INSURANCE giant Aviva has struggled to reassure investors in the current turmoil besetting financial markets.
Shares is the UK’s biggest insurer closed 33% lower yesterday – wiping more than £2bn from its market value – even though the Norwich Union firm maintained its dividend and insisted it was in a strong financial position.
Aviva posted operating profits up 4% to £2.3bn for 2008 – but reported a net loss of £885m because of the performance of investment markets amid falling equity, property and bond values.
The company said it had reviewed the value of its assets and liabilities and made “cautious provision” in the results for future losses.
As well as the sharp drop for Aviva, shares in rivals Prudential and Legal General fell by more than 7%.
Aviva insisted its capital position was strong and said its solvency surplus was £2bn at the end of 2008, a figure which would fall to £1.2 bn if equity markets were to decline by a further 40%.
Aviva said it was better placed to withstand the tough market conditions because it was less dependant on earnings from long-term savings new business.
It said: “This is an important factor in setting our dividend. Our geographic spread across four continents and diverse distribution also brings resilience.”
Aviva said its total dividend would remain at 33p a share.
Chief executive Andrew Moss said: “In a tumultuous year, our underlying business has shown great resilience. Operating profits are up and we have maintained our dividend.”
Aviva profits under a new reporting measure were £3.36bn, an improvement of 10% after growth in both life and pensions and general insurance.
The net loss widened to £7.71bn using the measure, which aims to improve transparency and comparability in reporting standards across Europe.
With two-thirds of its business now coming from outside the UK, the company said the weak pound brought it financial benefits.
Profits in general insurance were 17% higher..
