Sales at Hibernian Aviva were down 43 per cent in the first quarter due to a sharp decline in the Irish life and pensions market.
The insurer said consumers had been “deterred by volatile equity markets, the slowdown in economic growth and property market uncertainty”.
Its health unit was “outperforming" competitors in the recruitment of new members and had seen its membership increase to 200,000. This translates to an estimated 9 per cent market share, the company said.
It noted that premiums in the Irish market continued to be affected by aggressive competition.
Its British parent Aviva today said it had bolstered its capital reserves by a quarter, addressing a key concern for some investors, and reported a better-than-expected 11 per cent rise in first-quarter sales.
Aviva, which last month suffered sharp share price falls due to worries over its capital strength, said its solvency surplus had risen to £2.5 billion by the end of March from £2 billion three months earlier.
Aviva shares were up 4.7 per cent at 286 pence by 8.16am, making them the biggest riser in the FTSE 100 share index, which was 0.85 per cent lower.
The stock has fallen 30 per cent since the beginning of the year.
"I think this is a key step. They've shown that they've got levers to pull, and that's obviously heart-warming," said Fox-Pitt, Kelton analyst Raghu Hariharan.
Aviva shares slumped by a third to a record low on March 5th after the group said it would leave its 2008 final dividend unchanged, stirring fears that rising corporate bond defaults could erode its capital reserves and potentially force a rights issue.
The company said today that the improvement in its capital position partly reflected a 35 per cent take-up by shareholders of an option to receive the 2008 dividend in shares instead of cash.
Aviva also credited further contributions from operating profits, hybrid debt issues, and the proceeds from the sale of a Dutch subsidiary first announced a year ago.
"Suggestions that Aviva needs a capital raising are effectively dead," Oriel Securities analyst Marcus Barnard wrote in a note to clients.
Aviva's life and pensions sales for the first three months of 2009 were £9.5 billion pounds, the company said, up 11 per cent compared with the same period last year.
Additional reporting Reuters
