Aviva New Business Value In Q1 Up, Despite Weak UK, Premiums Down; Stock Dips

(RTTNews) - British life and health insurer Aviva Plc (AV.L, AV) reported Thursday an increase in first-quarter value of new business, its key measure of growth in life insurance, with significant improvement in Europe and Asia, despite weak UK. Meanwhile, net written premiums in general and health insurance declined 6 percent from last year. In London, Aviva stock is trading around 3 percent lower.

The company noted that the impact of regulatory reform in the UK, poor weather and difficult trading conditions in the UK motor market have been offset by recovering European businesses and strong performance from growth markets.

For the first quarter, value of new business or VNB increased 7 percent to 224 million pounds from last year's 209 million pounds. In constant currency, value of new business grew 10 percent.

Value of new business, excluding Eurovita, Aseval & Malaysia, was 228 million pounds, a growth of 10 percent on a reported basis, and 13 percent at constant currencies. According to the firm, 45 percent rise in new business in Europe and a 96 percent growth in Asia more than offset a 22 percent reduction in the UK.

In the UK, annuity VNB was 43 percent lower mostly due to the company's re-pricing actions and a relatively strong first quarter in the prior year.

Overall, VNB in growth markets increased 73 percent with strong growth in Poland and Asia and now contributes 26 percent of the group's total VNB, compared to last year's 19 percent. Turkey VNB declined 21 percent due to market volatility.

Net written premiums in general and health insurance, meanwhile, declined 6 percent to 2.083 billion pounds from 2.220 billion pounds last year. UK GI net written premiums were down 8 percent, while Canada net written premiums grew 5 percent in constant currency.

The company further said its overall performance in the first quarter was 'reassuringly calm and stable,' in marked contrast to the weather and regulatory developments.

Operating capital generation or OCG in the quarter was 0.4 billion pounds, same as last year, with improved OCG in Europe offset by higher weather losses in Canada and the UK.

The general insurance combined operating ratio or COR, was 2.2 percentage points higher at 97.7 percent, compared to 95.5 percent last year, impacted by increased weather claims in Canada and the UK.

IFRS net asset value or NAV per share increased 6 percent to 286 pence from 270 pence last year. MCEV net asset value per share was 469 pence, compared to 463 pence a year ago. Group Chief Executive Officer Mark Wilson said, "Aviva still faces challenges both in the external environment and in the business as we progress our turnaround. The regulatory environment is constantly changing and soft conditions persist in certain general insurance lines."

Going forward in the UK, the company expects its increased focus on mid-size bulk purchase annuity transactions to partially mitigate the impact of the Budget proposals.

In London, Aviva shares are losing 16.32 pence or 3.07 percent, and trading at 515.18 pence.