Aviva Nine-month Worldwide Sales Decline - Update

(RTTNews) - U.K.-based insurance services provider Aviva Plc (AV, AV.L), Wednesday, in an interim statement, said its Worldwide total sales and life and pensions profit sales declined by 11%, reflecting lower consumer demand as well as strategic actions taken by the company. Looking ahead, Aviva noted that total profitability outlook for 2009 remains good. For the nine-month period, the company's total life and pensions sales in present value of new business premiums, or PVNBP, declined 11% to GBP 24.06 billion from GBP 27.01 billion in the previous year and dropped 19% in local currency. According to the company, all references to sales represent PVNBP, which is the present value of new regular premiums plus 100% of single premiums.

The company said its prior year results were restated to reflect the move from European Embedded Value, or EEV, to Market Consistent Embedded Value, or MCEV, basis.

Total investment sales decreased 10% to GBP 3.04 billion from GBP 3.37 billion in the earlier year and was down 16% in local currency. Aviva said that the investment sales are calculated as new single premium plus the annualized value of new regular premiums. Worldwide total long-term savings sales for the nine months declined 11% to GBP 27.10 billion from last year's sales of GBP 30.39 billion and decreased 19% in local currency. In the U.K., market conditions remained challenging and life and pensions sales were 25% lower at GBP 6.66 billion, compared to GBP 8.84 billion in the prior year. Collective investments sales dropped to GBP 631 million from GBP 1.24 billion a year earlier. In Europe, long term savings sales increased to GBP 13.91 billion from GBP 13.66 billion last year. Life and pensions sales decreased to GBP 12.6 billion from prior year's GBP 13.02 billion and on a local currency basis sales were 13% down from a year ago. In the U.S., new business sales slightly decreased to GBP 3.74 billion from last year's GBP 3.81 billion and fell 22% on a local currency basis. In Asia Pacific, Life and pension sales fell 22% to GBP 1.05 billion from GBP 1.34 billion in the preceding year and was down 30% in local currency. The company said its overall retail sales volumes were 11% down at GBP 4.39 billion, compared to GBP 4.91 billion in the previous year and 17% lower on a local currency basis. Life and pension sales through Delta Lloyd declined 11% to GBP 2.83 billion from GBP 3.19 billion in the prior year and was down 22% in local currency. Aviva noted that the Group margin is in line with full year 2008 at 2.1%.

Estimated net asset value or NAV per share on an MCEV basis increased to 520 pence at September 30 from 416 pence at the end of June 2009, benefited by the strong improvement in equity markets, the narrowing of credit spreads, foreign exchange movements increasing the value of the Group's overseas businesses and the benefit from a reduction in the staff pension scheme deficit, the company noted. On an IFRS basis, estimated net asset value per share increased to 409 pence at September 30 from 349 pence at the end of June 2009. According to the company, the sustained nature of economic downturn profitability continues to impact customers' keenness and ability maintained to save. Many of the customers are presently giving priority to the repayment of debt over new long-term savings commitments, Aviva added. Andrew Moss, chief executive said, "In recent months Aviva has completed a number of strategic initiatives which, together with improving financial markets, significantly increased our capital and balance sheet strength. The outlook for the group's total profitability in 2009 is good despite a reduction in sales driven by continuing customer caution and active management of sales volumes to optimize profitability." "We have seen a strong rebound in financial markets which, if sustained to the end of the year, will have a positive effect on our overall profits," added Moss. On October 1, Aviva announced the completion of the sale of its Australian life business and wealth management platform. The total proceeds of the Australian sale are expected to be GBP 0.45 billion or AU$ 0.9 billion, with the majority received on completion. Yesterday, Aviva also announced the completion of the Delta Lloyd initial public offering or IPO and said the shares commenced trading on Euronext Amsterdam. The IPO will raise gross proceeds of GBP 1.03 billion or EUR1.12 billion, which includes 10% over-allotment option, and will generate a pro forma IGD benefit of GBP 0.5 billion, the company said. "Yesterday's successful IPO of part of our holding in Delta Lloyd was another significant milestone for Aviva, giving us further opportunity to reallocate capital to other parts of the group," added Moss.

AV closed Tuesday's regular trading at $12.68 on the NYSE.

AV.L is currently trading at 406 pence, up 26.7 pence or 7.04%, on a volume of 4.86 million shares. In the past 52 weeks, Aviva shares have been trading between 160.10 pence and 474 pence on the LSE.

For comments and feedback: contact editorial@rttnews.com Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index