Business World

Tuesday 23 January 2018

Aviva hit by weather claims as Irish profits slump €12m

Thomas Molloy

AVIVA, Ireland's largest insurer with 1.2 million customers, said operating profit at its Irish unit fell despite rising elsewhere in Europe as it made less from its private healthcare unit.

The insurance company, which previously traded here under brand names such as Hibernian and Vivas Health, made an operating profit of £50m (€55.4m) here last year, down from £61m (€67.5) the previous year. Operating profits at the Aviva Healthcare unit tumbled to €49m from €63m due in part to technical reasons linked to a previous discount.

Profits of all insurers in Ireland have been hit by the flooding and snow towards the end of last year. Rival FBD, which reported 2009 earnings yesterday, said its profits had also been dented by weather-related payouts.

"In Ireland, we took the unprecedented step of launching an advance payment mechanism to help householders and businesses facing hardship in the aftermath of the severe floods," Aviva said yesterday.

Despite the decline in operating profit here, the UK-based insurer which also operates in the US and Australia returned to profit at a group level and said it will chase further growth in Europe.

Aviva, the UK's largest insurer by sales, said that it remained convinced that sales growth in Europe, including the UK would outstrip Asia as well as America over the next five years.

Andrew Moss, Aviva's chief executive, said that the European life and pensions markets would reach $1.7 trillion by 2015. "We have positioned our business to maximise this opportunity for Aviva," he said.

After plunging to an £885m loss last year, Aviva made £1.3bn in profits after tax for the 12 months to the end of December.

Pre-tax profits for the year reached £1.8bn last year, after slipping to an £1.3bn loss in 2008. Operating profits rose 3pc to £3.48bn.

"We've taken out costs by creating simpler, more modern ways of doing business which reflect the changing way customers choose to deal with us," Mr Moss said.

Aviva will pay a dividend of 24p to shareholders, down 9p from 2008.

Shares in the company fell during trading in London, underperforming the European insurance share index and the FTSE 100, which were both flat.

Analysts said the decline reflected worries over Aviva's pension deficit, which reduced the company's net asset per share figures by a bigger than expected 62 pence.

"We think that's what the market's looking at the moment," Shore Capital analyst Eamonn Flanagan said.

Irish Independent

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