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Aviva today reported net losses of £885 million for 2008, but said profits were up.

The UK's largest insurer - holding Norwich Union – said it would maintain dividends at 33p a share as operating profits rose four per cent to £2,297 million.

However, falls to the stock market meant total losses were recorded.
Andrew Moss, Aviva chief executive, said the business has shown "great resilience" in a tumultuous year.

"Operating profits are up and we have maintained our dividend," he said.

"Bottom line earnings have been affected by investment markets which have predictably created significant unrealised losses during the year."

He also explained investors should be given further reassurance as the firm's capital position and its statutory solvency buffers remained at £2 billion.

Aviva also reported the unrealised losses on our balance sheet equate to eight per cent of the total bond portfolio, as market values are "very low".

"This is significantly above the highest ever actual default losses reported in the last one hundred years," Mr Moss said.

Actual defaults in 2008 stood at £140 million, with losses on AIG, Lehman, Bradford & Bingley, Freddie Mac, Fannie Mae and Washington Mutual.

However, Mr Moss said this loss represented just 0.2 per cent of Aviva's total corporate debt portfolio.

Aviva reported long-term savings sales up one per cent to £40,278 million, including core life and pensions sales up 11 per cent.

Investment sales fell 43 per cent.

General insurance premium income increased five per cent to £11,137 million.

"Despite the downturn, Aviva continues to be attractive to customers seeking security for their long-term savings," Mr Moss said.

"We had a record year in our home market, achieving our highest ever UK life and pensions sales."

At 8:36AM GMT, the Aviva share price was down 3.42 per cent to 275.25p.