Aviva's first-quarter global sales down 3 per cent

Misery continues for the UK-based insurer.

Aviva's headquarters in London. Credit: Getty Images

Aviva has reported worldwide total sales (excluding Delta Lloyd and RAC) of £9.7bn for the first quarter of 2012 – a decrease of 3 per cent, compared to £10.09bn for the same period last year.

The British insurance giant's woes, which culminated last week with the departure of CEO Andrew Moss, have only continued to worsen, with a 5 per cent drop-off in life insurance sales.

Moss left amid shareholder discontent over underperforming shares. A spokesman for Aviva has since announced that a search for a replacement could take the rest of the year. Its executive deputy chairman, John McFarlane, has taken day-to-day charge of the company.

Life and pension sales fell by almost a quarter (23 per cent) in Italy and Spain, largely due to the ongoing troubles in the eurozone. In 2011, 40 per cent of Aviva's operating profit was generated in mainland Europe. As a result of its exposure to the region, the company has predictably suffered more than many of its UK rivals.

Total long-term savings sales were £7.47bn (2011: £7.84bn), while sales from general insurance and net health written premiums were £2.23bn (2011: £2.24bn).

In life insurance, the new business internal rate of return was 13.3 per cent (2011: 13.7 per cent). The group's general insurance combined operating ratio was 96 per cent (2011: 97 per cent).

During the quarter, the company generated £0.5bn in operating capital, including £0.1bn benefit from a reinsurance transaction in the UK.

In the UK, life and pension sales were £2.44bn, with a life new business IRR of 15 per cent. Pension sales increased 12 per cent, while individual annuities and protection sales increased 20 per cent.

In Ireland, market conditions remain difficult.

John McFarlane, executive deputy chairman at Aviva, said:

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.