More on Aviva
Aviva: Q1 new business
Aviva reported strong new business figures for the first quarter of 2006, the growth being lead by sales of investment products.
Life and pensions sales were up 27% on an APE basis, investment sales were up 119% on an APE basis and total sales were up 34% on an APE basis when compared to the same period last year.
The company uses the PVNBP (the present value of new business premiums) to report its figures and the rest of our commentary will be based on PVNBP figures unless otherwise stated. PVNBP is calculated as the present value of new regular premiums plus 100% of single premiums. Since single premium policies form an important part of the industry’s sales, PVNBP tends to flatter the sales figures. We also tend to be wary of companies that report most of their figures in PVNBP – something that Aviva pioneered.
Granted, PVNBP is the new accepted standard for reporting but much of the rest of the industry is quite happy to give equal prominence to the old industry standard of APE – in Aviva’s case the APE figures listed above were found buried deep within the announcement.
While the improvement in the life and pensions sales is to be welcomed, indeed only expected given the reversal of fortunes in the industry, there is still little to suggest that this company can outperform the sector. (We have looked at this in more detail in our previous piece).
The share trades at 807p, on a prospective PE (2007 earnings) of 10.1x, within the sector range, with a yield of 3.8%.
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