Britain's largest insurance company, Aviva, beat expectations with a nine per cent increase in full-year life and pension sales yesterday and boosted its shares with a more bullish than expected outlook.
Worldwide sales of life and pension products rose to £2.550 billion from £2.377 billion in 2003. The consensus of analysts' forecasts was for £2.503 billion with a range of £2.453-£2.543 billion.
"Confidence in saving is steadily growing and we are seeing more and more of that in relation to the long-term savings market," Aviva's head of international life operations, Philip Scott, said.
"In the UK we expect to see further growth in the market this year and a stronger pick-up next year supported by increasing consumer confidence and pension simplification."
Aviva is the third key life insurer to update the market on its full-year sales and its performance and outlook continue a positive run. Last week smaller rivals Legal & General and St James's Place Capital reported a 14 per cent and 19 per cent increase respectively.
The outlook for Britain's listed life insurers is improving as consumer demand for savings products revives and new distribution rules are expected to lead to further consolidation around the largest players.
"The outlook statement is more bullish than usual. Historically Aviva has been a bit more bearish than the other insurers so that's good news," said Gordon Aitken, analyst with JP Morgan, which has a "neutral" rating on the stock.
"The diversity of their sales performance is also good - it's nicely spread across continental Europe and the UK."
At 1045 GMT Aviva's shares were up 2.8 per cent at 637-1/2 pence, the third-highest gainer on the FTSE. The stock has risen seven per cent over the past two months amid a more upbeat outlook for the UK savings market and has outperformed European rivals by nine per cent over the past three months.
Aviva, which trades as Norwich Union in the UK, has signed distribution deals with panels of financial advisers and said talks with other distribution groups were at an advanced stage. It expects to announce details of new deals later this quarter.
Gary Withers, the chief executive of Aviva's UK life operations, said it would be the end of the year before insurers start to see the benefit of new distribution deals.
Total UK sales, including investment sales, rose six per cent in 2004, bolstered by strong demand for unit-linked bonds. Aviva had a leading 12.3 per cent share of the UK life and pensions market at the end of the third quarter.
Aviva said there could be a slight reduction in sales of some of its individual pensions in the first quarter of 2005 because of reduced commission payments but the launch of a new pension product and similar commission cuts by rivals should compensate for any reduction.
Mr Scott also said the simplification of Britain's pension system in 2006 should improve sales. The group is expecting the UK life and pensions market to have grown around five per cent in 2004 and single digit growth for 2005.
More than half of the group's sales came from continental Europe with life and pension sales in France up 30 per cent, aided by improving equity markets and a new joint venture with Credit du Nord.
Sales from the Credit du Nord partnership were £109 million in the fourth quarter and Mr Scott said he expected similar sales levels in 2005. The sales figures were expressed on an annual premium equivalent basis, a standard measure used to iron out volatility.