Car insurer and pensions giant Aviva said 2011 profits rose six per cent to £2.1bn today after it boosted its share of the UK market.
The group achieved record operating profits of £931m in its UK life insurance division, with gains in its core markets of workplace savings, annuities and equity release products and protection.
In its general insurance business, where it is the UK market leader, Aviva’s profits were up seven per cent to £520m after the roll-out of direct pricing to motor insurance brokers and the launch of its quotemehappy website.
The group, which is the UK’s largest insurer with 14 million customers, also grew profits in Europe despite the economic climate in countries where it has a major presence, such as Spain and Italy.
On the back of today’s results, chief executive Andrew Moss increased the company’s targets for this year in both general and life insurance.
He added: “Although the economic environment is likely to remain tough for the foreseeable future, we have built a strong, sustainable and diverse business well positioned for further profitable growth.”
The group, which has around 4,800 Yorkshire employees, has its UK life and pension business based in York where it employs 3,000 people.
Its shares have climbed 30 per cent from December lows as sentiment about the eurozone debt crisis has improved, a trend reflected in Aviva’s balance sheet after its solvency cushion improved to £3.3bn at the end of February from £2.2bn at the end of 2011.
Helped by a successful advertising campaign featuring comedian Paul Whitehouse, industry figures recently showed Aviva overtook Churchill and Direct Line owner RBS Insurance as the biggest general insurer in the UK.
The improvement follows upward pressure on car premium rates across the industry and a surge in the firm’s own customer numbers, with its motor premiums up by 13 per cent.
Rising costs have been blamed on a “compensation culture” encouraged by ambulance chasers and as fraud has risen.
However, Aviva said its combined operating ratio - measuring operating costs as a percentage of revenues - was flat in general insurance at 96 per cent. It comes after a period of major job losses at the firm.
In the UK life and pension business, Aviva has changed its product mix to focus on more profitable business.
Regulatory changes such as the FSA’s Retail Distribution Review, involving reform of retail investment advice, are expected to benefit firms such as Aviva with a strong brand and wide range of products.