Aviva boss shrugs off Prudential's Asian expansion

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The head of insurance giant Aviva has shrugged off the growth plans of rival insurer Prudential, saying that he will concentrate on Europe rather than Asia.

Aviva chief Andrew Moss, who also unveiled a surprise rise in Aviva's operating profits, called Prudential's takeover plans in Asia "audacious".

In contrast, Aviva is staking its future on growth in Europe, which Mr Moss said would grow faster than Asia.

On Monday, Prudential agreed to buy Asian insurer AIA for $31.5bn (£24bn).

Mr Moss said that Aviva, Britain's second-biggest insurer, planned a renewed focus on the UK and Europe as the "baby boomer" generation moves into retirement across the continent.

"In terms of life and pensions assets over the next five years, Europe is actually projected to grow by more than Asia is," Mr Moss told the BBC. "We are very comfortable with our position."

"It's certainly an audacious move," he added.

Prudential shares have slumped 16% since the company announced its intention to raise $20bn in a rights issue to help fund the deal for AIA, part of the collapsed US insurer AIG.

Mr Moss said that the European market - including the UK - has the potential to be worth some $1.7 trillion within the next five years - "outstripping" the majority of Asia and North America.

Dividend cut

His comments came as Aviva reported a 3% rise in operating profits 3% to £3.48bn, up from £3.37bn.

The results were ahead of analysts' forecasts that profits would fall to about £3bn.

However, Aviva shares fell after the insurer cut its total dividend to 24 pence a share, compared with 33p in 2008. By late morning the shares were down 2.3% to 381.30p.

The profit figures come after the group stepped up its "One Aviva" strategy to simplify its structure and branding.

As part of this, the Norwich Union name disappeared last summer after more than 200 years to be replaced by Aviva, amid a multi-million pound advertising campaign featuring stars including Bruce Willis and Ringo Starr.

The insurance industry has battled against difficult conditions since the financial crisis struck, which hit balance sheet strength and decimated the market for pension and savings contributions.

Mr Moss said: "We expect the external environment to remain unpredictable for some time, but are encouraged that we saw the first signs of an improved appetite to save among our customers in the final quarter of last year."