Full year results 2023

Barry:

Hi, Amanda. Thanks for having me here today to talk about the results with you. So, it's the end of the financial year, how have we performed?

Amanda:

So, Barry, thank you very much for travelling over from Ireland today to do this. I think what today's results demonstrate is our momentum. Aviva is moving even faster than before, and I think the real credit for that performance goes to our Aviva colleagues for everything that they do to support our customers, whether that is helping a family recover from a devastating flood claim, consolidating somebody's pension pot to help them plan for retirement, or delivering a new service such as the Canadian Auto Care Centers. They work tirelessly to solve our customers financial puzzles, so they deserve a huge thank you.

Amanda:

So if we turn now to the performance of the business, I think what you've seen is a consistent quarter-on-quarter growth, strong reliable earnings and cash generation. And of course, we are exceeding our targets. So if we unpack that just a little bit, we continue to grow right across the business. In General Insurance premiums are up by 13% and we've had over £8.3 billion of net flows into the Wealth business.

Amanda:

We're also more efficient. Our costs are down by 1% and we've achieved our cost savings target one year early. We're more profitable. Operating profit is up 9%. And I think that shows the real underlying strong performance of the business. And that has translated into excellent cash remittances of £1.9 billion. And today we announced the £300 million share buyback, which starts immediately.

Amanda:

And with our confidence in Aviva's performance and the positive outlook for cash generation, we've upgraded our dividend guidance today. So another strong year.

Barry:

Well, that's great to hear. What are the top highlights across the business?

Amanda:

It's actually difficult to pick one or two. So maybe I could just run through a couple of the really standout points for me. So in the Wealth business, Doug and the team have delivered really, really strong growth in the Workplace savings business with 477 new schemes won in 2023. We've also delivered double digit AUM growth on the Adviser Platform and expanded our lead generation capability into Succession Wealth. Across Protection and Health those businesses are both growing. 

And Retirement, of course, remains a really core part of the Aviva proposition. And we've seen good growth in Individual Annuities and the Bulk Purchase Annuity business in 2023. In Aviva Investors, Mark and the team have delivered sustainable asset origination for the annuity business and they've captured over £4 billion worth of workplace net flows in 2023. In UK General Insurance Jason and the team are cementing our number one position with over 40% growth in Personal Lines Retail and continued growth in Commercial Lines. And, finally, in Canada, Tracy and the team have grown the Commercial Line business whilst delivering a very strong 88% combined operating ratio and building out the RBC partnership in Personal Lines. So what this really shows is the benefit of the diversified model and when all of the businesses are performing at the level that they are today, I think it shows the real strength of the Aviva proposition.

Barry:

So it's clear that Aviva is a great investment and I've heard you talk about that before, can you share in your own words why that is?

Amanda:

Firstly, we’re the UK's leading diversified insurer, there's no other business that can replicate that in the UK. That combination of strong growth potential with capital light businesses I think is a very compelling investment proposition. Secondly, we have a consistent strategy. It hasn't changed. We're focused on the four key areas of customer, growth, efficiency and sustainability. Thirdly, we have strong organic growth in all of our markets.

Amanda:

That has been accelerated through bolt-on M&A, as you've seen this week with the acquisition of Probitas. And I think that's evidenced in the numbers that we're producing and we're really confident that we can sustain that performance. Fourth, I think we now have a track record of delivery, built up with strong and consistent performance momentum over the past three and a half years.

Amanda:

And finally, and of course, very importantly, we deliver superior returns for shareholders, growing dividends and providing regular capital returns. So all of that, I think, creates a very compelling investment proposition.

Barry:

So, can we expect any changes to our strategy?

Amanda:

So I think we know that our strategy, the go-to customer brand of choice across insurance, wealth and retirement is actually the right one for Aviva. And so it's no surprise that our strategy remains unchanged and we are laser-focused on execution. And I think we're really well positioned to secure that future growth with a new set of upgraded Group targets.

Amanda:

We're making excellent progress on executing the strategy so far, and it's unlocking the competitive advantage of Aviva's model, but also creating real momentum for the future.

Barry:

To continue with this momentum, what growth opportunities are we seeing?

Amanda:

I think we're really fortunate there are plenty of growth opportunities. Let's just take a few of those. So in the Wealth market, we expect that market to grow to £4.3 trillion over the next decade. Our acquisition of the AIG UK Protection portfolio provides 2.5 million customers across the UK. In Canada the acquisition of Optiom, that strengthens our Specialty Lines business, and it gives us a growing stream of distribution income.

Amanda:

And in the UK General Insurance business, the acquisition of Probitas is another step in our strategy to invest in Aviva's future profitable growth. Aviva's presence in the Lloyd’s market opens up new opportunities to accelerate growth in capital-light insurance businesses. So we're already number one for trust, consideration and awareness for customers, but we're definitely not complacent Barry. We continue to prioritise delivering the right outcomes for our customers.

Amanda:

For example, we pass on all of the benefit of interest paid on cash balances on the investment platform, and we don't have early exit charges. And we're going to continue with this customer focused momentum in 2024 and beyond.

Barry:

What do you want everyone to take away from today?

Amanda:

Okay, so I think if we reflect on today's results, we have transformed the performance of Aviva over the last three years. We've grown quarter-on-quarter, year-on-year. And by operating more efficiently, we're turning that into improvements in profitability. And through dividend growth and regular share buybacks we are sustainably delivering superior returns to our investors. With our strong momentum and continued investment in the business we've got real confidence in the ability to extend this track record and it's been another excellent year. So ultimately, I want everyone looking at the results to feel as proud and as confident as I feel in the future of Aviva. 

Barry:

Thanks for talking to me, Amanda.

Amanda:

Thank you very much for coming over and doing the interview Barry, it's been great to see you.