Aviva sets the pace with £1.91bn

BRITAIN'S biggest insurer, Aviva, turned the screw on its rivals by unveiling full-year profits of nearly £2bn and pledging further growth as confidence returns to the savings market.

Chief executive Richard Harvey said the group, best known as Norwich Union in the UK, had benefited from cost cuts and focusing on the most profitable areas of the insurance market.

He added its vast bancassurance business in Europe, where the group sells its plans through bank branches, was posting 'significant growth' with margins now at 39.7%.

Aviva signalled its strong performance to analysts a fortnight ago, when raising its profit forecasts for 2003 by £200m to £1.9bn on the industry standard achieved profits basis.

Today's figures showed these profits came in at £1.91bn, up from £1.72bn in 2002 with the earnings contribution from new business sales rising 3% to £621m.

Harvey said its general insurance arm, which insures one in five UK homes, was generating sustainable profits while its life arm had coped well with the bear market.

He also shrugged off fears about the effects new 'realistic' accounting rules could have on its solvency position in the UK.

Yesterday, Prudential disappointed the City with a 30% drop in profits and refusing to commit to growing its dividend after the first cut since the First World War.

Aviva shareholders pick up a full-year dividend of 24.15p per share, up 5%.