More on Aviva
Aviva: Q3 new business
Aviva reported slow new business figures for the nine months to September 2005. On an APE basis, new business volumes increased by 7%. Investment sales (which contribute only 8.3% of total sales) fared better, growing 40% than the core life and pensions business which grew by just 5%.
Life and pension sales declined in the UK, Poland and Spain. Growth was steady in the rest of Europe, reaching 48% in Italy.
Aviva has been facing a more competitive market in the UK and margins have suffered as the company has attempted to grow sales. While the rest of the UK life assurance industry has been reporting fairly strong growth Aviva’s relative weakness is a concern. Growth also seems to be slowing: Q1 new business was up 11%, H1 was up 8%.
Aviva seems likely to underperform the sector and its opaque figures (its reporting is based on the ‘present value of new business premiums’ which tend to flatter the results rather than the industry standard APE) do not do anything to inspire confidence.
The share trades at 648.62p, on a prospective PE (2005 earnings) of 9.9x with a yield of 4%.
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