Aviva sees profits jump in U.S.
August 5, 2010 by Karen Mracek
Updated 2:27 pm
By KAREN MRACEK • email@example.com •
August 5, 2010
Aviva PLC reported an increase in profits for the first half of the year, with strong results from its U.S. operation based in Des Moines.
Aviva North America, which includes Aviva USA, doubled its operating profits for the first six months of 2010, to $332 million, over the same period a year ago.
“Our business is really hitting on all cylinders,” said Chris Littlefield, CEO of Aviva USA. “We’ve had nice growth in volumes on our life insurance business, we’ve seen very good sales on our annuity business, and as importantly, we’ve seen a return to good profitability in our business.”
Doubling profits “in a challenging economic environment reflects decisive management actions in the U.S.,” the company said in a statement.
Aviva USA, which is part of London-based Aviva PLC, the world’s fifth-largest insurer, employs about 1,300 people in the Des Moines area.
Sales in the U.S. were down 27 percent compared with the first half of 2009, as the company continued to deliberately manage its annuity growth.
“We delivered about $2.8 billion in annuity sales. … We’re pretty happy with our annuity volume,” Littlefield said. “We are committed to the annuity
business. We have a strong franchise there that we want to maintain.”
The life insurance side of the business, however, is where Littlefield sees the potential for significant growth.
“We think there is a good opportunity there — given all that has happened in the last couple years — for a new player who is financially strong to come into that market and really make an impact on growing their business,” Littlefield said.
Operating profits in life insurance was up 258 percent to $136 million over same six months a year ago.
Aviva USA also saw improvement in new business profitability in the U.S., with 14 percent rate of return on new business compared with 7 percent in
“Certainly, we’ve made a lot of tough decisions over the past 12 months or so to really focus on the profitability of our business and getting back to
managing our business in a more disciplined fashion and focusing on our management of spread,” Littlefield said.
Aviva Investors, which also has its U.S. operations in Des Moines, reported an operating profit of $67 million for the first half of 2010, up over the