Amanda Blanc, Chief Executive Officer, said:
“We are making good progress in our strategy to simplify Aviva’s portfolio and have recently announced the sale of Aviva Singapore and Aviva Vita in Italy for £2 billion.
We are announcing today a new sustainable and resilient dividend policy, based on our core markets of the UK, Ireland and Canada. As we simplify Aviva’s portfolio, we will deliver further value to shareholders by returning excess capital above 180% solvency cover ratio#, once our debt leverage target ratio has been reached.
The Board has declared a 7.0 pence per share interim dividend in respect of the 2020 financial year which will be paid in January 2021. The Board currently expects to recommend a final 2020 dividend of 14 pence per share which is subject to a final decision to be taken in March 2021. The expected 2020 total dividend of 21.0 pence per share is then expected to grow by low to mid-single digits.
Our trading performance is robust and our financial position is strong with a capital surplus of £11.8 billion. The first nine months have demonstrated Aviva’s ability to grow in core markets where we have attractive, long-term growth prospects. Bulk purchase annuities sales increased to £5 billion, which is a record for Aviva and commercial insurance premiums are up 9% across the UK, Canada and Ireland.
The response of our people to the Covid crisis has been nothing less than phenomenal and I would like to thank them for all they have done for our customers this year. We continue to work at pace to deliver our strategy, support our customers, and unlock value for Aviva shareholders.”
9M20 operating highlights
Trading
- Life PVNBP £32.1 billion (9M19: £32.4 billion)
- Value of new business (VNB)‡ £714 million (9M19: £828 million)
- General insurance net written premiums (NWP) £7.1 billion (9M19: £7.0 billion)
- Controllable costs‡ £2.8 billion (9M19: £3.0 billion)
Dividend
- 2020 interim dividend of 7.0 pence per share
- 2020 final dividend expected to be 14.0 pence per share, 21.0p total, subject to a board decision in March 2021
- No 2019 final dividend (2019 total dividend:15.5 pence per share)
Capital & liquidity
- Solvency II capital surplus £11.8 billion (HY20: £12.0 billion)
- Solvency II cover ratio‡# 195% (HY20: 194%)
- Solvency II net asset value# 410 pence per share
- Centre liquidity £2.8 billion1 (July 2020: £2.5 billion)
Transcript for video Watch our Group CEO, Amanda Blanc’s third quarter 2020 trading update video
In August I set out three priorities for Aviva: Focus the portfolio. Transform performance. And Financial strength. I am pleased to report today that we are making good progress on all of these.
Throughout the Covid crisis, despite the uncertainty and getting to grips with new ways of working, our people have risen to the challenge magnificently, keeping the show on the road for our customers. What I'm reporting today is down to each and every one of them, and I want to say 'thank you' for what they've achieved together.
Focus the Portfolio
We're focusing the portfolio on our core markets of the UK, Ireland and Canada, where we have market leading positions, can generate attractive returns and have the right to win. For our International businesses in Continental Europe and Asia I said that we would manage these for long-term shareholder value and that ultimately there may be better owners for these businesses.
We have made good progress since August, already announcing £2bn of disposals. In September we sold the majority of our Singapore business and we're on track to complete that deal next week
- two months ahead of where we expected to be. Earlier this week we announced the sale of our Italian life insurance joint venture, Aviva Vita. We've completed the sale of our Indonesian business and we expect to do the same for Hong Kong by the end of this year. I can confirm we are exploring our options for France, Poland, the remainder of our Italian businesses and our Joint Ventures.
Progress will take time as these are complex with multiple stakeholders. We will be decisive, but we won't be rushed into anything.
Transform Performance
Our second priority is to transform performance and I am pleased to see early progress here too in Q3. We're delivering robust growth in our core businesses, especially in the key segments where we have leading capabilities and there are long-term growth prospects.
I'm delighted to say we're being recognised for this success - taking a clean sweep at the British Insurance Awards last week claiming General, Personal and Commercial Insurer of the Year.
And importantly we're on track to exceed £150m of cost savings for the Full Year 2020. and on track for £300 million of savings from our core markets by 2022. We've made a good start here, but everyone at Aviva understands we've got a lot more to do to truly transform our performance.
Financial Strength
My third priority is financial strength and today's numbers show that Aviva's balance sheet is in robust health. Our Solvency 2 cover ratio and centre liquidity are strong. And I can reiterate my commitment to reducing Aviva's debt. We are intending to use the aggregate cash disposal proceeds of £1.Sbn from Singapore and Aviva Vita to do just that.
Dividend
Now, turning to the important matter of dividends. We are today announcing a new dividend policy which will deliver a sustainable and resilient ordinary dividend, aligned to the capital generation, cash flow and growth of our core markets in the UK, Ireland and Canada. We expect to grow ordinary dividends per share by low-to-mid single digits.
Aligned to this new policy, we are announcing an interim dividend for 2020 of 7 pence per share. And, subject of course to the Board's decision at the time, our current expectation is that the final 2020 dividend will be 14 pence per share, which would bring the total 2020 dividend to 21 pence per share. We will not be distributing a final 2019 dividend.
We understand the importance of dividends to our shareholders, and our people - many of whom are shareholders themselves. We have taken the prudent decision to preserve capital and enhance our financial strength to ensure we are well positioned through this period of Covid and Brexit uncertainty. Future growth in the dividend will be driven by the transformed performance of our market leading businesses, by lower levels of debt and from the benefits of focusing the portfolio.
Capital Framework
When thinking about deployment of excess capital, we are committed to generating strong and sustainable shareholder value. We will look to reduce debt, return capital to shareholders and continue to invest in our core businesses where we see attractive opportunities to do so.
So, in summary, we've made a good start. We're doing what I said we'd do three months ago. But we're only getting started. We have a new dividend policy which is sustainable, resilient and aligned to our core markets. We have solid foundations from which we can transform performance and grow our businesses. It is in our gift to deliver on our ambitions and unlock the value in Aviva. And that is precisely what we intend to do.
Download the third quarter announcement PDF (1.67 MB)
Download the third quarter presentation PDF (2.50 MB)
Watch our third quarter update
-ENDS-
# The estimated Solvency II position represents the shareholder view only.
1 Stated as at end October 2020
Enquiries:
Media:
Andrew Reid
+44 (0)7800 694 276
Sarah Swailes
+44 (0)7800 694 859
Analysts:
Diane Michelberger
+44 (0)20 7662 0911
Notes to editors
- For information on how Aviva is helping our people, customers and communities impacted by COVID-19 visit: www.aviva.com/covid-19-our-response/
- Analyst presentation and Q&A will be streamed on www.aviva.com at 0900 hrs GMT
- 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 30 September 2020. The average rates employed in this announcement are 1 euro = £0.88 (Q3 2019: 1 euro = £0.88) and CAD$1 = £0.58 (Q3 2019: CAD$1 = £0.59). Growth rates in this announcement have been provided in sterling terms unless stated otherwise.
- We exist to be with people when it really matters, throughout their lives – to help them make the most of life. We have been taking care of people for more than 320 years, in line with our purpose of being ‘with you today, for a better tomorrow’.
- In 2019, we paid £33.2 billion in claims and benefits on behalf of our 33.4 million customers.
- We will focus on the UK, Ireland and Canada where we have leading market positions and significant potential. We will invest for growth in these markets. Our International businesses in Europe and Asia will be managed for long-term shareholder value. We will also transform our performance and improve our efficiency. Our transformation will be underpinned by managing our balance sheet prudently, reducing debt and increasing our financial resilience.
- Total group assets under management at Aviva group are £522 billion (HY20) and our Solvency II capital surplus is £11.8 billion (Q320). 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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