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Life Assurance Company Reports Print E-mail

TEP – 10 August 2010 

UK second-biggest insurer Aviva has beaten analysts expectations reporting that first-half profit rose 21 percent as the life assurer indicated a consumer return to long-term savings products.

Operating profit rose to £1.27bn beating expectation of £1.17bn as net income rose to £1.08bn from £675mn a year earlier. Chief Executive Officer Andrew Moss added that Aviva “remains alert to the macroeconomic environment and risks in financial markets.”

Aviva indicated that it is increasing sales of life and pension products in Europe and following its main competitors Legal & General Group and Standard Life, selling products with fewer guarantees in an effort to reduce the amount of reserve capital.

Aviva also confirmed that it is renewing its strategic partnership with Royal Bank of Scotland RBS in a new distribution agreement with Aviva where RBS’s distribution network will sell Aviva protection and selective pension products.

RSA Insurance Group have also reported today a ‘resilient’ interim performance against a difficult first half for the insurance industry as profit before tax came in virtually unchanged at £302m from £301m last year.

Insurance industry sales quotient, net written premiums were reported up 9% at £3.80bn from £3.49bn in a comparable period in the first half of 2009 while RSA's combined operating ratio also improved to 94.8% from 93.5%.

Andy Haste, chief executive officer of RSA commented that “As it stands today, we continue to expect to achieve a combined operating ratio of around 95% for the full year... we expect the UK to remain in positive territory for the remainder of 2010 with Emerging Markets to return to double digit growth in 2011.”

Life assurance giant Legal & General reported interim figures ahead of expectations despite profit coming £589m in the first half of 2010 but down from £656m previously reported in a comparable period.

The city will react well to the news since Panmure Gordon had a figure of £572m at the top of the range of its market forecast. L&G also indicated that it cash on account at the end of June at £3.3bn, presently ahead of the life insurers regulatory capital requirements. Company also increased the half year dividend to 1.33p from 1.11p.

Legal & General chief executive Tim Breedon added “We remain on track to generate at least £600m of net cash in 2010... we are optimistic about growth prospects in UK savings and annuities, though there is little evidence of recovery in the UK housing market.”

Meanwhile, there is sign of life back in the TEP market. The market has recently been supressed with margins squeezed by the low interest environment of the last 18 months. However, TEP's or traded endowment policy surrender values appear to be back on the increase after experiencing a couple of years of stagnation, according to leading TEP brokers.
 
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