Broker snap: Aviva to grow earnings in 2011

4th Mar 2011 10:12

Nomura continues to believe that insurance giant Aviva offers investors good growth prospects at an attractive price after an impressive 2010.The insurance group's cost reduction and focus on higher-margin product selection were the main drivers of a 26% increase in operating earnings. However, while these were boosted by a number of one-off items - mainly relating to the reattributed estate and Irish reserve releases - the broker estimates that Aviva can grow operating earnings by 9% in 2011."The main growth drivers are likely to come from two areas, in our view: 1) its weighting towards life business, especially risk and unit-linked life in continental Europe and the UK, which is likely to grow at a rate well above Property & Casualty insurance, and 2) its ongoing cost-reduction target of £400m by the end of 2012," says analyst Nick Holmes.The broker stays a 'buyer' and raises the target price to 650p to reflect time value appreciation.