British insurer Aviva said on Thursday that annual net profits slumped 85 percent on exceptional charges and due to economic strains in Europe, but underlying earnings rose.
Profit after tax stood at £225 million ($355 million, 269 million euros) in 2011, Britain's second biggest insurer after Prudential said in a results statement.
That compared with net profit of £1.463 billion in 2010.
The slump was partly caused by charges linked to Dutch group Delta Lloyd, in which it sold a 15-percent stake in April, cutting its shareholding to 43 percent.
But Aviva chief executive Andrew Moss also noted in the results statement that "concerns over the macro-economic environment in Europe dominated market sentiment, resulting in exceptional market volatility and uncertainty in 2011."
He added: "Against this backdrop, I am pleased to report a year of good progress and operating profits of £2.5 billion."
Looking to 2012, Moss said Aviva had increased its operating targets, "underlining our confidence in Aviva's continued success."
With Aviva seeking to focus on core insurance and savings businesses in priority markets, it last year agreed to sell its British roadside rescue division RAC to private equity firm Carlyle for £1.0 billion,.
Earlier this year, it offloaded its businesses in the Czech Republic, Hungary and Romania to US peer MetLife for an undisclosed amount.
Aviva is the world's sixth biggest insurer, with more than 53 million customers and 45,000 employees worldwide.