Aviva reports strong start to 2024

(Sharecast News) - Aviva has reported strong results for its first quarter on Thursday, with robust growth across its divisions as it maintained a solid capital position. General insurance premiums surged 16% year-on-year to £2.7bn, driven by a 19% increase in the UK, with notable growth in personal lines due to strong rate discipline and new business.

Commercial lines also grew 10%.

In Canada, general insurance premiums rose 11%, bolstered by a 16% increase in personal lines through rating actions and new business growth.

The group's combined operating ratio (COR) stood at 95.8%, slightly up from 95.4% in the first quarter of 2023, with improvements in the UK offset by a higher COR in Canada.

Protection and health sales increased by 5%, while wealth net flows saw a 15% rise to £2.7bn, supported by double-digit growth in both workplace and platform sectors.

Retirement sales climbed 13%, with margins improving to 2.9% from 1.9% in the same period last year, driven by higher bulk purchase annuity volumes and pricing discipline.

Aviva's solvency and liquidity positions remain strong, with an estimated Solvency II shareholder cover ratio of 206%.

The slight reduction from the prior year's 207% was attributed to the final dividend, share buyback, and the acquisition of Optiom, partly offset by capital generation and the sale of its Singapore joint venture.

Its Solvency II debt leverage ratio was 30.9%, or 28.7% considering the Tier 2 notes redemption.

The firm said it was progressing well with its £300m share buyback, adding that the final dividend of 22.3p per share had been paid to shareholders.

Aviva said it was enhancing shareholder value through strategic acquisitions, including the £100m purchase of Optiom O2 in Canada and the £242m acquisition of Probitas in the Lloyd's market.

The recent sale of its Singapore joint venture for £937m, and the acquisition of AIG's UK protection business for £453m, further streamlined its geographic footprint and expanded its market presence.

Looking ahead, Aviva said it was confident in meeting its targets, including an operating profit of £2bn by 2026, Solvency II own funds generation of £1.8bn by 2026, and cash remittances exceeding £5.8bn from 2024 to 2026.

The company said it expected continued strong demand in protection and health, driven by favourable market dynamics, and saw wealth as central to its strategy for sustainable, capital-light growth.

"This is another set of excellent results, extending our track record of consistently strong trading," said group chief executive officer Amanda Blanc.

"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."

Blanc added that the bulk purchase annuity market also continued 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."

At 0906 BST, shares in Aviva were down 0.29% at 494.76p.

Reporting by Josh White for Sharecast.com.