Aviva profits see heavy fall

by David Masters

Story link: Aviva profits see heavy fall

Aviva, the parent company of Norwich Union, has reported its results for 2007, with general insurance profits falling 39% to £1.033 billion. This was compounded by a 6% rise in its combined operating ratio (COR), which reached 100%.

The company’s net premiums also fell to £5.4 billion, a decrease of 3%.

Norwich Union’s contribution to the profit was £433 million, almost two thirds lower than the £1.12 billion profits the previous year.

The plummeting profits and poor results were blamed on £475 million in losses from the UK’s summer floods. Without the floods, the company’s COR would have been just 95%. Competitive market conditions did little to help matters.

In spite of the falling profits, the company says that it maintained a healthy balance sheet, with net asset value per share up to 772 pence, an increase of 13%. Dividends also rose by 10% to 33 pence. According to Aviva, the balance sheet was unaffected by the global credit crunch.

Andrew Moss, Aviva’s chief executive, said of the results: “The advantage of our diverse business model is demonstrated by robust financial results which show our fast-growing life business offsetting the exceptional losses caused by the worst UK floods for 60 years.

“In volatile investment markets our conservative approach to investment risk has served us well.”