LONDON (AFP) — Aviva, the second-biggest British insurance company, said on Wednesday it made a net loss of 94 million pounds (119 million euros, 186 million dollars) during the first half of 2008 as its assets dropped in value.
Aviva had made a net profit of 807 million pounds during the first six months of 2007.
The group added that it remained optimistic about achieving its targeted 20 percent growth in new business sales in the Asia Pacific region during 2008, despite a 10 percent decline in the first half.
"Everyone is well aware of today's (difficult) investment market conditions. The group's loss after tax ... reflects the reduction in value of the group's assets," Aviva chief executive Andrew Moss said in an earnings statement.
Aviva added that the company's operating profit rose by 12 percent to 1.72 billion pounds in the first half, fueled by growth in its life insurance businesses. Aviva said it had raised its interim dividend by 10 percent.
"In the face of economic headwinds Aviva has made real progress in the last six months," said Moss.
"Operating profit and dividend are well ahead of last year and we maintain a strong balance sheet despite significant unrealized investment losses affecting our bottom line earnings," he added in the statement.
The dividend hike helped to lift Aviva's share price by seven percent in London trading. Aviva added that it planned to reattribute one billion pounds in surplus cash from two funds operated by its British subsidiary Norwich Union.
The group said it intended to offer a cash payment averaging 1,000 pounds to one million policyholders. In return, Aviva would lay claim to the remaining 2.1 billion pounds of surplus cash.
Meanwhile in a bid to reduce its reliance on contributions from mature Western markets, Aviva set a target of growing new business sales in Asia Pacific by at least a fifth each year until 2010.
"At this point in time I remain confident of being able to do that," Aviva Asia Pacific Chief Executive Simon Machell said in a statement issued alongside the earnings release.
However in the six months to June 30, total new business sales in Asia Pacific fell to 1.84 billion pounds from 2.03 billion pounds in the same period a year earlier.
"The economic conditions and the market volatility have been a challenge for us... People are more cautious about investing in equity related products," Machell said.
In early afternoon trade, the share price of Aviva stood 7.02 percent higher at 499.50 pence on London's FTSE 100, which was up 1.05 percent at 5,375.10 points.
- Dow Jones Newswires contributed to this story -
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