British life insurer Aviva reported a better than expected 12 per cent rise in its 9-month sales, and confirmed that it may renegotiate a £1 billion sterling payout to customers as a result of weak financial markets.
Aviva owns Hibernian Insurance and Hibernian Health (formerly Vivas) in the Republic. Aviva said sales in Ireland were 27 per cent lower than the prior period. The company said this reflects reflecting the property market uncertainty and the one-off impact of Special Savings Investment Accounts (SSIA) maturing in 2007.
Aviva, owner of the Norwich Union brand, said it had life and pensions sales of £25.6 billion ($39.6 billion) in the nine months to September 30th, up from £22.9 billion in the same period last year.
Analysts had expected sales of £24.8 billion, according to the average of 13 forecasts collected by the company. Individual forecasts ranged from a low of 23.9 billion to a high of £25.4 billion.
Aviva also said its capital position was "strong", with a capital surplus of £1.3 billion at October 24th, down from £1.9 billion on September 30th.
The company estimated its surplus would fall by another £400 million in the event of stock markets falling by a further 20 per cent.
However, Aviva confirmed a weekend press report that it may attempt to renegotiate a £1 billion payout to policyholders, announced in July, as a result of weak financial market conditions.
"Should these conditions persist, then the terms of the offer could change to ensure it remains fair to both customers and shareholders, although this is not a decision we will make in the short term given the current volatility in world markets," the insurer said.
Any change to the proposed £1 billion payout would be made in consultation with Clare Spottiswoode, the former head of gas regulator Ofgem who was appointed to represent policyholders as Aviva looked into re-attributing a surplus that had built up in two of its with-profits funds.
Life insurers' shares have fallen steeply this month on mounting concerns that falling equity and bond markets as the global economy slows could dent their capital reserves.
Reuters