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RSA Insurance Group plc’s Profit Jumps As Aviva plc Looks To Asia For Growth

Aviva’s (LSE: AV) recovery over the past few years has been impressive. Indeed, after reporting a loss of 11.2p per share during 2012, the company’s profit is expected to jump this year, with City analysts predicting earnings per share of 47.9p for 2014, followed by earnings per share of 50.9p during 2015.  

What’s more, Aviva’s recovery has reached the stage where the group is now searching for opportunities to boost growth. One of the regions where Aviva has been traditionally under-represented is Asia.

For example, the company has £250bn in assets spread across 15 countries but only a single-digit percentage of these assets is located within Asia. Specifically, within Asia the firm has £4.1bn in assets under management. 

Wealth management 

To try and attract more investor interest, Aviva is looking to expand its wealth management offering, within Asia. As part of this drive, the company will launch several new investment funds, some of which will be focused on mainland China.

China is the place to be for wealth management. 40,000 new millionaires were created within the country during 2013 and on average, the country’s millionaire population is expanding by around 3.5% per annum, that’s nearly 35,000 new millionaires being created every year.  

In theory this should be a great move for Aviva. Peer, Prudential’s move into Asia catapulted the company’s earnings higher and turned the group into the global insurance behemoth it is today. Aviva’s Asian ambitions could do the same for the company. 

Still recovering 

As Aviva moves from the recovery to growth stage, RSA Insurance’s (LSE: RSA) recovery is gaining traction. The company announced today that while premiums written by the group fell 9% during the third quarter, headline profit benefited from £198m of disposal gains. It’s likely that the value of premiums written by the company fell due to disposals. 

RSA’s recovery is being led by former RBS boss, Stephen Hester who has moved quickly to shore up RSA’s balance sheet, exit unprofitable markets and reshuffle the company’s management team.  Commenting on today’s results, Mr Hester stated that: 

” … The building blocks to support RSA’s recovery are coming together. Since H1 we announced new disposals in Singapore, Hong Kong, China and Italy. The disposals of Noraxis, and our businesses in Poland, Lithuania and Estonia have completed, booking strong gains … “

As RSA’s recovery takes shape, City analysts believe that the company can return to growth next year. Indeed, City figures suggest that RSA’s earnings per share will jump 19% to 36.1p during 2015. That being said, earnings per share are expected to contract by 13% this year. But still, 2014 has been a transformational year for RSA.

Long-term play

Aviva's position in the retirement savings market makes it a solid long-term investment.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.