Aviva rallies after reassuring on capital

Published on Thursday 9 October 2008 21:20

AVIVA led a rally in the insurance sector yesterday after it moved to reassure the markets over its capital strength amid the stock market turmoil.

The Norwich Union owner said it had protected itself against recent share price declines, which have the potential to impact the group's surplus regulatory capital.

Its capital excess – which it is required to hold under regulatory rules – stood at about 1.9 billion, up from 1.8bn at the end of June.

There had been fears over the buffer after Aviva warned in June that a 20 per cent fall in markets could wipe 700 million off the surplus.

Aviva confirmed that hedging policies had been successful in sheltering the group against the falls in the market. It also took out further protection, ahead of the recent devastating market declines.