Aviva UK Life sales surge but redemptions concerns remain

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Aviva has reported a 52 per cent rise in sales in its UK Life business but concerns remain about redemptions within the Aviva Investors business.

The provider’s third quarter interim management statement, published this morning, shows UK Life sales measured on a present value of new business premiums basis rose from £3bn in Q3 2014 to £4.6bn in Q3 2015.

Annuities sales almost doubled, from £721m to £1.4bn, although this was largely driven by a single £1bn longevity insurance deal signed during the quarter.

Pensions sales were up 70 per cent, from £1.3bn to £2.2bn, while protection sales increased by 49 per cent, from £294m to £440m.

However equity release new business was down 39 per cent, from £205m to £126m, and bond sales slumped 41 per cent, from £48m to £29m.

Aviva Investors, meanwhile, saw redemptions of £4.5bn in the third quarter of the year in a period of “difficult industry conditions”, cancelling out its £4bn in gross sales.

Aviva group chief executive Mark Wilson says Aviva Investors continues to make progress but although gross sales are “encouraging” redemptions remain “too high”.

Sales at Aviva Investors were boosted by the AIMS flagship range of funds, which now has £1.9bn of funds under management.

The investment unit contributed just £9m to the firm’s new business, although this was up from £5m in the same period last year.

Wilson says: “We are maintaining the momentum of Aviva’s transformation with a further quarter of improved performance.

“In asset management, our flagship fund range, AIMS, continues its strong investment performance and the Target Return Fund has recorded returns of 6.6 per cent over the past 12 months. We expect this growth to continue.”

As a result of the acquisition of Friends Life, which was completed in March this year, £23bn of assets will be transferred from Axa Investment Managers in November.

Wilson says: “The acquisition of Friends Life is everything we expected it to be. We have now achieved £91m of savings against our target of £225m.

“At the same time our UK Life business continues to grow and our customers are responding positively to the full range of pensions freedoms we offer.”