British insurer Aviva beat forecasts with a 5 per cent rise in first-quarter sales and confirmed key growth targets, as a weaker result in its tough domestic market was offset by growth in its US and Asian arms.
Aviva, which owns Irish insurance firm Hibernian, also gave one of the gloomiest views to date of its home market, with a contraction expected for the coming months, before sales recover.
It said European sales dropped 8 per cent, hit by sharp falls in Ireland and Italy, where banks have focused on deposits, and by a 7 per cent decrease in France, Aviva's largest continental European market, where broader growth has remained sluggish.
Aviva's total life and pensions sales over the first three months of the year climbed to £8.17 billion, beating an average analyst forecast of £8.03 billion.
Aviva said sales in Britain, which accounts for roughly a third of new business but for a larger slice of profit, fell 3 per cent in the quarter, as consumer sentiment was hit by the impact of the credit crunch and a weakening property market.
It expects current market conditions - with business also affected by changes to capital gains tax rules - would cause a contraction in the first half, but said it saw sales recovering to grow for the full year.
"Our UK life business performed in line with our expectations of the life and pensions market and we maintained both a market leading position and steady margins," Aviva chief executive Andrew Moss said.
A drop in sales of UK commercial property funds hit investment sales, but the group said it expected property fund sales to would begin to return in the second half of 2008.
North American sales rose 24 per cent and Aviva said it remained optimistic on the outlook for US growth, despite volatility in investment markets and lower interest rates.