Long-term savings North America

Long-term savings North America

In the USA new business sales of £4,545 million (2008: £5,715 million) were 20% lower on a sterling basis and 33% lower on a local currency basis. This reflected our continued focus on increasing capital efficiency by moderating the pace of annuity sales compared to the prior year, growing our life insurance business and our decision not to write funding agreement sales in 2009 (2008: £848 million). Excluding the impact of funding agreement sales written in 2008, life and annuity sales were down 7% over the same period last year and 21% lower on a local currency basis. Our fourth quarter sales have shown positive growth from the third quarter this year, increasing by 45%, reflecting both an improvement in annuity and life sales.

Sales of annuities for the year have decreased by 13% to £3,674 million (2008: £4,244 million), and by 27% on a local currency basis. Sales in the fourth quarter were up 44% over the third quarter sales, with the number of pending applications significantly higher than at the previous quarter end. Customers continue to seek products with guarantees and recognise Aviva as one of the stronger market participants. However, demand for annuities in the first half of the year exceeded our desired production, so we took actions to focus on capital efficiency and ensure that the overall business mix for the year was consistent with our strategic goals.

Life product sales, which mainly include indexed universal life and term assurance products, were 40% higher at £871 million (2008: £623 million), and 19% higher on a local currency basis. This is a strong result when set in the context of a US life market which declined 19% through the first nine months of 2009. Our fourth quarter sales were 47% higher than the third quarter of this year. Our innovative products and actions to build distribution through expansion into the brokerage general agency market and leveraging our existing life and annuity channels provide confidence in our position for future growth.