Offshoring to India raises UK insurance major Aviva's profit
Bucking industry gloom, offshoring to India has driven annual profits of Aviva up 6% to #1.9 billion.business Updated: Apr 02, 2004 13:07 IST
Offshoring to India has driven the annual profits of insurance major Aviva, bucking the gloom in the industry.
The company's bottom-line surplus was boosted six per cent to£1.9 billion.
Its chief executive Richard Harveysaid that a tough UK market was offset by a "very strong performance" in Europe.
Director Philip Scott said general insurance profits had been boosted by the group's ability to "maintain small increases in premiums" while driving down the cost of claims.
But improvements in UK life insurance were largely due to cost cuts, he added.
The company defended the decision to create 3,700 jobs in India by the end of this year as an important means of creating further efficiencies.
"What is often forgotten," said Scott, "is we employ 33,000 people in the UK and the people in India will be supporting the UK business."
In contrast with many companies hit by the weakness of the dollar, Aviva, which owns the Norwich Union brand, benefited from the strong euro, which accounted for around one third of the profit rise.
It was also buoyed by a controversial cost-cutting drive, aimed at saving 250 million pounds a year from 2005.
The economies include the export of more than 2,300 jobs to India and the closure of Hill House Hammond broking chain with the loss of 1,600 jobs.
Insurance analyst David Nisbet of Merrill Lynch said: "Aviva had already provided an indication of the headline profits, and so a figure of £1.9 billion caused no surprises. Nevertheless the detail within the results was universally positive."