OPERATING PROFITS RISE AT AVIVA

UK-based composite Aviva has reported an 8% increase in operating profit for its non-life and health insurance divisions to £1.68bn. The result includes an exceptional release in the UK of about £200m. The combined ratio came in at 94%.The total dividend rose 10% to 30p a share. For the group, operating profit pre-tax rose on a European Embedded Value (EEV) basis to £3.2bn, implying a return on capital employed of 13.1%, ahead of the group target of 12.5%. In the UK, Aviva’s Norwich Union brand saw total sales rise by 31% to £13.6bn, with EEV profits up 26% to £744m. Gross margins were maintained at 2.9%. Aviva said that it expected NU to grow “at least in line with the market” this year, probably by between 5% and 10%. In mainland Europe, premiums were up about 5% to £502m; a third of the growth `was attributed to central and eastern Europe. Good performances in France, Poland, Italy and Spain were partially offset by lower business volumes and margins in the Netherlands. Aviva’s businesses in Asia-Pacific continued to show strong growth, with total sales nearly doubling in 2006. Aviva confirmed that it expected to enter the Taiwanese and Malaysian markets this year. Operating profits in Asia-Pacific grew by 16% to £86m.