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Aviva UK group pension sales plunge 55%

Aviva’s UK group pensions business has plunged by 55 per cent in 2009 to £462m from over £1bn in 2008.

The insurer blames factors such as lower consumer confidence, limited salary increases and unemployment as well as fewer large scheme wins for the drop.

In today’s fourth quarter new business figures, Aviva also reports a 39 per cent drop in bond sales over the same period from £3.3bn to £2bn, which it attributes to its strategy of reducing commission as well as its withdrawal of the income protection guarantee option.

Investment sales were down 29 per cent from £1.5bn to £1bn.

Total UK life and pension sales were down 25 per cent in the UK during 2009 at £8.9bn compared to £11.9bn in 2008.

The news comes as this week’s Money Marketing reveals Aviva is cutting stakeholder commission by almost a quarter.

Annuity sales were down 22 per cent at £1.9bn compared to £2.4bn in 2008, while individual pensions sales were down 12 per cent from £3.7bn to £3.3bn.

Protection business was down 14 per cent from £1.1bn to £965m but equity release business was up 10 per cent from £250m to £276m as Aviva profited from the exit of other players such as Prudential.

Bancassurance sales through Aviva’s venture with Royal Bank of Scotland were up 3 per cent to £1.25bn from £1.2bn.

Aviva has more than doubled its capital surplus over the year from £2bn to £4.5bn.

Aviva UK chief executive Mark Hodges says that at least half of the year on year declines were as a result of strategic decisions to target “margin and profitability over volumes”.

Aviva group chief executive Andrew Moss has dismissed rumours that the life company could be looking to offload its UK business as “just speculation”.

He says: “We start 2010 in a strong position. Our focus remains on growing our business profitably and improving our operational efficiency so that we can fully benefit as our major markets return to economic growth.”

Worldwide, Aviva saw total life and pensions sales drop 12 per cent over the year from £36bn to £32bn.

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. … or could it be that their GPP (and PP) proposition aint up to sratch vs other providers AND that their admin/customer service is (based on my personal experience) ‘awful’ to say the least??

  2. Clearly neither Mr Hodges nor Mr Moss are aware of a the most significant reason for plunging life and pension sales which is the appalling ‘service’ they affford to IFA’s.They have obviously not yet heard of the regulatory initiative known as TCF which impacts on the whole advice chain and not just IFAs. Contrast Aviva’s results with those of Standard LIfe and you quickly realise the board are providing excuses not reasons for these results.

  3. To be fair, their crap admin and customer service is no worse than any other life office. Those that were any good are now awful thanks to contracting work out to Asia.

  4. Our experience over the lasy 2 years is the exact opposite. Your perception of humour is strangely sardonic

  5. Yes I agree. Our experience is such that we wont go out of our way to put anything new in AVIVA and we are gradually taking clients out.
    It’s not just their appalling state of disorganisation it’s the attitude. IFA’s who have built the mighty hulk that AVIVA is through giving AVIVA their clients’ money are treated by AVIVA as simpletons. AVIVA treat the IFA’s clients as if they are AVIVA’s. AVIVA may be right we certainly have been simpletons-we have stoked up these might insuers’ coffers with our clients’ money and they don’t have the decency now to speak to us as if we know and unedratsnd the market that WE deal with, and to offer us a good service for our clients. Time to move away from insurers to non insurer wraps

  6. Most likely reason for the drop in business, is that the cat is out of the bag about how Aviva really treats it’s customers;
    insurance that does not pay out
    investments that go down, even when the market goes up
    huge up front charges that are not properly explained
    MVR’s at the whim of the company and not in line with the markets

    I could go on, but you get the picture.

    In reality word is spreading and people do not like to be bitten twice. Trust is the biggest issue in the finiancial services industry and it looks like Aviva are right out of it. the only way for them to do business now is to hide behind other peoples brands.

  7. It comes as no real suprise to me. I think the demise of the traditional ‘jack of all trades’ life insurer was written some time ago. They are bloated, poor value and disingenuous. Come on, why would you really need to use a company like Aviva anyway? Maybe a bit of term assurance? Think they are a poor result of a few too many mergers.

  8. Life offices are in denial of the fact that their parasitic existences must come to an end when they have bled their hosts dry and scared off the rest.

    They move on to pastures new like India and China where it takes a while before they twig that what happened in the UK is heading their way like a cancer.

    Blaming ‘demanding’ IFAs for their downfall spawned the resurrected and damaging RDR.

  9. Perhaps AVIVA’s Stephen Gay (head of distribution) will now concentrate on putting his own house in order instead of promoting the RDR.
    Is his love of the RDR costing AVIVA business? I think yes. “As you sow, so shall you reap”.

  10. I should say my earlier comment was in response to “How funny” and that our experience relates to GPPs.We have set a number of significant schemes with Aviva and the overall experience has been very good!

  11. I would suggest that a major reason for the considerable drop in Aviva’s recent sales figures is down to Aviva’s much touted “Brand Advocacy” at work. Aviva’s sharp practice to its policyholders in the recent reattribution of the inherited estate of the CGNU/CULAC With-Profits fund has ensured that Aviva has given itself a bad reputation for its appalling treatment of its loyal customers. Aviva has broken the golden rule of business of upsetting its customers. Aggrieved customers will always ensure that they tell as many people as possible to try to prevent other people using a bad business.

  12. as an ordinary policyholder who took out some policies with “commercial union” back in the 1980’s which were taken over (or should i say swallowed up) by norwich union/aviva. i can only say that things have gone from bad to worse to disastourous for me.
    even taking the “crash” into consideration, performance has been shocking.
    something seems to be going on at norwich union/aviva akin to ripping ordinary policyholders off for the benifit of board and shareholders.
    NEXT YEAR MY POLICY AND ANY COMMITMENT TO NORWICH UNION/AVIA ENDS THANK GOODNESS AND I WILL NEVER EVER BUY ANYTHING WITH AVIVAS NAME AGAIN. – SORRY JUST TELLING THE TRUTH.

  13. I was beginning to wonder if other IFAs felt the same way about Aviva as I do. Glad to see I am not alone. I believe they have become a rather unsavoury organisation. If they treat IFAs badly, as I beleive they do, why would they act any differently towards the clients?

  14. Interesting that they are turning their distribution focus towards banks. Is this because banks will ignore TCF, RDR etc and stiff their clients with uncompetittive products?

    Frankly good luck to anyone wanting to flog Aviva products. Service will come back and bite you where it hurts!

  15. I do find it amusing- though hardly surprising- that so many fellow ‘professionals’ take every opportunity to respond to these type of stories in such an unprofessional way.

    If you deal with your clients in the same opinionated, self-important manner as you openly post on forums such as this, don’t be surprised if they decide to move on long before RDR D-Day.

    I have little sympathy for the provider in question, they do seem they have forsaken the IFA sector- if you believe that, then don’t use them, move on.

  16. Many basic pension sales are still commission orientated and if the money isn’t there, your policies will not be sold… simples… I haven’t seen Aviva moving to the newer pension platform business that others have done.. in fact I havent seen anything re Aviva and pensions…. so it’s not really surprising their pension sales are well down.

    Funny how all that actuarial brain power back in the late nineties, early naughties stated that 1% AMC and 100% plus LAUTRO was feasible..

    and Aviva..? …. like most of the large institutions, you get the feeling that they would love to distance themselves from the IFA….

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