News Release
23 May 2024
Aviva plc Q1 2024 Trading
Update
Excellent first quarter
results
Strong growth across the
Group. Another quarter of consistent delivery
Capital position strong and
resilient
General
Insurance
|
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Protection
&
Health
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Wealth
|
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Retirement
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Solvency II
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£2.7bn
|
|
£106m
|
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£2.7bn
|
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£1.7bn
|
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206%
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Premiums1 +16%2
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Sales1 +5%
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Net flows
+15%
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Sales1 +13%
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Cover
ratio3
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Q123:
£2.4bn
|
|
Q123:
£102m
|
|
Q123:
£2.3bn
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Q123:
£1.5bn
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FY23:
207%
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Amanda Blanc, Group Chief Executive Officer,
said:
"This is another set of excellent results, extending our track
record of consistently strong trading. Our diversified business
model is continuing to deliver, and we are growing
right across the Group.
"We accelerated new business sales in our capital-light businesses: General Insurance premiums
increased 16% to £2.7bn and our workplace
pensions business generated net flows of £2bn as we won 136 new schemes.
The bulk purchase annuity market also continues to be active, with
Retirement sales up 13%.
"Aviva is in great health. We are financially strong, we are
trading well, and our investments in new products and customer
service are paying off. We have clear competitive advantages - in
our brand, our scale, and our diverse business - which are driving
consistently strong performance, and giving us real optimism about
2024."
Continued capital-light growth momentum
• General Insurance premiums up 16%2 to
£2.7bn.
• UK GI premiums
up 19% to £1.7bn with 27% growth in personal lines reflecting
continued strong rate discipline in the high inflationary
environment, and new business growth. Commercial lines grew
10%.
• Canada GI
premiums up 11%2 to £0.9bn with personal lines up
16%2 driven by rating actions on the existing book and
new business growth. Commercial lines grew
5%2.
• Group
undiscounted combined operating ratio (COR) of 95.8% (Q123: 95.4%).
An improvement in the UK COR as the rating actions taken earn
through was offset by an increased Canadian COR. Discounted COR of
92.0%.
• Protection & Health sales were up 5%, driven by continued
growth in Protection.
• Wealth net flows of £2.7bn were up 15% on the prior year with
double-digit growth in Workplace, up 13%, and in Platform up
24%.
• Retirement
sales were up 13% driven by higher BPA volumes. Retirement margin
improved to 2.9% (Q123: 1.9%) as we focused on pricing
discipline.
Strong solvency and liquidity positions
• Estimated Solvency II shareholder cover ratio remains strong
at 206%.
• The reduction in the quarter of 1pp was primarily driven by
the final dividend, share buyback and the acquisition of Optiom,
partly offset by total capital generation in the quarter and
completion of the sale of Singapore.
• Solvency II debt leverage ratio of 30.9% (FY23: 30.7%) or
28.7% when allowing for the Tier 2 notes redemption announced on 16
May.
• Centre liquidity (Apr 24) of £2.1bn (Feb 24: £1.9bn),
primarily reflecting net proceeds from acquisitions and disposals
offset by the share buyback.
• £300m share buyback is progressing well.
• The 2023 final dividend of 22.3p per share was paid to
shareholders today.
Progress on inorganic execution
• We continue to make progress in executing strategic deals that
enhance value for shareholders. Our focus is on enhancing
capabilities or where there are clear financial or strategic
benefits to a transaction.
• On 5 January we completed the acquisition of Optiom O2
Holdings in Canada for £100m. The acquisition supports Aviva's
capital-light growth in the attractive Canadian market and
strengthens Aviva Canada's specialty lines business and
distribution capabilities.
• We announced the £242m acquisition of Probitas on 4 March: a
high quality, fully-integrated platform in the Lloyd's market,
which will expand the market opportunity for Aviva's Global
Corporate & Specialty (GCS) business. The transaction is
expected to complete in mid-20244.
• On 18 March we completed the exit from our Singapore joint
venture for a total consideration of £937m, further simplifying the
Group's geographic footprint.
• We completed the acquisition of AIG's UK protection business
for £453m on 9 April, accelerating growth in the attractive UK
protection market. The acquisition will broaden distribution, with
over 2.5m customers across individual and group protection, and
deliver capital and expense synergies.
Confident outlook
• We remain confident in meeting the Group targets outlined at
our FY 2023 results presentation:
◦ Operating
profit5: £2bn by 2026.
◦ Solvency II own funds generation: £1.8bn by 2026.
◦ Cash remittances: > £5.8bn cumulative 2024-2026.
• In General
Insurance we remain focused on pricing appropriately. We expect the
underlying COR6 to continue to benefit from rating
actions taken in 2023 and so far in 2024.
• We expect further strong demand given supportive market
dynamics in Protection, and in Health, as set out at our 'In Focus'
briefing last month. Wealth is central to our strategy and presents
a significant opportunity for Aviva to continue to generate
sustainable, capital-light growth. We expect to continue our
disciplined approach to BPAs.
• We are committed to delivering for our shareholders. As
announced with our full year results, our upgraded dividend
guidance is for mid-single digit7 growth in the cash
cost. Our intentions for further regular and sustainable returns of
capital remain unchanged.
Footnotes
1
|
Sales for Protection & Health
(Insurance) refers to Annual Premium Equivalent (APE). Sales for
Retirement (Annuities and Equity Release) refers to Present Value
of New Business Premiums (PVNBP). Premiums for General insurance
refer to gross written premiums (GWP). The first instance of each
reference has been footnoted. However, this footnote applies to all
such references in this Trading Update. APE, PVNBP and GWP are
Alternative Performance Measures (APMs) and further information can
be found in the 'Other information' section of the Aviva plc Annual
Report and Accounts 2023.
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2
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In constant currency.
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3
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Solvency II cover ratio is the
estimated Solvency II shareholder cover ratio at 31 March
2024.
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4
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Completion of this transaction is
subject to customary closing conditions, including regulatory
approvals.
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5
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Reference to operating profit
represents Group adjusted operating profit which is a non-GAAP APM
and is not bound by the requirements of IFRS. Further details of
this measure are included in the 'Other information' section of the
Aviva plc Annual Report and Accounts 2023.
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6
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Undiscounted COR excluding the
impacts of prior year development and weather versus long term
average (LTA).
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7
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Estimated dividends are for guidance
and are subject to change. The Board has not approved or made any
decision to pay any dividend in respect of any future
period.
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Notes to editors
• All figures have been translated at average exchange rates
applying for the year, with the exception of the capital position
which is translated at the closing rates on 31 March 2024. The
average rates employed in this announcement are 1 euro = £0.86
(Q123: 1 euro =£0.88) and CAD$1 = £0.58 (Q123: CAD$1 = £0.61).
Where percentage movements are quoted on a constant currency basis,
this is calculated by applying current year to date average
exchange rates to prior year.
• Growth rates in this announcement have been provided in
sterling terms unless stated otherwise.
• All percentages, including currency movements, are calculated
on unrounded numbers so minor rounding differences may
exist.
• 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 Aviva plc Annual Report and Accounts
2023.
• We are the UK's leading diversified insurer and we operate in
the UK, Ireland and Canada. We also have international investments
in India and China.
• We help our 19.2 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 more than 325 years, in
line with our purpose of being 'with you today, for a better
tomorrow'. In 2023, we paid £25.6 billion in claims and benefits to
our customers.
• In 2021, we announced our ambition to become Net Zero by 2040,
the first major insurance company in the world to do so. We are
aiming to have Net Zero carbon emissions from Aviva's operations
and supply chain by 2030. While we are working towards our
sustainability ambitions, we recognise that while we have control
over Aviva's operations and influence on our supply chain, when it
comes to decarbonising the economy in which we operate and invest,
Aviva is one part of a far larger global ecosystem. There are also
limits to our ability to influence other organisations and
governments. Nevertheless, we remain focused on the task and are
committed to playing our part in the collective effort to enable
the global transition. 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, Living Pension 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 www.aviva.com/about-us/our-people
• As at 31 December 2023, total Group assets under management at
Aviva Group were £376 billion and our estimated Solvency II
shareholder capital surplus as at 31 March 2024 was £8.5 billion.
Our shares are listed on the London Stock Exchange and we are a
member of the FTSE 100 index.
• For more details on what we do, our business and how we help
our customers, visit www.aviva.com/about-us
•
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•
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•
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Enquiries
Investor contacts
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Media Contacts
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Timings
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Rupert Taylor Rea
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+44(0) 7385 494 440
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Andrew Reid
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+44(0) 7800 694 276
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Analyst conference call:
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0830 hrs BST
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Joel von Sternberg
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+44(0) 7384 231 238
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Sarah Swailes
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+44(0) 7800 694 859
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https://www.aviva.com
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Michael O'Hara
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+44(0) 7387 234 388
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Marion Fischer
|
+44(0) 7800 693 219
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Click on, or paste the following
link into your web browser, to view the full Aviva plc Q1 2024
Trading Update:
http://www.rns-pdf.londonstockexchange.com/rns/5513P_1-2024-5-22.pdf
The document is available to view on
the Company's website at https://www.aviva.com/investors/results/