Analysts say property price dive could hit insurers’ results
Norwich Union owner Aviva sparked protests from investors yesterday after it put a freeze on withdrawals from its biggest property fund amid concerns property price falls will damage Britain's insurance industry, newspapers said.
Aviva said it would block investors from cashing in their holdings for six months to allow more time for it to generate cash through a sale of shops and offices across the country.
The decision, which affects up to 225,000 investors in the Norwich Union Unit-Linked Property Fund (Life and Pensions), follows a dramatic fall in commercial property values over the past year. In December alone the main index tracking values for the industry lost 5.6%, the biggest monthly drop on record.
The Guardian quoted analysts Keefe, Bruyette & Woods claiming UK insurers due to report 2008 figures next month would declare "scary balance sheets". It forecast a drop in sales of 10% at some firms this year and a fall of 4% across the industry next year.
It said the focus of investor interest would be on balance sheets and whether insurers would experience the same problems faced by banks.
The Telegraph said Aviva’s shares fell 15p to 283p, bringing it close to its October nadir. The fund freeze would give it time to sell property, avoiding a firesale in a market where buyers are scant. It is the third such property fund Aviva has had to freeze, The Telegraph said.
