Aviva reports 'calm and stable' first quarter

15th May 2014 07:00

'Reassuring calm and stable' was the message set out by Aviva Chief Executive Mark Wilson in the insurer's first-quarter trading update, with the value of new business (VNB) growing solidly despite weather and regulatory developments.VNB - Aviva's key measure of growth in life insurance - improved by 13% in the first three months of 2014 to £228m as a decline in UK Life was offset by strong performances across Europe and Asia. This was the company's sixth consecutive quarter of year-on-year VNB growth.UK VNB declined by 22% on last year, owing mainly to a 43% slump in annuity VNB to £40m due to re-pricing actions and strong comparatives.The company said its combined operating ratio (COR) - a gauge of profitability which compares premiums with losses and expenses - deteriorated to 97.7% during the quarter, compared with 95.5% the year before, reflecting poorer weather during the period.Net asset value per share increased by 6% to 286p in the first quarter.The company said it made further progress in simplifying its portfolio since the full-year results were announced in March, as it announced the disposals of its Turkish general insurance business, US asset management boutique River Road, South Korean joint venture as well as a significant restructure of its Italian business."Aviva still faces challenges both in the external environment and in the business as we progress our turnaround," Wilson said. "The regulatory environment is constantly changing and soft conditions persist in certain general insurance lines. As a business we remain focused on cash flow, expense efficiency and the clinical allocation of capital to areas where we can maximise returns. There is still much to do."BC