LIFE AND pension sales fell 47 per cent for Aviva’s Irish subsidiary in the first half of 2009, new figures reveal today.

The company said the decline in sales at Hibernian Aviva reflected the sharp fall in the market due to the recession.

The value of new business during the first six months of the year was £4 million (€4.7 million), down 50 per cent on the same period a year ago, while margin was reduced to 0.9 per cent as against 1.2 per cent.

The insurer said there is lower demand across both retail and bancassurance channels locally.

Aviva, which is the UK’s second-biggest insurer by market value, cut its first-half dividend payment 31 per cent as investment earnings fell. Net income climbed to £675 million in the six months to June 30th, compared with a £97 million loss a year earlier.

The insurer cut its first-half dividend 31 per cent to 9 pence. Aviva paid a dividend of 13.09 pence for the same period a year earlier.

“Life and pensions margins have improved, the general insurance business has beaten our targets,” chief executive officer Andrew Moss said in the statement. The dividend cut is “in line with lower investment earnings in 2009”, he said.

Aviva, like rivals Prudential and Legal General, is trying to boost its capital reserves to combat rising losses on investments ranging from corporate bonds to commercial property.

The insurer is taking on less risk by purchasing more reinsurance, making more dividend payments in shares and in June sold its Australian unit for $776 million to bolster its balance sheet. Operating profit, measured on a market-consistent embedded value basis, rose to £1.69 billion in the period, from £1.51 billion in 2008. Aviva shares touched their lowest in 20 years in March after the insurer held its full-year dividend at 33 pence. – (Additional reporting: Bloomberg)