Reductions averaged between 4% and 5% across commercial property and motor
Aviva’s cutbacks in UK commercial business will continue into next year, according to UK and Ireland general insurance chief executive Robin Spencer (pictured).
The company revealed in its third-quarter interim management statement this morning that it had taken action to reduce exposure in a number of UK commercial lines, including blue-water hull marine, agriculture and scheme business.
Spencer said: “In a number of the areas we have highlighted, we have seen reductions in volume of about 4% and 5% and we would expect that to continue into next year.”
He added that the cuts were an average across Aviva’s UK commercial property and motor book and were in keeping with the group’s strategy of focusing more on areas producing good results.
“We are allocating our capital to those lines of business where we think we can make superior returns,” he said. “Where we know the market is very tough we are pulling back.”
Spencer added, however, that Aviva was growing in lines of business where they believed good returns were possible.
“I think the motor story this morning is an example of that,” he said.
Aviva said this morning that personal motor net written premium had increase 8% in the first nine months of 2012, in part thanks to new initiatives such as Quotemehappy and MultiCar.
Group restructuring
Aviva also revealed this morning that the group was exiting eight more business areas as part of its restructuring plan. This is in addition to the planned sale of its US life and annuities business, the reduction in ownership of Delta Lloyd below 20% and the sale of its Sri Lankan operation. The exits are likely to take place in early 2013.
The company confirmed it was in talks with third parties to sell its US life and annuities business, although it said it would be sold at a “substantial discount” to the IFRS book value of £2.4bn.
Chief financial officer Pat Regan said that while the business would be sold at a discount, “a potential sale would generate significant economic capital surplus and we believe it will be in the interests of the group”.
Group executive chairman John McFarlane added that the planned US sale would “bring us close to, or within, the minimum of our target capital ranges”.
The company also identified five further business areas where it will reduce capital allocation.
No comments yet