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Aviva Says Falling Insurance Sales May Have Reached Bottom
Jan. 28 (Bloomberg)
Aviva Plc, the U.K.’s second-biggest insurer, said a drop in the company’s sales may have ended in the final quarter of last year.
Life and pension sales in the U.K., Aviva’s biggest market, fell in the four quarters through Sept. 30 and revenue from its European unit dropped in the first three quarters of last year as consumers put off saving for retirement amid the worst recession in a generation.
“There’s a good case that maybe the third quarter of last year may have seen the bottom in terms of that cycle,” Chief Executive Officer Andrew Moss said today in a Bloomberg Television interview at the World Economic Forum in Davos, Switzerland. “I’m a bit more optimistic.”
Aviva, which will report fourth-quarter revenue Feb. 4, is betting that cost-saving measures and efforts to sell more products to existing customers in Europe will offset slowing growth in the U.K. The insurer last year cut its dividend while selling its Australian business and part of its Dutch unit to boost capital reserves after posting a net loss for 2008.
Moss, who led a working group advising the government on insurance issues last year, said that during the Davos meetings he will try to persuade policy makers to make it clear individuals need to take more responsibility for their own retirement savings.
“One of the changes we need to see long term in western economies is greater provision for long-term savings because the fact is governments simply can’t afford pension provision in the way, perhaps, they’ve been thinking they can,” he said.
The insurance industry is “on a good track” in negotiations to modify Solvency II, European Union regulations for insurance that will be implemented in 2012, Moss said. The Association of British Insurers said in September the rules may force U.K. insurers to raise 70 billion pounds of additional capital to back annuity contracts.
“What I’m going to be doing in debates in the next couple of days is making sure we do stay on track,” Moss said.