RNS Number : 8574L
18 May 2022
18 May 2022
Aviva plc Q1 2022 Trading Update
Continued progress and trading momentum across Life and General
Strong and resilient capital position, with capital return to be
completed by end of May
On track to meet upgraded targets outlined at FY 2021
Wealth Annuities & UK & Ireland General Insurance Solvency II
Equity Release Life
GBP2.7bn GBP1.3bn GBP8.4bn GBP2.1bn 192%
Net flows, 7%(1) Sales(2) +22% Sales(2) +2% GWP +5% Pro forma(3)
of opening AuM cover ratio
Q121: GBP2.9bn Q121: GBP1.0bn Q121: GBP8.3bn Q121: GBP2.0bn FY21: 186%
Amanda Blanc, Group Chief Executive Officer, said:
"First quarter trading was positive, and our performance shows
the clear benefit of Aviva's business mix across insurance, wealth
and retirement. We delivered healthy sales numbers across all our
major business lines, with UK customer numbers up by over 100,000
in the last year to 15.4m, increasing our confidence that we can
transform Aviva's performance and grow.
"UK & Ireland Life sales are up 2%, and net flows into our
Wealth business remained strong at GBP2.7 billion, despite market
volatility. Our Advisor platform is now the number one in the
market for net flows, and in Annuities and Equity Release we saw
increased bulk purchase annuities volumes, written with good
"We have also continued our momentum in General Insurance where
we had our best first quarter sales in a decade, as more people
were attracted to the strength of the Aviva brand and the quality
of our products. Total General Insurance sales were up 5% to over
GBP2 billion, driven by strong sales in commercial lines in both
the UK and Canada.
"We remain very well positioned to benefit from the long term
growth trends in our markets, and to meet our upgraded financial
targets. This is underpinned by our strong capital position which
benefits from rising interest rates. Our financial strength and
market leadership give us confidence that we can successfully
navigate the current uncertain economic conditions."
Continued growth in Life sales(2) and record Q1 General
-- UK&I Life sales of GBP8.4bn, up 2% (Q121: GBP8.3bn) with
growth in Annuities & Equity Release and Protection &
Health partly offset by Wealth.
-- Total BPA sales in Q1 were GBP843m, up 29%, with a healthy
pipeline weighted towards the second half of the year.
-- UK&I Life value of new business (VNB) GBP144m, up 31%,
and VNB margin of 1.7% (Q121: 1.3%), driven by Annuities &
Equity Release VNB of GBP31m (Q121: GBPnil).
-- General Insurance gross written premiums (GWP) up 5% in Q1 to
GBP2.1bn, another record. UK&I GI GWP up 3% to GBP1,347m and
Canadian GI GWP up 10% to GBP753m.
-- GI combined ratio (COR) of 96.4% (Q121: 90.6%) reflecting
GBP70m cost for the February storms in UK GI and more normal motor
1 Q1 net flows annualised as a percentage of opening assets under management
2 References to sales represent present value of new business
premiums (PVNBP) which is an Alternative Performance Measure (APM).
Further information can be found in the 'Other information' section
of the Full Year 2021 Results announcement.
3 Pro forma for further debt reduction of GBP500m over time and
pension scheme payment, and after the impact of the acquisition of
Succession Wealth. Actual Q1 Solvency II cover ratio is 205% (FY21:
* The financial information for comparative periods in this
trading update refer to continuing operations only.
Continued focus on cost efficiency
-- Controllable costs down 3% (excluding cost reduction
implementation, strategic investment and IFRS 17 costs) to GBP683m
at Q1 (Q121: GBP705m).
-- On track to achieve savings target of GBP750m gross savings
(GBP400m net of inflation) by 2024 relative to our 2018
Capital return process nearing completion
-- Shareholder approval received for GBP3.75bn return of capital
via B Share Scheme. Total capital return to shareholders of
GBP4.75bn will therefore be complete by end May 2022.
-- 76 for 100 share consolidation now completed with new share count of 2,802m as at 16 May.
Solvency and liquidity remain strong and resilient
-- Solvency II shareholder cover ratio of 205% (FY21: 244 %) was
39pp lower driven by GBP3.75bn capital return, GBP500m redemption
of subordinated debt, 2021 final dividend, partly offset by
operating capital generation in the period and the beneficial
impact of higher interest rates.
-- Solvency II cover ratio of 198% (FY21: 191%), pro forma for
further debt reduction of GBP500m over time and GBP75m pension
scheme payment. The acquisition of Succession Wealth will further
reduce this pro forma ratio to 192% (FY21:186%).
-- Solvency II Operating Capital Generation (OCG) for our UK
Life Heritage business was GBP175m in 2021, representing c.9% of
business unit OCG. We expect Heritage OCG to run-off by
c.GBP10-GBP15m per annum.
-- Centre liquidity (Apr 22) of GBP5.8bn (Feb 22: GBP6.6bn).
Centre liquidity of GBP1.5bn pro forma for the GBP3.75bn capital
return, further GBP500m debt reduction over time and GBP75m pension
-- GBP500m Tier 2 Notes matured in April, completing half of our
targeted further GBP1bn debt reduction.
Significant progress on ESG rating
-- Sustainalytics ESG risk rating improves to 11.3, now ranking
Aviva 6th(1) out of 296 global insurers (up from 25th) and ahead of
all UK Financial Services peers.
-- We remain confident and on track to meet the cash remittance,
own funds generation, and cost reduction targets outlined at our FY
2021 results presentation.
-- Our dividend guidance(2) of c.GBP870m for 2022 and c.GBP915m
for 2023 remains unchanged. Following the capital return and share
consolidation this would be equivalent to per share amounts of
c.31.0p and c.32.5p respectively.
-- The acquisition of Succession Wealth, announced in March,
remains on track to complete in the second half of 2022.
-- Our strong leadership positions, together with the actions we
have taken over the past two years to strengthen our financial
position, leave us well placed to navigate the prevailing economic
Pages 3 to 5 of this release cover Q122 trading performance and capital
in further detail
1 As at 17 May 2022
2 Estimated dividends are for guidance only. The Board has not
approved or made any decision to pay any dividend in respect of any
Life sales(1) and Value of New Business (VNB)
Q122 Q121 Sterling Q122 Q121 Sterling
GBPm GBPm % change GBPm GBPm % change
Annuities & Equity Release 1,279 1,047 22% 31 - 100%
Protection & Health 696 630 10% 57 51 12%
Wealth & Other 6,010 6,168 (3)% 49 54 (9)%
Ireland Life 445 424 5% 7 5 40%
UK & Ireland Life total 8,430 8,269 2% 144 110 31%
International investments 303 398 (24)% 19 42 (55)%
Total 8,733 8,667 1% 163 152 7%
Total Life sales of GBP8.7bn, up 1%. VNB up 7% to GBP163m.
Annuities & Equity Release
-- Sales were 22% higher, driven primarily by improvement in BPA
volumes compared with the low volumes of transactions seen in the
market in Q1 2021, as well as strong growth in Equity Release,
partially offset by lower levels of Individual Annuity business.
There is a healthy BPA pipeline weighted towards the second half of
-- VNB up strongly to GBP31m (Q121: GBPnil). This reflects
higher availability and allocation of illiquid assets backing
annuities in the quarter compared with the prior period. As usual,
the majority of illiquid allocation will occur towards the end of
the year, and so VNB margins are likely to be lower at half year
2022 before improving in the second half.
-- Our VNB represents the impact on Solvency II Own Funds in
year 1. It therefore excludes margins earned in future years, which
emerge in our numbers over time. We also use the actual assets and
reinsurance achieved within the reporting period, rather than an
approach based on longer term target asset and/or reinsurance
Protection & Health
-- Overall sales were up 10% driven by strong performances in Group Protection and Health.
-- Health was up 21% as our Expert Select proposition for
consumers continues to perform strongly, while we also saw good
performance in the SME line.
-- Protection was up 7% in total, driven by strong growth in
Group Protection which included the benefit of one significant
-- VNB grew 12% driven by higher volumes in Group Protection and
Health, partially offset by increases in the yield curve which
negatively impacts VNB in Protection.
Wealth & Other
-- Overall sales were 3% lower reflecting market volatility
which dampened investment activity, as well as strong prior period
comparator in workplace where Q1 2021 had benefited from
significant scheme wins that were delayed during 2020.
-- VNB was 9% lower at GBP49m (Q121: GBP54m) in part due to lower volumes in the period.
-- Sales grew 5% driven by continued strong sales in unit-linked business.
-- Continued focus on financial discipline and improved margins
from delivery of our new rationalised product offerings has
supported VNB growth of 40%.
-- Sales 24% lower reflecting strong prior period comparators
which benefited from new product launches in Singapore and China,
together with the impact of lockdowns in Q1 this year.
1 References to sales represent present value of new business
premiums (PVNBP) which is an Alternative Performance Measure (APM)
and further information can be found in the 'Other information'
section of the Full Year 2021 Results announcement.
Wealth and Aviva Investors net flows(1) and assets under
Net Assets under
31 31 Dec
Q122 Q121 Mar 21
GBPm GBPm change 22 GBPbn GBPbn change
Wealth(2) 2,721 2,896 (6)% 150 152 (1)%
Of which: platform 1,454 1,531 (5)%
Of which: workplace 1,412 1,543 (8)%
Of which: individual pensions and other (145) (178) (19)%
Aviva Investors (4,283) 20 253 268 (5)%
Of which: external assets (235) 184
Of which: internal assets (1,194) (164)
Of which: strategic actions (2,854) -
-- Net flows of GBP2.7bn remained strong at 7% (annualised) of
opening AuM, though were 6% lower than Q121 (GBP2.9bn). This
reflected lower inflows due to market volatility, and an improved
lapse rate of 6% that was nearly 1pp lower than Q1 2021.
-- Platform net flows were 5% lower at GBP1.45bn (Q121:
GBP1.53bn), as market volatility resulted in lower investment
activity and switching in the period. Performance remains strong,
and our Advisor Platform reached the significant milestone of
taking #1 ranking in net flows for the whole of 2021 for the first
-- Workplace net flows remained strong at GBP1.4bn (Q121:
GBP1.5bn), with the reduction in flows primarily a result of a
strong Q1 in 2021 which benefited from a number of scheme wins
whose transition had been delayed in 2020.
-- External net flows of GBP(0.2)bn (Q121: GBP0.2bn), excluding
cash and liquidity funds, reflected volatile market conditions.
-- Internal asset net flows of GBP(1.2)bn (Q121: GBP(0.2)bn)
reflected expected outflows from internal assets, mainly Heritage.
Strategic actions net flows of GBP(2.9)bn largely relate to exit
decisions taken by clients previously part of the Group, mainly
Aviva Investors France.
-- Fund performance remains strong, with 76% of funds above
benchmark over 1 year (FY21: 69%) and 66% over 3 years (FY21:
-- We continue to focus on our strengths of ESG, real assets,
infrastructure and credit, while improving the efficiency of the
General Insurance GWP and COR
Personal lines Commercial lines Total Total
Q122 Q121 Q122 Q121 Q122 Q121 Q122 Q121
Sterling Sterling Sterling
GBPm GBPm % change GBPm GBPm % change GBPm GBPm % change % % Change
UK 627 643 (2)% 611 552 11% 1,238 1,195 4% 99.4% 92.1% pp
Ireland 46 53 (13)% 63 57 11% 109 110 (1)% 100.9% 94.4% pp
Canada 451 427 6% 302 259 17% 753 686 10% 91.8% 88.1% pp
Total 1,124 1,123 -% 976 868 12% 2,100 1,991 5% 96.4% 90.6% 5.8pp
-- GWP up 5% to GBP2.1bn (Q121: GBP2.0bn), another record first
quarter. The UK delivered growth of 4% and Canada 10%.
-- COR was 5.8pp higher at 96.4% (Q121: 90.6%) following a
return to more normal claims frequency together with higher UK
weather costs versus long-term average.
-- In line with the market, we are observing increasing claims
inflation across our GI businesses as a result of macro-economic
uncertainties and volatility. In response we have taken swift
pricing, underwriting and claims management actions to mitigate
this, and we expect these actions to continue.
UK & Ireland
-- UK commercial lines growth of 11% was driven by continued
rate momentum (7pp) and strong new business growth and retention
(4pp) , including growth of 12% in SME and 9% in Global Corporate
and Specialty (GCS) lines.
-- Personal lines down 2%, with Retail premiums down 1% driven
by pricing discipline in a soft rating environment, and
Intermediated premiums also down as we continue to reshape the
portfolio towards higher margin lines.
1 Aviva Investors net flows excludes liquidity funds and cash
2 Q121 re-presented to remove Wealthify which is now shown as a Group investment
-- Following the FCA pricing practices review, policy retention
in Q1 has increased across both Home and Motor.
-- UK GI COR of 99.4%, was 7.3pp higher than prior year, of
which 5.2pp relates to higher weather costs (the February storms
cost GBP70m). A return to more normal claims frequency also
adversely impacted the COR.
-- In Ireland, growth of 4% (at constant currency) was driven by
Commercial Lines, whilst the COR of 100.9% reflected more normal
claims frequency and adverse large losses.
-- Commercial lines premiums were 17% higher (13% higher at
constant currency), with the business benefiting from new business
activity, and the favourable rate environment.
-- Personal lines premiums were 6% higher (3% higher at constant
currency), reflecting strong rate increases against the
-- COR of 91.8%, was 3.7pp higher than prior year mainly due to
more normal levels of claims frequency.
Capital & centre liquidity
Solvency II shareholder cover ratio
-- The cover ratio reduced by 39pp during the quarter to 205% (FY21: 244%).
-- This was driven by the GBP3.75bn capital return which is now
fully recognised in our Solvency II position, the redemption of
GBP500m of subordinated debt, and the 2021 final dividend, partly
offset by Solvency II Operating Capital Generation (OCG) in the
period and the beneficial impact of higher interest rates.
-- Estimated pro forma cover ratio of 198%, allowing for a
further GBP500m debt reduction over time and GBP75m pension scheme
payment. The acquisition of Succession Wealth will further reduce
this pro forma ratio to 192%.
Movements recognised in Q1 2022(1)
redemption reduction Pro forma Pro forma
GBP3.75bn of 2021 Total & pension estimated estimated
capital subordinated final capital scheme at Q1 at FY
GBPbn FY 2021 return debt dividend generation Q1 2022 payment 2022 2021
Own funds 22.2 (3.75) (0.5) (0.55) (0.1) 17.3 (0.6) 16.7 17.4
SCR (9.1) - - - 0.6 (8.4) - (8.4) (9.1)
Surplus 13.1 (3.75) (0.5) (0.55) 0.6 8.8 (0.6) 8.3 8.3
(%) 244% 205% 198% 191%
Solvency II debt leverage ratio
-- Solvency II debt leverage of 29% at Q122 after allowing for
the GBP500m subordinated debt redemption on 21 April (FY21:
-- Estimated pro forma debt leverage of 28%, allowing for a
further GBP500m debt reduction over time and GBP75m pension scheme
-- Centre liquidity of GBP5.8bn as at the end of April 2022 (Feb
2022: GBP6.6bn), primarily reflecting the redemption of GBP500m of
-- Estimated pro forma centre liquidity of GBP1.5bn, allowing
for the GBP3.75bn capital return, a further GBP500m debt reduction
over time and GBP75m pension scheme payment.
1 Rounding differences apply
An analyst call will take place at 0830hrs BST on 18 May 2022
and will be live-streamed via our website. A replay will be
available after the event. www.aviva.com
We will be hosting the next of our Aviva In Focus sessions on 29
June 2022. The session will cover our Annuities & Equity
Release business, together with asset origination. For further
details please email: IR@aviva.com.
Rupert Taylor Rea +44 (0)7385 494 440
Joel von Sternberg +44 (0)7384 231 238
Michael O'Hara +44 (0)7837 234 388
Andrew Reid +44 (0)7800 694 276
Sarah Swailes +44 (0)7800 694 859
Notes to editors
-- Throughout this trading update we use a range of financial
metrics to measure our performance and financial strength. These
metrics include Alternative Performance Measures (APMs), which are
non-GAAP measures that are not bound by the requirements of IFRS
and Solvency II. A complete list and further guidance in respect of
the APMs used by the Group can be found in the 'Other information'
section of the 2021 Results Announcement.
-- All figures have been translated at average exchange rates
applying for the period, with the exception of the capital position
which is translated at the closing rates on 31 March 2022. The
average rates employed in this announcement are 1 euro = GBP0.84
(Q1 2021: 1 euro = GBP0.88) and CAD$1 = GBP0.59 (Q1 2021: CAD$1 =
GBP0.57). Growth rates in this announcement have been provided in
sterling terms unless stated otherwise.
-- We are the UK's leading Insurance, Wealth & Retirement
business and we operate across our core markets of the UK, Ireland
and Canada. We also have international investments in Singapore,
China and India.
-- We help our 18.5 million customers make the most out of life,
plan for the future, and have the confidence that if things go
wrong we'll be there to put it right.
-- We have been taking care of people for 325 years, in line
with our purpose of being 'with you today, for a better tomorrow'.
In 2021, we paid GBP30.2 billion in claims and benefits to our
-- Aviva is a market leader in sustainability. In 2021, we
announced our plan to become a Net Zero carbon emissions company by
2040, the first major insurance company in the world to do so. This
plan means Net Zero carbon emissions from our investments by 2040;
setting out a clear pathway to get there with a cut of 25% in the
carbon intensity of our investments by 2025 and of 60% by 2030; and
Net Zero carbon emissions from our own operations and supply chain
by 2030. Find out more about our climate goals at
www.aviva.com/climate-goals and our sustainability ambition and
action at www.aviva.com/sustainability
-- Aviva is a Living Wage and Living Hours employer and provides
market-leading benefits for our people, including flexible working,
paid carers leave and equal parental leave. Find out more at
-- At 31 December 2021, total Group assets under management at
Aviva Group were GBP401 billion. Our Solvency II shareholder
capital surplus is GBP8.8 billion as at 31 March 2022. Our shares
are listed on the London Stock Exchange and we are a member of the
FTSE 100 index.
This document should be read in conjunction with the documents
distributed by Aviva plc (the 'Company' or 'Aviva') through The
Regulatory News Service (RNS). This announcement contains, and we
may make other verbal or written 'forward-looking statements' with
respect to certain of Aviva's plans and current goals and
expectations relating to future financial condition, performance,
results, strategic initiatives and objectives. Statements
containing the words 'believes', 'intends', 'expects', 'projects',
'plans', 'will', 'seeks', 'aims', 'may', 'could', 'outlook',
'likely', 'target', 'goal', 'guidance', 'trends', 'future',
'estimates', 'potential' and 'anticipates', and words of similar
meaning, are forward-looking. By their nature, all forward-looking
statements involve risk and uncertainty. Accordingly, there are or
will be important factors that could cause actual results to differ
materially from those indicated in these statements. Aviva believes
factors that could cause actual results to differ materially from
those indicated in forward-looking statements in the announcement
include, but are not limited to: the impact of ongoing uncertain
conditions in the global financial markets and the local and
international political and economic situation generally (including
those arising from the Russia-Ukraine conflict); market
developments and government actions (including those arising from
the evolving relationship between the UK and the EU); the effect of
credit spread volatility on the net unrealised value of the
investment portfolio; the effect of losses due to defaults by
counterparties, including potential sovereign debt defaults or
restructurings, on the value of our investments; changes in
interest rates that may cause policyholders to surrender their
contracts, reduce the value or yield of our investment portfolio
and impact our asset and liability matching; the unpredictable
consequences of reforms to reference rates, including LIBOR; the
impact of changes in short or long-term inflation; the impact of
changes in equity or property prices on our investment portfolio;
fluctuations in currency exchange rates; the effect of market
fluctuations on the value of options and guarantees embedded in
some of our life insurance products and the value of the assets
backing their reserves; the amount of allowances and impairments
taken on our investments; the effect of adverse capital and credit
market conditions on our ability to meet liquidity needs and our
access to capital; changes in, or restrictions on, our ability to
initiate capital management initiatives; changes in or inaccuracy
of assumptions in pricing and reserving for insurance business
(particularly with regard to mortality and morbidity trends, lapse
rates and policy renewal rates), longevity and endowments; a
cyclical downturn of the insurance industry; the impact of natural
and man-made catastrophic events (including the impact of COVID-19)
on our business activities and results of operations; the
transitional, litigation and physical risks associated with climate
change; failure to understand and respond effectively to the risks
associated with environmental, social or governance ("ESG")
factors; our reliance on information and technology and third-party
service providers for our operations and systems; the impact of the
Group's risk mitigation strategies proving less effective than
anticipated, including the inability of reinsurers to meet
obligations or unavailability of reinsurance coverage; poor
investment performance of the Group's asset management business;
the withdrawal by customer's at short notice of assets under the
Group's management; failure to manage risks in operating securities
lending of Group and third-party client assets; increased
competition in the UK and in other countries where we have
significant operations; regulatory approval of changes to the
Group's internal model for calculation of regulatory capital under
the UK's version of Solvency II rules; the impact of actual
experience differing from estimates used in valuing and amortising
deferred acquisition costs (DAC) and acquired value of in-force
business (AVIF); the impact of recognising an impairment of our
goodwill or intangibles with indefinite lives; changes in valuation
methodologies, estimates and assumptions used in the valuation of
investment securities; the effect of legal proceedings and
regulatory investigations; the impact of operational risks,
including inadequate or failed internal and external processes,
systems and human error or from external events and malicious acts
(including cyber attack and theft, loss or misuse of customer
data); risks associated with arrangements with third parties,
including joint ventures; our reliance on third-party distribution
channels to deliver our products; funding risks associated with our
participation in defined benefit staff pension schemes; the failure
to attract or retain the necessary key personnel; the effect of
systems errors or regulatory changes on the calculation of unit
prices or deduction of charges for our unit-linked products that
may require retrospective compensation to our customers; the effect
of simplifying our operating structure and activities; the effect
of a decline in any of our ratings by rating agencies on our
standing among customers, broker-dealers, agents, wholesalers and
other distributors of our products and services; changes to our
brand and reputation; changes in tax laws and interpretation of
existing tax laws in jurisdictions where we conduct business;
changes to International Financial Reporting Standards relevant to
insurance companies and their interpretation (for example, IFRS
17); the inability to protect our intellectual property; the effect
of undisclosed liabilities, separation issues and other risks
associated with our business disposals; and other uncertainties,
such as diversion of management attention and other resources,
relating to future acquisitions, combinations or disposals within
relevant industries; the policies, decisions and actions of
government or regulatory authorities in the UK, the EU, the US,
Canada or elsewhere, including changes to and the implementation of
key legislation and regulation (for example, Solvency II). Please
see Aviva's most recent Annual Report for further details of risks,
uncertainties and other factors relevant to the business and its
Aviva undertakes no obligation to update the forward looking
statements in this announcement or any other forward-looking
statements we may make. Forward-looking statements in this report
are current only as of the date on which such statements are
This report has been prepared for, and only for, the members of
the Company, as a body, and no other persons. The Company, its
directors, employees, agents or advisers do not accept or assume
responsibility to any other person to who this document is shown or
into whose hands it may come, and any such responsibility or
liability is expressly disclaimed.
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