Income and growth seekers are being advised to look again at the UK’s largest insurance company Aviva.

News of an improvement in the insurer’s overseas earnings and its drive for internationalisation coupled with a developing presence in the Far East has set tongues wagging that the group is a hot prospect for a takeover bid.

As if analysts were not already cock-a-hoop, news that the company’s cash surplus has risen to over £4 billion is likely to mean that the prospective six per cent dividend yield is safe.

When the company announced its results for the fourth quarter at the beginning of the month, Andrew Moss, group chief executive, said that efficiency savings were on target and that life and pensions sales were up 21 per cent on the third quarter of 2009 to £8 billion.

He added, ‘In the fourth quarter we increased sales across all our regions and saw the first signs of an improved appetite to save among our customers. European bancassurance was particularly strong.

‘In 2009 as a whole we have successfully managed new business to ensure the right balance between volume, capital efficiency and profitability.

This means we have deliberately foregone sales in some areas.’ According to research website Digital look, there are currently zero research notes advising to sell Aviva.

From 19 current reports (Friday 26 February), 10 are a strong buy, one is a buy and eight are neutral on the insurer.

At the time of the company’s results announcement, Moss also noted that the IPO of Dutch subsidiary Delta Lloyd had also been a success.

This has also been a reason why the stock has been so popular with investors over the past three weeks.

He explained, ‘We also achieved a number of important milestones in the final three months of the year, in particular the IPO of our Dutch subsidiary, Delta Lloyd, building further momentum in the delivery of our ‘One Aviva, twice the value’ strategy.

‘We start 2010 in a strong position. Our focus remains on growing our business profitably and improving our operational efficiency so that we can fully benefit as our major markets return to economic growth.’

Nick Raynor, investment adviser at The Share Centre, is one of the sector expects ranking the stock as a strong buy.

He added, ‘Aviva released its figures for quarter four in February and the signals were mixed.

‘Although UK sales suffered, sales in Europe were up by 39 per cent and there has even been renewed speculation that the group could be a bid target.

‘We currently list Aviva as ‘buy’ for income and growth seekers due to its drive to its improvement in overseas earnings’