UK insurer Aviva beat forecasts with 1% rise in 2007 operating profits today, as strong growth in savings offset the heavy cost of Britain's floods. The company said it aimed to double statutory earnings by 2012.
Britain's largest insurer, which left some disappointed last year with a lack of detail on its strategy, also unveiled ambitious plans to integrate its asset management business and boost sales, while growing its profit and dividend.
'Although the external environment is uncertain, customers need the products we provide, and our markets remain fundamentally attractive,' CEO Andrew Moss said.
Aviva's operating profit, on a European embedded value (EEV) basis, rose to £3.29 billion sterling from a restated £3.25 billion a year ago. Analysts had forecast an average profit of £3.05 billion.
Statutory operating profit, on which the dividend is based, was £2.23 billion, down 15% and broadly in line with the £2.21 billion average forecast.
The insurer said last month that the higher than expected £475m impact of flood losses meant its combined operating ratio - costs and claims as a percentage of premiums - would come in at 100%, missing a 98% target. Without the impact of the June and July floods, the combined ratio would have been 95%, above targets.
Operating profit for the broader general insurance unit fell 39% to £1.03 billion over the 12 months. Aviva's life business, however, driven by growth in the US, UK and European units, saw profit climb 35% in 2007 to £2.75 billion.
Aviva's shares have been battered along with the rest of the sector by the shock waves from the credit crunch, though the insurer has only minimal exposure to the sub-prime sector.
Analysts said the results would be an opportunity to clear up concerns that have helped drag the shares 27% lower since the start of 2007, underperforming the UK life sector by over 10%.
Aviva said today that its balance sheet was not materially affected by global credit turmoil, adding it had reduced its exposure to market volatility by selling £3.4 billion of equities in its general insurance shareholder funds and UK pension scheme in the autumn, switching to bonds.
