Aviva Asia posts 23% drop in value of new business on weaker Singapore performance

INSURER Aviva Asia has reported a 23 per cent year-on-year fall in value of new business (VNB), a measure of the expected profits from new premiums written, in the first six months of 2016.

For the first half of the year ended June 30, VNB for Asia dropped to £61 million (S$108.9 million) on a constant currency basis, reflecting a £10 million decrease in Singapore.

The weaker performance from Singapore was largely a result of the end of the bancassurance partnership with local lender DBS, which partly offset higher sales in protection through the financial advisers network, the British insurer said on Thursday.

Operating profit from the life and general insurance, as well as health businesses, grew 45 per cent (on constant currency basis) to £112 million, mainly due to contribution from Friends Provident International (FPI), which became part of the Aviva group following the acquisition of Friends Life in April 2015.

Said Chris Wei, executive chairman of Aviva Asia & FPI and global chairman of Aviva Digital: "The momentum of our transformation in Asia continues apace, as we pursue our strategy of disruption, and put customers at the centre of everything we do. Aviva Financial Advisers in Singapore is an excellent example of this, providing customers with more choice and access to an extensive range of products from Aviva and other trusted providers as well. We believe financial advisory is the future of the insurance industry in Singapore, as customers increasingly demand choice that tied agents cannot offer."

On the global level, Aviva posted a 63 per cent year-on-year plunge in profit after tax to £201 million for the six months, or earnings per share (EPS) of 2.5 pence, down 80 per cent from a year ago.

The group declared an interim dividend of 7.42 pence, 10 per cent higher than a year ago.

Mark Wilson, group chief executive said: "We remain on track to deliver on the plan outlined at our recent investor day to increase the dividend payout ratio to 50 per cent of operating EPS by the end of 2017, up from 42 per cent in 2015."