Distance from Greece allows insurer Aviva to top sales forecasts

AVIVA, the British insurer, yesterday hailed its "strong" capital position, reassuring investors it had minimal exposure to the sovereign debt of stricken Greece, as it unveiled figures that beat analysts' expectations.

Britain's largest insurer after Prudential said it had just 150 million of exposure to Greece – equal to 0.1 per cent of shareholders' funds – as it topped sales forecasts with a smaller-than-expected 5 per cent drop in first-quarter core sales.

Mark Hodges, chief executive of Aviva UK, told The Scotsman: "We're very confident about the strength of our balance sheet." He declined to comment on speculation over takeover targets for Resolution, the buy-out firm founded by Clive Cowdery that makes no secret of its ambitious acquisitive growth plans.

It has been linked to a string of insurers including Aviva. Others include the UK arm of Prudential, Legal & General and Edinburgh-based Scottish Widows, the insurance unit of the bailed-out Lloyds Banking Group. British units of continental European insurers – such as the Edinburgh-based UK division of Dutch firm Aegon, and British arms of France's Axa and Switzerland's Zurich Financial Services – have also been cited.

Hodges said: "There's been a lot of takeover talk over the last couple of years, but relatively little has happened. I don't fear it (consolidation]. We have a very strong position, a very strong brand, and we're much more focused on running our own business than worrying about consolidation in the market."

He spoke as Aviva unveiled what Hodges called a "very positive set of numbers" as a recovery in British and European investor appetite offset the impact of a decision to slow US growth. Group life and pensions sales in the first three months of the year totalled 9.13 billion, down from 9.57bn a year ago and well above expectations of 8.49bn.

Investment sales jumped 143 per cent and annuities virtually doubled, as Aviva benefited from what it said was a savings revival. Rivals including L&G and Standard Life have reported a similar return to more positive investor sentiment.

Kevin Ryan, an analyst at ING, said: "There is huge confidence coming back into the market. Whether that will be sustained in the second quarter is anybody's guess."

Britain and Europe accounted for 85 per cent of Aviva's long-term savings new business. In the US, sales saw a 48 per cent year-on-year drop, hit by Aviva's focus on profit over sales which forced it to slow the pace of annuity sales.

Andrew Moss, group chief executive, said: "We are content to grow that business, albeit at a moderate pace." New business was being written at improved profit margins.

"Our priority remains managing that business for profit." Shares closed down 1.6 per cent at 333.6p last night amid a day of market jitters.