Aviva says Pru acquisition will "weigh" on life sector
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Aviva group chief executive Andrew Moss has criticised Prudential’s embattled £23.5bn acquisition of AIG’s Asian arm AIA claiming the move will “weigh” on the life insurance sector.
During a results conference call this morning, Moss (pictured) said the proposed £14bn rights issue to fund the deal, which has been stalled by the FSA due to capital adequacy concerns, will impact other insurers.
He said: “If money is going to be taken out of the sector in the sort of size we are talking about in the Pru rights issue then the money has to be found somewhere and therefore in the context of the timetable one would expect it to weigh on the sector through that period.
“Whatever the timetable is, clearly that is uncertain at the moment but we will see what transpires on that over time.”
Meanwhile, Aviva reported fairly stable life and pensions sales for the UK of £2.55bn, slightly up on the £2.5bn recorded in the first quarter of 2009 and up 14 per cent on the fourth quarter.
Collective investment sales increased to £426m in the first three months of the year, jumping from £175m for the same period last year. The insurer says this reflects increased confidence among UK investors.
Aviva recorded record levels of protection and annuity applications in the first quarter. Total annuity sales jumped 35 per cent to £877m compared with £648m in the fourth quarter of 2009. The firm’s bulk purchase annuity offering delivered sales of £344m up from £28m in Q4.
Sales of individual annuities fell to £533m from £620m in the fourth quarter. Aviva says this reflects the seasonal market fall in application levels during December and January.
Aviva’s pension sales were 10 per cent higher than the fourth quarter of 2009 at £941m compared with £859m as customers’ propensity to save began to return and group schemes secured during 2009 converted into new business volumes, the firm says.
Equity release sales increased by 52 per cent to £96m from £63m in the fourth quarter.
Moss insisted the insurer was focused on growth at home, claiming “the growth potential continues to be immense” in the UK and Europe.
He said: “Europe and the UK are the primary engines for Aviva’s growth today, accounting for 85 per cent of our long-term savings sales in the first quarter. Sales have recovered and we have seen strong performances across our portfolio of life, general insurance and asset management businesses, compared to the previous quarter.
“Our capital position remains strong and this second quarter of growth bodes well for the rest of the year, even though there is still a degree of economic uncertainty in a number of markets.”
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