Aviva Forecasts Faster Growth in UK Life and Pensions Market

Strategic Insights -

Aviva yesterday reported a 9 per cent increase in worldwide sales of life and pension products in 2004, with chief executive Gary Withers anticipating a 5 per cent expansion of the UK life and pensions market in the current year. The market expansion is expected to accelerate after tax rule simplifications in April 2006. Norwich Union Life, Aviva's UK brand, aims to maintain profitability despite pursuing growth in new business. Prudential, a rival insurer, aims to expand its UK life and pensions business twice as fast as the market rate over the next two to three years.

Key Takeaways:

  • Aviva reported a 9 per cent increase in worldwide sales of life and pension products in 2004, with UK sales rising 5 per cent to £1.1bn on an annual premium equivalent (APE) basis.
  • Norwich Union Life's chief executive, Gary Withers, expects the UK life and pensions market to expand by 5 per cent in the current year on an APE basis, with a potential acceleration in growth after April 2006.
  • Aviva aims to maintain profitability in the face of aggressive growth strategies from rivals, including Prudential, which has pledged to expand its UK life and pensions business twice as fast as the market rate over the next two to three years.
  • The bancassurance joint venture between Aviva and Royal Bank of Scotland saw sales of life and pensions products fall 15 per cent on an APE basis, due to work on introducing Norwich Union's products to RBS's sales platform.
  • Aviva's shares rose 19p to £639p after the company reported a strong performance in continental Europe, particularly in France, the Netherlands, Italy, and Spain.

Statistics:

  • Worldwide sales of life and pensions products at Aviva rose to £2.55bn (£2.38bn in 2003) in 2004, a 7.6 per cent increase.
  • UK sales of life and pensions products at Aviva rose 5 per cent to £1.1bn on an APE basis.
  • Prudential aims to expand its UK life and pensions business twice as fast as the market rate over the next two to three years.

Sources:

  • "Aviva shares rise 19p as market forecast is raised," The Times, (year not specified)
  • "Aviva Reveals 9% Rise in Sales", Insurance Times, (year not specified)
  • "Aviva's UK boss says firm will not sacrifice profits for growth", This is Money, (year not specified)