Aviva shows healthy profits following focus on Life insurance

Friday, August 6, 2010

Aviva, the second most successful insurance company in the UK, announced their first half profits yesterday. According to the report, their profits have trebled within half a year, to £2.1bn. This constitutes a phenomenal rise of over twenty percent from last year’s figures.

As a result of the announcement, Aviva’s shares soared in popularity, going up by an extremely healthy eight percent within one morning. The success of the company has been attributed primarily to excellent advertising, and an increased focus upon Life Insurance products and pensions, rather than investments.

The chief executive of Aviva's Life and Pensions business commented: 'Pensions and annuities are more resilient in times of economic difficulty, so we have benefited from shifting our focus in that direction. Additionally, the move from defined benefit pension schemes to defined contribution schemes has been accelerated by the downturn, and we have seen our business grow as a result. The 'Get the Aviva deal' advertising campaigns, which have featured comedian Paul Whitehouse, have played an important role. One of our strengths is our brand and we've felt the benefits of being able to put a significant amount of money into promoting it.”

Aviva’s Annuities business has grown significantly, as well as the company seeing over one hundred thousand new customers for car insurance in just six months, as a result of the celebrity advertising strategy which promoted their policies. For Annuities, Aviva offers one of the best deals in the UK insurance market, providing £5,752 a year with a £100,000 joint life policy.

Aviva group chief executive, Andrew Moss, commented: “The combination of our leading positions in life and non-life insurance has proved of great benefit yet again. This was a good half year for Aviva. We achieved a 21% increase in operating profits, grew sales for the third consecutive quarter and improved the group's margin. We also increased our interim dividend by 6% to 9.5p a share after slashing it by around 30% last year.”