Interim results - Worldwide long-term savings new business – Three months to 31 March 2006
Continental Europe
France:
Aviva France’s sales increased by 12% to £1,134 million (2005: £1,020 million), with strong operational performance supported by favourable equity market performance and a change to the tax treatment of the Plan d’Epargne Logement (PEL) bank product.
Tax benefits attached to PEL banking products were restricted with effect from 1 January 2006, prompting significant transfers from these accounts into insurance products. Consequently, the overall market growth1 of 29% in the three months to March 2006 has mostly benefited bancassurers (with growth of 39% compared with 11% amongst the traditional insurers). Transfers from PEL products are expected to decrease over the coming months.
Excluding Crédit du Nord, Aviva has performed in line with the average for traditional insurers, with 11% growth. Crédit du Nord new business sales grew by 18%.
Aviva’s total unit-linked sales were 23% higher at £501 million (2005: £411 million), representing 46% of overall savings sales. In particular, unit-linked sales in AFER were 53% higher at £165 million (2005: £109 million). Growth in Euro fund sales was 6%, with sales of £586 million (2005: £562 million) reflecting Aviva’s continuing strategic focus on unit-linked business.
Since late in 2005, Aviva’s distribution networks have been encouraging policyholders to transfer existing 100% Euro funds into more balanced Euro and unit-linked portfolios, as allowed by the ‘Fourgous’ amendment, while ensuring that policyholders are receiving best advice. Experience to date has been encouraging, with £700 million of existing funds transferred into unit-linked funds. While these transfers are not included in our new business figures, this initiative brings benefits both through increasing the proportion of existing investment in less capital-intensive unit-linked funds and enabling a greater proportion of future new business from existing customers to be unit-linked.
Although a slow down in the rate of growth is expected following this exceptional first quarter, Aviva expects strong growth in unit-linked business to continue for the remainder of 2006, with the timing of campaigns in the bancassurance channel and equity performance resulting in some volatility in quarterly sales levels.
New business margin increased to 4.0% (2005: 3.5%) with a resulting increase in new business contribution of 28% to £45 million (2005: £36 million). The increased margin reflects the higher mix of unit-linked sales.
- Based on gross written premium.
