening and we are seeing rating above claims inflation in all major classes for the first time in five years, This, together with the actions we have put in place in 2008, gives us confidence in delivering a UKGI COR in 2009 in line with our worldwide target of 98% or better.”