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Aviva UK life arm returns to growth as VNB rises

Aviva’s UK life arm has reported a return to growth during the third quarter despite radical Government reforms that battered annuity providers.

The insurer’s third quarter interim management statement, published this morning, reveals the value of new business written rose 18 per cent, from £102m in Q3 2013 to £120m this year.

However, the value of new business in the year-to-date is down 9 per cent, from £326m in the first nine months of 2013 to £297m in 2014.

Year-on-year UK sales, measured on a present value of new business premiums basis, rose 6 per cent, from £8.56bn in Q3 last year to £9.1bn this year.

Annuity sales rose 61 per cent year-on-year, from £447m to £721m, driven by a bulk annuity transaction completed in July this year.

Pensions sales were down 4 per cent, from £1.34bn in Q3 2013 to £1.29bn this year, while equity release sales rose 77 per cent, from £115m to £205m.

Bond sales were up by almost a third, from £38m to £48m, and protection new business rose from £277m to £294m.

However, ‘Other’ UK business – which includes retail fund management and Aviva’s long-term health business – was down 37 per cent, from £780m to £491m. Aviva’s retail fund management business was transferred from Aviva’s UK life business to Aviva Investors in May this year.

Integration and restructuring costs were £75m during the period, down 62 per cent year on year. The firm says most of these costs relate to Solvency II.

Aviva group chief executive Mark Wilson says: “Aviva’s turnaround is delivering. Our key metrics have improved again. Year to date, our net asset value is 10 per cent higher; value of new business is up 15 per cent and the general insurance combined ratio improved to 95.9 per cent.

“The steps we have taken to focus and strengthen the group mean we are in a different position to two years ago.

“Notwithstanding this progress, there is still more to do before we can be satisfied we are fully delivering on our investment thesis of cash flow plus growth.”

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