LONDON -- While crippling austerity in Europe has put the brakes on growth rates in Europe, a backdrop of accommodative central-bank action, elevated commodity prices, and rising personal-affluence levels has created an exceptional investing opportunity in developing countries.

The divergence between traditional and emerging markets is borne out by the latest International Monetary Fund projections, which put U.S. growth at 1.9% in 2013, while eurozone GDP is set to dip 0.3%. Conversely, emerging markets are anticipated to expand 5.3% this year.

Bubbly activity in developing geographies can create large opportunities for many London-listed firms. Today, I am looking at Aviva (AV -0.24%) (AVVIY 0.39%) and assessing whether its operations in these regions are likely to underpin solid earnings growth.

Operating profit slides across the board
Aviva reported in March that operating profit declined 15% in 2012 to 2.1 billion pounds, with weakness reported across the entire group. In life insurance and the general insurance and health division, profit dropped 5% and 4%, respectively. Fund management profit fell 16% to 51 million pounds.

The company is still highly geared toward European markets. About 48% of 2012's operating profit from its life insurance business was generated from its operations in the U.K. and Ireland. Domestic activities also accounted for 55% of profit within general insurance and health.

Although the company has exposure to lucrative emerging markets, these areas account for less than 13% of total group operating profit, and they performed badly in 2012. Life insurance operating profit from its Poland division fell 8% to 153 million pounds, while in Asia profit collapsed 36% to 69 million pounds. Profit from other higher-growth geographies doubled to 8 million pounds, but this is measly in relation to group totals.

The drop in profits from developing markets came despite life insurance operating profit from Singapore rising 25% last year to 65 million pounds. In Eastern Europe, for example, the impact of a difficult economic backdrop and regulatory changes affected product sales. Elsewhere, operating losses from life and general insurance businesses in Turkey extended to 22 million pounds from 9 million pounds the previous year; regulatory changes affected revenues from India; and high interest rates in China whacked the popularity of its savings products there.

In my opinion, enduring difficulties in Aviva's key Western European markets, as well as a lack of respite due to its already-small exposure to developing regions, is likely to keep Aviva under the cosh.

So is Aviva a buy?
City analysts expect earnings per share to keep edging lower in the near term -- this is anticipated to fall to 43 pence in 2013 from 45 pence last year before rebounding modestly to 46 pence in 2014.

The life insurance behemoth was forced to slash last year's dividend by more than a quarter last year to 19 pence, rebasing the shareholder payout in an effort to reduce leverage and increase retained earnings. And brokers are anticipating this to fall again this year to 17.2 pence before recovering some ground to 17.8 pence in 2014.

Dividends for these years carry respective yields of 5.5% and 5.7%, well above the average 3.2% FTSE 100 forward average and providing a slight premium to a prospective yield of 5.2% for the rest of the U.K.'s listed life-insurers. However, with Aviva's full-year dividends having been cut three times since 2000, further earnings pressure should make investors fearful over future payout potential.

Aviva was recently changing hands on a P/E rating of 7.2 for 2013 and 6.6 for 2014, providing a chunky discount to a forward earnings multiple of 12.9 for the entire life-insurance sector. However, I believe the firm's lower rating is justified until earnings emerge on a solid footing and uncertainty over future dividends is resolved.

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