Car Insurance by Aviva on 8 March 2012
Aviva beat City forecasts with a 6% rise in 2011 profits and has overtaken Direct Line, recently rebranded from RBS Insurance, to become the largest general insurer in the UK.
The insurance group has grabbed a bigger share of the UK life and pensions market, now at 12%, and won 400,000 new car insurance customers, taking the total to more than 2 million. Admiral, the second-biggest UK car insurer who reported rising profits on Wednesday, has about 2.9 million customers.
Aviva, which operates in 21 countries (down from 30 a couple of years ago), made an operating profit of £2.5bn in 2011 from continued operations, ahead of the £2.4bn pencilled in by City analysts. Profit before tax slumped to £87m from £2.4bn, including a £726m loss relating to its Dutch subsidiary Delta Lloyd.
Aviva's eurozone debt exposure has fallen to £1.3bn from £1.6bn in 2010, equivalent to 1% of shareholder assets. Aviva has a big business in Italy and Spain, but it has zero exposure to Greece and Portugal and "very little" to Ireland, said Aviva's finance chief Pat Regan. "We're pretty comfortable with that level."
Chief executive Andrew Moss said conditions in Europe were "undoubtedly tough". "People are still nervous in some of those markets and that will affect sales of unit-linked products, for example," he said. Even so, the insurer made record operating profits of £216m in Spain.
Asked about the eurozone debt crisis, Moss said things were moving in the right direction: "It's perfectly clear that the politicians have a much better grip on what's happening. There are going to be a few bumps in the road, but overall the trends are towards consensus and agreement."
Moss said the company would carry on simplifying its portfolio. Last year, it sold the RAC breakdown business for £1bn, further reduced its stake in Delta Lloyd and offloaded its Czech, Romanian, Hungarian and Slovakian operations.
Oriel Securities analyst Marcus Barnard said: "At first glance a better than expected set of results, with plenty for the bulls and something for the bears." He said the dividend had fallen slightly short. Aviva will pay out 26p a share to shareholders, up just 2% from 2010 and below expectations of 26.8p.
The insurance group has grabbed a bigger share of the UK life and pensions market, now at 12%, and won 400,000 new car insurance customers, taking the total to more than 2 million. Admiral, the second-biggest UK car insurer who reported rising profits on Wednesday, has about 2.9 million customers.
Aviva, which operates in 21 countries (down from 30 a couple of years ago), made an operating profit of £2.5bn in 2011 from continued operations, ahead of the £2.4bn pencilled in by City analysts. Profit before tax slumped to £87m from £2.4bn, including a £726m loss relating to its Dutch subsidiary Delta Lloyd.
Aviva's eurozone debt exposure has fallen to £1.3bn from £1.6bn in 2010, equivalent to 1% of shareholder assets. Aviva has a big business in Italy and Spain, but it has zero exposure to Greece and Portugal and "very little" to Ireland, said Aviva's finance chief Pat Regan. "We're pretty comfortable with that level."
Chief executive Andrew Moss said conditions in Europe were "undoubtedly tough". "People are still nervous in some of those markets and that will affect sales of unit-linked products, for example," he said. Even so, the insurer made record operating profits of £216m in Spain.
Asked about the eurozone debt crisis, Moss said things were moving in the right direction: "It's perfectly clear that the politicians have a much better grip on what's happening. There are going to be a few bumps in the road, but overall the trends are towards consensus and agreement."
Moss said the company would carry on simplifying its portfolio. Last year, it sold the RAC breakdown business for £1bn, further reduced its stake in Delta Lloyd and offloaded its Czech, Romanian, Hungarian and Slovakian operations.
Oriel Securities analyst Marcus Barnard said: "At first glance a better than expected set of results, with plenty for the bulls and something for the bears." He said the dividend had fallen slightly short. Aviva will pay out 26p a share to shareholders, up just 2% from 2010 and below expectations of 26.8p.
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