Aviva Q1 sales up 20 pct, beats forecasts

LONDON, Apr 27: Aviva Plc, Britain's largest insurer, beat forecasts with a 20 percent rise in first-quarter life and pension sales on Thursday and said it saw growth continuing in 2006, though the current pace could ease.

Aviva is under pressure to show an ability to generate organic growth after a 17-billion-pound (.4 billion) bid for rival Prudential Plc was rebuffed last month.

''These very strong numbers prove that the proposal we made was about putting together two companies with very strong growth prospects,'' Finance Director Andrew Moss said in a conference call with reporters.

Worldwide life and new business sales climbed to 6.8 billion pounds from 5.7 billion the year before. That was well above a consensus forecast of 6.08 billion pounds.

Profit contribution from the sales rose 20 percent to 235 million pounds, above expectations, with a margin of 3.5 percent, flat on the same quarter last year.

''First-quarter life sales and new business profit figures were very strong,'' analyst Matt Lilley at Lehman Brothers said in a note after the results.

''The company's attempted merger with Prudential and the continuing speculation over other potential acquisitions has distracted attention from the fact that Aviva's life business currently enjoys a good deal of momentum.'' Aviva's shares were up 0.37 percent at 815-1/2 pence at 0832 GMT.

The shares have slipped over 2 percent since it said last month it had dropped the Prudential bid and are now trading at around 1.65 times embedded value, just above the average for a the sector.

Prudential is trading at around 1.76 times EV.

GROWING AT HOME In the UK Aviva said total sales climbed 34 percent to 3.2 billion pounds. Life and pensions new business rose 27 percent to 2.76 billion, as individual pensions sales benefitted from transfers ahead of changes to UK regulations with ''A-day'' this month and improved equity markets helped investment bonds.

''The big feature is individual pensions and switching ahead of A-day. If there is a concern, it is how much business is being cannibalised either internally or from third parties as part of this process,'' said analyst Kevin Ryan at ING said.

''Individual pensions are fairly low margin anyway. If you add on some switching on top of that, it's fairly low grade stuff.'' UK new business margins came in at 2.8 percent for the first three months, down from 3.1 percent in the same period a year ago but above 2.7 percent in the second half of 2005.

Several of Aviva's rivals have said they see strong growth prospects for the UK market, despite competition. Patrick Snowball, appointed in January to head the insurer's UK life and non-life businesses, said he had increased his estimates.

''We'd said high single digit growth across the whole (UK) market. I think we'd move that up a tad to low double digit and we expect to grow in line with the market through the year,'' he told a conference call.

Aviva's international business, which now accounts for almost 60 percent of life and pensions sales, saw new busines up 16 percent at 4.03 billion pounds, boosted by France and Italy.

The figures have been reported on a PVNBP (present value of new business premiums) basis, which allows a better comparison of the sales performance of life assurance across Europe.

PVNBP takes the value of new single premiums sold plus the expected present value of new regular premium policies.

REUTERS