Singapore produced a 27% increase in life and pensions to £309m, from £244m in the first half of 2011, “driven by robust bancassurance sales performance with the Development Bank of Singapore.”
In China, life and pension sales fell by 22% to £161 million, from £207m, which Aviva explained in terms of industry growth slowing with the economic downturn and the impact of prior year changes to bancassurance regulations.
Aviva added that attractive bank deposit rates further reduced demand for longer term insurance savings plans in China: “We continue to shift our focus from investment-oriented products to protection products and to build our customer base in the high net worth segment of the market in the face of heightened competition across all distribution channels.”
Meanwhile in India, life and pension sales were up by 12% to £56 million, from £50m, as Aviva strengthened its “distribution network and focussed on traditional business in line with industry trends following changes to market regulation.”
Korea’s life and pensions sales were down 3%, while Malaysia’s life and pension sales ( a smaller market for Aviva) increased by 48% driven by the success of marketing campaigns. Hong Kong’s life and pension sales decreased by 24% mainly in unit-linked products, as we continue to face a challenging economic environment, and strong competition from the industry.
The Aviva Group as a whole announced an after-tax loss of £681m representing a swing of more than £1bn given in H1 last year it reported a profit of £465m.
In a statement to shareholders Aviva plc chairman John McFarlane stated: “In July, we announced our revised strategic plan and execution is on track. The first priority remains to build Aviva’s financial strength. In the second quarter we reduced our Italian sovereign bond holdings by just under €2 billion2. In July we sold 21% of Delta Lloyd, bringing our holding below 20%. We expect to announce further progress in the delivery of our plan in the second half of the year.
We have also committed to reduce the cost base by £400 million. We have already removed the regional layer of our structure, reduced the number of management layers and have made substantive changes to promote a sharper performance ethic across the group.
While this has been a challenging first half, we are taking the necessary actions to improve our position going forward. This environment is likely to continue and therefore we expect second half performance trends to be broadly similar to the first six months, but with higher restructuring costs as we implement our strategic plan.
