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Aviva Plc Interim Management Statement For The 3 Months To 31 March 2011

Aviva plc (NYSE:AV):
General insurance: strong premium growth and improved profitability  
  • Strong performance driven by combination of pricing actions, improved efficiency and improving market conditions
  • Net written premiums of £2.7 billion: 14% increase on 4Q10 and 9% increase on 1Q10
  • Group combined operating ratio strong at 97% (1Q10: 102%)
  • UK general insurance sales up for fifth consecutive quarter – 20% increase to over £1 billion (1Q10: £0.9 billion)
  • Brand strategy working well - 580,000 additional UK motor customers since the start of 2010
  • Appointed Preferred Strategic Partner to HSBC across Europe and extended the existing general insurance agreement in the UK until 2016
Life insurance: increasing returns from a change in business mix  
  • Improved profitability – new business internal rate of return ex Delta Lloyd increases to 13.7% (1Q10: 12.3%)
  • Long-term savings sales of £8.8 billion: level with 4Q10 and 14% decrease on 1Q10 as less profitable business is reduced
  • Management actions to improve profitability and capital efficiency drive lower sales volumes in Italy and US
Good strategic progress  
  • Continued focus on priority markets where we have strength and scale
  • Reduced shareholding in Delta Lloyd from 58% to 43%, generating gross cash proceeds of £381 million
  • On track to meet the group’s near-term financial targets

Andrew Moss, group chief executive, commented:

“We have made a good start to the year. Our general insurance performance is a real highlight; sales are up strongly and profitability is good. Life sales are down on 2010, primarily because we have driven new business returns higher by changing our product mix to focus on more profitable business.

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