Aviva Interim Management Statement
A solid start to 2012
Aviva plc today announced its Q1 2012 Interim Management Statement. In a challenging economic environment, operating profit for the quarter is marginally down compared to the same period last year due to the deconsolidation of Delta Lloyd and the sale of RAC. Adjusting for these, operating profit has marginally increased.
Aviva continues to focus on capital and operating capital generation. Aviva's estimated IGD solvency surplus at 31 March 2012 was £3.2 billion, ahead of the full year 2011 position (FY11: £2.2 billion) and in line with the position at 29 February 2012 (£3.3 billion). Aviva generated £0.5 billion operating capital in the first quarter and the IFRS Net Asset Value per share increased to 445 pence (FY11: 435 pence).
Long-term savings sales were down 5% at £7.5 billion (1Q11: £7.8 billion) as a result of tough market conditions. General insurance and health net written premiums were level with last year at £2.2 billion (1Q11: £2.2 billion).
Profitability levels are in line with targets: in life insurance the new business internal rate of return was 13.3% (1Q11: 13.7%) and the Group general insurance combined operating ratio was 96% (1Q11: 97%).
John McFarlane, Executive Deputy Chairman, commented:
"Although the economic environment remains uncertain, we have delivered a solid operating performance during the first three months of 2012 and profitability in both our life and general insurance businesses is in line with targets.
"We have begun the process of identifying a new CEO for the Group, internally and externally. We expect this will take the remainder of this year, as we need to appoint the best person in the world available to us. In the interim, I will act as Executive Chairman to ensure we take the necessary actions and decisions to improve the standing and performance of the Group, and to accelerate these actions. I am excited to be playing a pivotal role at what is clearly an important time for Aviva.
"My first task is to make an improvement in the capital and financial strength in the group as well as an improvement in our financial performance. Whilst not underestimating the significance of the challenge I am optimistic of the outcome.
"To this end, last week I announced a new set of priorities for Aviva:
Firstly a strategic review of all our businesses to ensure we are focused on the right segments; that we put in place plans to advance the performance and position of our businesses strategically, and exit sensibly those that are not part of our future. These will be reviewed by me and subsequently the Board in June, and we will provide an update to you in July.
Secondly to build the capital base and improve the balance sheet strength of the group.
Thirdly a profit and value improvement programme involving the dynamic reallocation of capital across our businesses, identifying sources of segmental revenue growth, and improvement in our operating margins and return on capital.
Finally a continuous advancement in the foundation of the group and our position with all stakeholders and a frank and open communication with shareholders.
"Aviva has a strong brand, dedicated people and I believe the business has a great future."