In this article I am looking at why I believe Aviva (LSE: AV) (NYSE: AV.US ) is on course to enjoy stunning earnings expansion.
Hot revenue growth on the cards
Aviva has managed to finally put to bed a prolonged period of sustained sales pressure, supported by a general improvement in the 
global economy and extensive product development. Indeed, the insurance giant saw new business values rise for the sixth consecutive quarter during January-March, it announced last month, and further growth would appear to be in the offing.
The firm saw the value of new inflows advance 13% during the first quarter to £228m, matching the growth rate punched in whole of 2013.
In particular, surging demand for its products across developing regions is helping to underpin exceptional growth, and the company saw new business values at constant currencies in Asia almost double in January-March. Aviva has had to hurdle the problem of severe weakening in emerging market currencies over the past year, but in sterling terms fresh inflows surged by a still-considerable 80% during the period.
The life insurance leviathan also saw activity take off in other developing geographies — values in Poland rocketed 108% in the first three months of the year, for example — and total new business from emerging regions rose by 73% during the period.
New business values from these so-called ‘growth markets’ now account for more than a quarter of the group total versus 19% in the corresponding 2013 period. And the stage appears set for Aviva to continue reaping the rewards of galloping population growth and a rising middle class, on top of low penetration rates by the world’s largest insurance houses, in these regions.
The company has seen business tail off in the UK in recent months as changing requirements for annuities dented regional performance — indeed, total new business slumped 22% in January-March. Aviva’s home market is responsible for well over a third of new inflows, so weakness here is of obvious concern. Still, the insurer is confident that its decision to focus on ‘mid-size bulk purchase‘ annuities should help revive its domestic business.
With the firm also looking to strategically boost its presence in developing markets across the globe, I believe that investors can look forward to further growth in product off-take well into the future.
