Dame Amanda Blanc

Karen Tso

… with Amanda Blanc, the CEO of Aviva. Amanda, thank you so much for joining us today. Just walk us through the latest half, the latest quarter, how are things tracking when it comes to the business?

Amanda Blanc

Good morning, both, and it's really good to be on. Thank you for having me. Yes, we've had an excellent first half that you just called out there. Premiums are up in General Insurance by 15%. Wealth net flows are up by 16%. Operating profits up by 14% and dividend up by 7%. So, you know, really, really strong set of results. And I think also very positively, we see really, really good growth momentum in the business and plenty of opportunity for that to continue to happen.

Karen Tso 

Amanda, can we just unpack the premium side because we've seen incredible increases, real strength in the business to date. But the 15% you cited, does that suggest a slight cooling down, at least, when it comes to the premium increases? 

Amanda Blanc 

Well, I think it depends on which sector of business you're talking about. But particularly if you look at the retail business, which is a significant business, particularly in the UK and Canada, what we are seeing is that premiums are starting to come off from incredibly strong premium increases during 2023. So I think that's what we would expect to happen. And what we see is very, very good ratings strength. So we're very, very comfortable about that, but I think you'd still agree a 15% increase in premiums is a very strong position to be in. 

Karen Tso 

Amanda, it's not just insurance CEOs and customers talking about motor insurance premiums these days. It's economists because it comes up the macro data and it's politicians, with Prime Minister Keir Starmer threatening to target the sector if we don't see any change to those increases. How political is motor insurance getting, and will it have any impact? 

Amanda Blanc

I think motor insurance has always been very political. But, you know, just to set it in the context of the market, it's a hyper competitive market. And the combined operating ratio for the whole market last year was 113%. So this is not a market where you're seeing significant profit being taken. You've seen big increase in terms of supply chain costs. So claims increasing, you know, some of those by 28%. Theft claims increasing. So I think it needs a grown up conversation around what we need to do. We totally are very sympathetic to customers who need their vehicles to get to work. But at the same time, you know, there's not profiteering here. 

Arabile Gumede

Yeah. Amanda, what has happened to consumer spending? Are you seeing pretty much the cracks in it then, their choices perhaps, altering just a little bit considering the cost-of-living crisis you’ve seen as well across the United Kingdom? What has that meant for your business?

Amanda Blanc

I mean, I think it's really interesting, Arabile, because when we look at this, actually, insurance is an incredibly resilient business and Aviva is obviously a very diversified business. So we see it right across the piece. But you know, we've seen good demand for health insurance. We've seen good growth in our motor insurance, good growth in our home business, good growth in our commercial lines business. We talked about wealth net flows. I think one of the areas that we might have expected was the people would maybe draw down on their pension savings. We haven't seen that happen. And in fact, our advisor platform flows grew by 45% this half. So, you know, really, really strong growth there. Our workplace business is 4.7 million customers, and that has grown also. So you know, insurance is very resilient. And Aviva is a very resilient business because we're very diversified. 

Arabile Gumede

So it's not off the back of consumers who are continually shopping around, I would guess, then, it is also on high customer retention, actually, which means that you kind of have to keep dynamic pricing and play dynamic thoughts on what exactly consumers are needing, right?

Amanda Blanc 
 
No, absolutely. I mean, if we look at our 16 million customers in the UK and 19 million globally, actually 40% of our new sales come from our existing customer base. And obviously, the more policies you have with a customer, the more the more loyalty there is, because they understand Aviva, they trust Aviva, and so they're prepared to give you the opportunity to write some of their other business. And so we definitely see, obviously our brand position is very, very strong, we've got very strong propositions, and also we've got a range of products. So if customers want a more value-based product they can have that, or if they want a more high net worth product, they can have that. 

Karen Tso

Amanda, often insurers see the economic cycle unfolding before others. When it comes to the UK, we just had some data crossing, we can see CPI is at 2.2% in July, services coming off a little bit, but still a strong 5.2%. Any signs in your view that we're still looking potentially at some weakening in the economy, which has been the broad market fear over the past number of days? 

Amanda Blanc

Look, Karen, I think we feel incredibly positive about the UK. If we look at some of the wealth trends, you know, the wealth market is going to, we believe, will grow from 1.5 trillion to over 5 trillion over the next ten years. So we may see small volatility in terms of things like the data that you just talked about, but actually we think that there's a really, really good, you know, good political stability now, some economic stability. Yes, with some ups and downs, but we feel very confident about the UK. We're a big investor in UK infrastructure. We're a big UK business and we feel pretty confident about the growth opportunities here. 

Arabile Gumede

Yeah, so what do the lower rates environment then mean, for Aviva particularly, in the UK?

Amanda Blanc

Well, look, we're pretty resilient to rates, Arabile. I mean, what we would see basically is that a lower rates environment might see customers move out of cash into investments. So that would be good for Aviva. Also things like our equity release business, a lower rates environment would benefit that. So you know, we actually are pretty resilient to that because of the diversified business.

Karen Tso

Amanda, there's been some market discussion as to whether Aviva is a takeover target. I've got to bring that up with you. And the stock price not going anywhere much this year. There's been a lot of market events, clearly, when it comes to individual stock prices too. But is the company in play in your view, or can you keep it independent?

Amanda Blanc

Look, I think it's all about the performance of the business. Our share price is up 12% this year, it’s up 26% year on year. We're sort of bucking the sector, if you like, in terms of our share price performance. And I think that's because of the really, really great performance that we're delivering. You know, this is my 17th time of standing up in front of the market, presenting the results. We've delivered consistently good results, quarter on quarter. We feel very confident about the diversified business. And you know we've got the biggest insurance brand in the UK. So what's not to like?

Arabile Gumede

Amanda, just very quickly, just to end off, I mean, you had made that purchase of Probitas of course. How much more growth are you beginning to see and expect moving forward in your health insurance business? And then the outlook for new products in the second half of the year. 

Amanda Blanc

Yeah. So first of all, on Probitas, that gives us the opportunity in the global corporate and speciality market. So that effectively doubles our distribution opportunity. And it also connects the UK Canada to the sort of global proposition. So we are very excited about that. Very good growth prospects there, clearly. And that is a market which has got good profitability and good growth prospects. Health, there's a continued opportunity. We grew our health business 10% in the first half. We continue to see very, very good growth opportunities there. In terms of new products, we've just launched our direct wealth proposition in the first half of this year. We've started to do some TV advertising, and we launched a simple advice proposition back on the 26th of July. So, you know, what we see in the UK is that less than 10% of people take advice. And it's really, really important when you're looking at 12.5 million people in the UK who may not have enough money to retire. So we think that we've got the propositions to fill those opportunities that exist in the market.

Karen Tso

Amanda, thank you so much for joining us on the back of your numbers today. We do appreciate your help dissecting them. Amanda Blanc with us, CEO of Aviva.

Guy Johnson

Today we bring you a deep dive into one of the country's top female CEOs. Aviva's, Amanda Blanc, is one of the few women leading a blue chip company in Europe. Soon after taking charge, she led a project to slim down operations and pledged to reverse a share slump. Almost four years on, and the stock has gained more than 30%. Now, Bloomberg's, Francine Lacqua spoke to Amanda Blanc about consolidation, the impact of AI and climate change on the industry, as well as opportunities for future growth.

Amanda Blanc

If you think about workplace pension, we have a 23%, 24% market share. But the thing is that that market continues to grow. We know that DC pensions will grow from the 500 billion it is today to 1.2 trillion by 2030. So there's plenty of growth opportunity. The wealth opportunity aside pensions is significant. So we don't see any lack of growth opportunities here. I think it's making sure that the business is really well positioned to be able to capitalise on that.

Francine Lacqua

I know you're also extremely involved with reforms in the City of London, some of the things that the regulators have been trying to push through. What's the right prescription for the UK to grow? So when you look at risk taking and growth, do you need a strong reform of the pension market?

Amanda Blanc

I think in the pension market, what we would encourage, is that there's more focus on advice. Today only 10% of people actually take any advice because it's expensive, they don't think advice is for them, whereas 70% of people want advice. So there's clearly something wrong there. So we are very, very big advocates of this work that's going on currently, with the regulation, with the Treasury to encourage people to take some sort of advice, even if it's a person like you, bought products like this, to just encourage individuals to really think about that. The other area, I think, where the regulators can help is in the businesses that we can invest in, where we put our capital to use to get good returns, and the Solvency II reforms, which we've heard a lot about, and will, I think really help companies like Aviva. We've committed 25 billion of investment into UK infrastructure over the next 10 years as a consequence of those reforms. So I think those are really important things that can help.

Francine Lacqua

But is there something in the US market? They have the 401k, it's just a different appetite from citizens and risk. There's a lot more retail investing. Is that a good template for the UK?

Amanda Blanc

Whether or not it's a good template, I think definitely the culture is a good culture because what you see in the US is the people are engaging more with their savings. They're thinking about the businesses they want to invest in. Whereas in the UK, in your defined contribution pension, something like 93% of people will just take the default pension. They're not thinking about what they want to invest in. So I think that is a definite role for more financial education, more understanding of what you're investing. Effectively, what are your savings in?

Francine Lacqua

How much are you thinking about AI and is that really going to be transformational for your industry, or is it already infiltrated through algorithms and some of the websites and technology that you have?

Amanda Blanc

AI already plays a massive role. If we think about motor pricing, it's all done by machine learning. It's very clever, it's very dynamic, and we've been using that for many years. We are using chatbots. We're using AI in some of our financial reporting. There's a lot of it already within the business, however, every CEO that you speak to every commentator, everybody's talking about, "What's the future role of AI?" And I think we are doing quite a lot of pilots in different parts of our business around thinking about how can large language models really help us, for example, in handling claims, in assessing documentation. Those are some areas. Clearly there's a much bigger role as we go into the future, but I think I'm more of a believer that this will happen in waves, rather than it would be a fundamental switch out one day in the market where suddenly everything will change.

Francine Lacqua

But is that transformational to attract business or is it transformational to actually look at claims?

Amanda Blanc

I think it's a combination of all things. I think it's basically making the business more efficient, which means clearly that's better outcome for customers because you can deliver the product to them more cheaply. But it's also the way you can analyse the business and you can make good decisions. So I think it's a combination of all things, but ultimately, if we think about some of the systems that we have today, if we get those onto more agile platforms using AI, that's a better customer experience as well in the interaction with Aviva.

Francine Lacqua

Does that mean you get also more business from the same customer, or you're able to take advantage of solvability for these customers?

Amanda Blanc

For sure. I think obviously our aim, because we can be with a customer from the very first junior ISA to the equity release mortgage that they may do at their end of their retirement, we do believe that if we've got more agile technology, more ability to understand where a customer is in their life journey, using AI, then clearly we can deliver better propositions.

Francine Lacqua

Amanda, putting insurance on things is not easy. You have climate change, you have natural disasters, you have disasters, for example, like the ship that went into the Baltimore bridge that took it down. How difficult is it to look at these man-made or not man-made disasters and decide what kind of insurance premium you need?

Amanda Blanc

Well, of course, the thing is that in many cases, particularly in general insurance, you only get to use the product when usually something bad has happened. Insurance is there to build back, to help to recover. So that's how you use your product. But I think we are constantly having to assess what's the impact of climate change, what's the impact of biodiversity? All of these are areas which will go into our pricing of our models, because ultimately, of course, if climate change continues in the way that it does today, then things become uninsurable. So it's very much in the interest of insurers to make governments, make customers, think about decarbonization and how they're thinking about their transition planning.

Francine Lacqua

But you are there actually in times of need, actually, as an insurance company?

Amanda Blanc

Absolutely.

Francine Lacqua

But do customers see that?

Amanda Blanc

Well, I think insurance can sometimes get a bad reputation. Sometimes that's self-inflicted, by the way, in the past. But I do genuinely believe that when I look at the experience that our customers have, for example, in a bad flood where effectively your home is uninhabitable for many, many months, and we were able to put people into rented accommodation, provide them with clothing, furniture, the response that you get back from that is, "I'm really glad that I'm insured with a reputable company." So I think it's only when you actually experience the product, that's when you really see the value of the product. And then that's usually when something bad happens, particularly in general insurance.

Francine Lacqua

Insurance, financial companies, financial services seem to be getting bigger because there's a lot of consolidation. Do you expect that also within insurance?

Amanda Blanc

You've seen that in insurance. I think if you take our own example, over the last number of years, whilst we haven't done big M&A, we've bought a wealth advice business, we've bought an additional protection business, we've entered into the Lloyds market. I think you will see more of that, for sure, because scale is really important because scale gives you buying power. It also gives you diversification.

Francine Lacqua

Do you spend, and I know you don't want to talk about speculation, but do you spend a lot of time looking at whether you're a takeover target or whether you want to buy something, or how do you navigate it as a listed chief executive?

Amanda Blanc

I think you would expect us to see most of the things that come onto the market will pass over our desk at some point. We will look at that, but I'm always looking at this, "Is this the right thing for Aviva? Is this going to add value to Aviva? Is it going to help us to deliver value for our shareholders?" And that can be around synergy. So is it going help us to be more efficient, or is it going to fill a gap that we don't currently have today? So it's strategic, and I think you will look at M&A differently, depending on those two things. But I think we've been very clear that, for us, M&A has a high bar. And so we are constantly looking at it, but it would have to be a quality acquisition.

Guy Johnson

A quality acquisition. We're going to bring you more of Francine's interview with Amanda Blanc after the break. They're going to talk about diversity, sexism in the city and what that means for leadership. That conversation next. This is Bloomberg.

Amanda is also a champion for equality and diversity in Britain. Bloomberg's Francine Lacqua, asks Blanc if she's disappointed there hasn't been more progress on this front.

Amanda Blanc

I think you'd have to say yes to that because if you're looking at the FTSE 100 and you have 10 female CEOs, 90 male CEOs, you have to say, "Something's not quite right about that." And if we look in financial services, and I'm the government's woman in finance, Charter Champion, we are seeing 1% improvements year-on-year. Now that's good, and we should celebrate that, but it's not quick enough. So I think we have to have a look at what's going wrong, and it's really the pipeline of women, if I talk about gender, women coming through. That is not strong enough. So we have to make sure that we keep women at work, being promoted, but always the best person for the job, but making it easy for families, for the man and the woman, to be able to work.

Francine Lacqua

But is that flexibility? I know there's been, and you've testified and we saw the episode with The Garret Club. Is it still easier for a man to do business in the city?

Amanda Blanc

I'm not sure it's easier for a man to do business. I think we have seen definitely some bad behaviours, and certainly I asked for women to contact me prior to giving evidence of the Treasury Select Committee and heard about lots of very, very bad experiences. But I think what you have to do is get shared parental leave. If you're looking for what makes it easier, at Aviva, 80% of our men take the full six months off parental leave. Now, I think that sets then the tone right from the very beginning of childcare responsibilities, that that is a shared responsibility. That makes a really big difference. I think at that point, it then becomes easier for the men and the women to do well. And what we want clearly is for both to do well.

Francine Lacqua

But so is that more important, than sexism in the city? For me, it was a watershed moment because this was on LinkedIn and you say, "I would like to hear from testimonies of people that have had allegations, either assault or bad experiences, being a woman in the city." That was quite powerful.

Amanda Blanc

Yeah, it was powerful. And it was very emotional actually, because I had hundreds of private messages from that. So you do still see that some women are experiencing bad behaviour, and that is clearly wrong, and that has to be dealt with by organisations. But I think there's the behaviour point and then there's the systems processes that you put in place to make sure that opportunities are available for both men and women to succeed. But I think the behaviour has to be dealt with. It has to be dealt with by organisations, and women have to feel that if they speak up, that that will be dealt with.

Francine Lacqua

Do you think that's gone backwards actually, that less people want to speak up?

Amanda Blanc

I'm not sure that it's gone backwards. I think that people are now more prepared to call it out. So you are seeing more examples of that. It's hard to say if it's gone backwards, because I think 10, 15 years ago, you wouldn't be hearing about this at all.

Francine Lacqua

There are also a number of diversity initiatives that the government said, "Well, actually, we're not doing it in the right way. We're wasting money, and it's not having much of an impact." How do you look at that?

Amanda Blanc

I think the danger with a lot of these things is that there's about 50 different initiatives within any organisation even. And effectively then you lose focus and you're not concentrating on what is actually going to make the biggest difference. And I think at Aviva, we've spent some time really focusing on what are the things that make a really big difference? So it is shared parental leave. It is sponsorship programmes. It is making sure that you've got access to all of the roles effectively, that you are encouraging access to all of the roles that are available. Those are the things I think you have to focus your attention on.

Francine Lacqua

Do you feel like UK PLC is actually listening, even if without government incentives?

Amanda Blanc

I do honestly believe so because I think that if I speak to, whether it's other female CEOs or male CEOs, everybody realises that a diverse workforce makes better decisions, looks after customers better. If I think about Aviva's 19 million customers, they are from all walks of life. And therefore, if you've got an organisation, which doesn't reflect that, you're not going to build good propositions, you're not going to make good decisions. So you have to have that represented. I think everybody gets that. It's between the getting it and the implementation of the strategies, I think sometimes things can not happen.

Francine Lacqua

When you look at leadership, what does it mean being a leader, being a chief executive in 2024? Is it different to what it was like 10 years ago?

Amanda Blanc

I do actually think it's different. If we think about, maybe go back 20 years, leadership was much more command and control. It was much more, "Trust me, I'm the CEO." I think there was less accountability, and at least you had longer, if you like, to deliver. I think today, I think CEOs are thinking about, well, what do their colleagues think? What do their customers think? What do their investors think? And I think the pace is really quick, and you have to be able to communicate really, really well, effectively. You have to be simple in your strategy. You have to get things done. You can't afford to take time. You have to be able to act decisively.

Francine Lacqua

But that's difficult.

Amanda Blanc

Yes. Well, is it? Doing what you say you're going to do, is it really that difficult? I think the environment is difficult in that everything you do is judged and it's judged pretty quickly, but everybody's living by the same rules effectively. So it's not like you're being judged any different to any other CEO, but I think that you need a big strategy and it takes months to deliver that. Now, I think sometimes we over complicate it. You know, if you know your organisation, if you know your industry, if you know your business, you know what needs to be done, and then it's a question of gathering the right team around you that have the same beliefs that think that there's the same way of doing things, and just getting on with it.

Francine Lacqua

What's the hardest bit of actually being a chief executive of a listed company? Is it building your troop? Is it building your board? Is it trying to get things done? Is it convincing everyone in the business?

Amanda Blanc

It's a big communication role being a CEO. You have to communicate to your investors, to your board, to your colleagues, to your customers that this is a good company, that this is worth investing in, whether it's your time, your product, or your money. So I think is it a harder job than other jobs? I don't know. It's a full-on job. It's a 24-hour-a-day job. There's not a minute of the day where you're not thinking about Aviva or what's going on, how could we respond to a different opportunity in the market, challenging yourself that you are constantly, constantly reinventing the organisation, but I love it.

Guy Johnson

That was of course, the Aviva CEO, Amanda Blanc in conversation with Francine Lacqua.

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