Aviva plc writes down billions in 2012 but increases operating profit in Canada

Aviva plc released Thursday its financial results for 2012, recording a worldwide after-tax loss of 3.05 billion pounds, with a 276-million pound operating profit in Canada.

“Our general insurance business in Canada delivered another strong performance with an improvement in the combined operating ratio to 93% (2011: 95%) and a 9% increase in operating profits” to 276 million pounds, the firm said in a statement, noting the operating profit in Canada in 2011 was 254 million pounds. As of Thursday, the British pound was worth $1.55.

It attributed the operating profit increase in Canada to a “continued underwriting discipline and the use of predictive analytics.”

Net written premiums in Canada also increased year-over-year, from 2.083 billion pounds in 2011 to 2.176 billion pounds last year.

The “largest driver” in its worldwide loss was the “agreed sale” of its U.S. business, the company said, noting in 2012 it recognized a total impairment of goodwill and intangibles of 3.3 billion pounds.

In December Aviva announced it agreed to sell Aviva USA Corp. to Bermuda-based Athene Holding Ltd.

In July, Aviva announced plans to exit 16 non-core business segments that were producing returns below the group’s required return. At the time it identified Canada’s personal property business as one of 15 segments with “unusually high return or growth” and the firm appointed Aviva Canada president and CEO Maurice Tulloch to the group executive team of the parent company.

Aviva plc’s new chief executive officer, Mark Wilson, assumed his role Jan. 1, replacing John McFarlane, the chairman of the board, as CEO. McFarlane, who will continue as non-executive chairman, had been interim CEO since May, when then-CEO Andrew Moss left the company. Wilson, a New Zealander, is a former CEO of AIA Group Ltd.

On Thursday, the company stated that on a “continuing basis,” Aviva plc’s loss after tax was 202 million pounds worldwide, driven in part by integration and restructuring costs of 461 million pounds, adverse investment variances of 634 million pounds, a loss on disposals of 164 million pounds and intangible impairments of 188 million pounds. Also contributing to the loss were “net adverse post tax non-operating items in Delta Lloyd,” related mainly to movements in the Delta Lloyd Group curve, of 304 million pounds.

Until November 2009, Delta Lloyd was owned mostly by an Aviva subsidiary, CGU International Holdings B.V. Over the next three years, it conducted a public offering of stock and sold more than three quarters of its ordinary share capital of Delta Lloyd. Aviva ceased to account for Delta Lloyd as an associate in July 2012 and announced it intends to sell the rest of its shares in Delta Lloyd.