Aviva reports dip in profits

BRITAIN’S largest insurer Aviva reported a drop in profit yesterday, cut its dividend as expected but reassured about future payments a day after rival Prudential abandoned its pledge to keep raising its payout.

Aviva had already prepared shareholders at the time of its 2001 results for a deep cut in the 2002 dividend payment. Chief executive Richard Harvey told CNBC television that the company was robust about its dividend position.

While the company refused to give a definite target for dividend payments Aviva gave a rough guide of a 5% increase for this year, although Mr. Harvey told reporters that was dependent on earnings. Aviva’s shares rose largely on relief that the results had not contained any nasty surprises.

“There was a lot of panic about dividends after Pru, so the statement is reassuring,” financial bookmakers Cantor said.

Aviva’s 2002 operating profit was stg£1.798 bn pounds ($2.83 bn), down from stg£1.983 bn pounds in 2001 as it struggled with tumbling stock markets. Analysts had expected a figure of stg£1.423-1.980 bn.

“Last year was difficult and this year will be difficult. It is inevitable that the falls in the stock market will depress our customers’ appetite for savings,” Richard Harvey, group chief executive, told reporters.

“Extra distribution of our products, especially in continental Europe, will mitigate that to a degree but we are still planning for a tough year.”

The dividend fell to 23 pence from 38 pence in 2001. “These were solid results in a challenging environment. The market should take some relief given their worst fears were not realised,” said one sector analyst.

On Tuesday, UK rival Prudential announced that it was reconsidering its dividend strategy and investors wiped 20% off its share price.