End of house boom boosts Aviva sales
NORWICH Union insurance giant Aviva today said the end of the housing boom has boosted sales, as UK life and pension volumes for 2004 were up 5% at £1.1bn.
And the country's largest insurer said it did not need to raise capital to fund sales growth. Executive director Philip Scott said: 'We do not need any changes to our capital structure to fund growth. The organic growth ambitions can be financed with our capital reserves and there is no need for securitisation or any other capital raising to fund growth.'
Rival Prudential shocked investors last year when it launched a £1bn rights issue largely to fund expansion in the UK.
With consumer confidence gradually returning, the company expects sales growth to continue. Growth in Europe will be boosted by the launch of its joint venture with Credit du Nord in France and an extension of its relationship with BPU in Italy.
Scott said the mis-selling row between Legal & General and the Financial Services Authority suggested the watchdog could be more analytical with investigation results.
Investment bank Dresdner Kleinwort Wasserstein raised its price target on Aviva shares to 650p from 600p. Dresdner said the group should benefit from the restructuring within the UK insurance market following 'depolarisation' and said growth in its European markets demonstrated the benefits of its diversified business model.
The bank kept an 'add' rating on the shares, which were up 2.7% at 637p, one of the top performing stocks.
Broker UBS reiterated its 'neutral' stance on Aviva and said the full-year worldwide sales of life and pensions business at £2.550bn beat its own forecast of £2.516bn and a consensus forecast of £2.37bn.
The broker said sales in Continental Europe were much stronger than anticipated. France, Italy and the Netherlands beat its forecasts, but Spain was light.
Sales in the UK also came in below expectations, but UBS said Aviva's strategy in the UK has been to focus on increasing the value of new business, rather than volumes.
