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Aviva Plc, the second largest insurer in the United Kingdom, released a performance report on the nine months ending September 30, 2011 on Thursday. European life and pension sales were down 18% from the same time last year, reflecting turbulence caused by the European Debt Crisis. Despite a 6% gain on sales in the UK, struggling sales in the US and Europe brought total long term savings sales down 8% on the year to £23.6 billion.
In the face of these losses, Aviva Chief Executive Officer Andrew Moss responded with confidence; “Markets have been exceptionally volatile but we have delivered a strong operating performance in the first nine months and we remain on track to meet our financial targets this year. Focusing on capital generation and our capital and liquidity position will continue to be priorities.” Apart from the losses in Europe sustained as a result of the debt crisis, other aspects of Aviva’s business have remained strong. The combined operating ratio has improved to 96% for 2011, while UK general insurance sales are up 12%. Despite their success in the UK, Aviva is being hit harder than its competitors, who are less exposed to volatility in the European market.
The mixed results from the news release have left the stock price relatively even, up around 0.8% in the early afternoon. As Aviva continues its policy of downsizing global operations and focusing on its most profitable markets, the CEO responded to shareholder concerns, saying, “Aviva is fitter and leaner today. Whilst the market environment is likely to remain challenging in the near term, we continue to make good strategic progress and are strengthening customer franchises in key markets, notably the UK.” Though Aviva’s profits are down from last year, they remain ahead of their short term financial targets and have performed well within Britain, taking on more than 318,000 new motor insurance customers in 2011 alone.
Andrew Moss’s unwavering confidence in the future of Aviva and its ability to meet their financial targets has had a neutral effect on investors, maintaining a steady share price throughout the day Thursday.
References
↑ Aviva News Release November 3, 2011
↑ UK Insurer Aviva Is Getting Back On Track By Stressing Profits, Not Scale
