Significant strategic delivery and strong growth in key areas.
Intended capital return of at least £4bn1 including up to £750m share buyback starting immediately2.
Best half year sales3 in General Insurance in a decade and record flows into Savings & Retirement.
| Cash remittances4,‡ | Interim dividend | Adjusted operating profit⁴,‡ | General Insurance GWP⁴ | Life new business PVNBP⁴,‡ |
|---|---|---|---|---|
| £1.1bn | 7.35p | £725m | £4.4bn | £16.9bn |
| +884% | +5% | +17% | +6% | +13% |
| HY20: £108m | 2020: 7.00p | HY20: £621m | HY20: £4.1bn | HY20: £14.9bn |
Amanda Blanc, Group Chief Executive Officer, said:
“We have made good progress on all fronts in the 12 months since we launched our strategy.
We are delivering on our commitment to make a substantial capital return to our shareholders. We intend to return at least £4 billion to investors by the end of the first half of 20221, starting with a share buyback of up to £750 million.
We delivered strong cash remittances4,‡ of £1.1 billion in the first half and we are on track to achieve our objective of over £5 billion in cash remittances‡ between 2021 and 2023. In light of our confidence in the strength of the business and underlying cash flows, the Board has declared a 5% increase in the interim dividend to 7.35 pence per share.
The breadth of Aviva, across life insurance and general insurance, is a key strategic advantage and has driven a 17% increase in operating profit4,5,‡ to £725 million. We also delivered some of our best ever sales figures in the first six months. In UK general insurance we delivered our highest sales3 in a decade. In Savings & Retirement, net flows‡ increased by 24% to a record £5.2 billion, and we’ve added 100,000 new workplace customers, reinforcing our number one position.
Alongside delivering growth, we continue to focus on reducing controllable costs4,6,‡ which are down 2%. We are on track to deliver our £300 million savings target in 2022 and are focused on achieving top quartile efficiency in all our businesses.
While we’ve got more to do, our half year results show we have what it takes to drive growth in our businesses. We remain completely focused on transforming performance, capitalising on the breadth of Aviva, making insurance simple and easy for our customers, and creating value for our shareholders.”
Return of capital to shareholders of at least £4bn by HY 2022 with full details with FY results in March 20221
- Intended shareholder return of at least £4bn (subject to regulatory and shareholder approvals, remaining completions and market conditions) including up to £750m via share buyback to commence immediately2
- Expect additional reduction in debt of c.£1bn and repayment of £0.7bn of internal loan
- Combined with £2bn repayment of debt in H1 2021, expected to utilise all of the cash proceeds from divestments of £7.5bn
- Divestment programme expected to complete by end of 2021.
Strong growth in cash remittances and operating profit
- Cash remittances‡ of £1,296m (HY20: £150m) of which £1,063m from continuing operations (HY20: £108m)
- Group operating profit5,‡ of £1,132m (HY20: £1,225m) and Group IFRS loss for the period of £198m (HY20: profit of £874m) reflecting non-operating items including anticipated loss on disposal of France and investment variances driven by higher interest rates
- Operating profit5,‡ from continuing operations up 17% to £725m (HY20: £621m) and Solvency II operating own funds generation‡ up 12% to £710m (HY20: £632m)
Significant financial strength
- Solvency II shareholder cover ratio‡ of 203% (FY20: 202%) and centre liquidity‡ (Jul 21) of £2.8bn (Feb 21: £4.1bn)
- Solvency II debt leverage ratio‡ of 26% (FY20: 31%) following £1.9bn debt reduction in H1
- Interim dividend up 5% to 7.35p (2020: 7.0p per share)
Continued focus on improving the performance of the business
- Life present value of new business premiums (PVNBP)‡ up 13% to £16.9bn4 (HY20: £14.9bn) with strong growth in Savings & Retirement and lower volumes of annuities in a subdued bulk purchase annuity market – good start to H2 with £2.1bn of BPAs secured in July (£3.7bn July YTD)
- Best start to the year in a decade for General Insurance gross written premiums (GWP) up 6% to £4.4bn4 (HY20: £4.1bn) and combined operating ratio (COR)‡ of 91.6%4 (HY20: 101.4%)
- Controllable costs4,‡ down 2% (excluding cost reduction implementation and IFRS 17 costs) to £1,378m (HY20: £1,408m) and on target to deliver £300m cost savings relative to our 2018 baseline in 2022.
Watch our interim results update for investors and analysts
Download our 2021 interim results announcement PDF (1.0 MB)
Download our 2021 interim results presentation PDF (4.3 MB)
Watch our Group CEO, Amanda Blanc's half year results 2021 film
Transcript for video Watch our Group CEO, Amanda Blanc's half year results 2021 film
One year ago, just after being appointed as Group CEO, I stood here and said I had big ambitions for Aviva.
I am determined to realise the potential of this company, and to create value for our shareholders, our customers, and our people.
To do this I set out three strategic priorities:
• To focus Aviva’s portfolio;
• To transform the performance of our core businesses; and
• To improve our financial strength.
Today, I’m very proud to report that we are making good progress on all fronts. I want to thank all of our people for their amazing efforts over the last 12 months. Starting with our work to focus the portfolio, I’m happy to say that’s now largely complete. We’ve realised significant value for our shareholders, announcing the sales of 8 businesses for cash proceeds of £7.5 billion.
We’ve recently completed the sales of Aviva Vita in Italy and Aviva SA in Turkey, and we expect to complete the remaining disposals by the end of 2021.
Our second priority is to transform the performance of Aviva. This is the real focus of our efforts, now and for the future.
Again, I’m pleased to report we have delivered a good first half performance.
We’re benefitting from our competitive advantage of being the only UK insurer able to serve all our customers needs.
And we’re making encouraging progress in the areas we have targeted to grow.
• In General Insurance, we’ve delivered the highest sales in a decade
• In Savings & Retirement, we’ve seen a record half year performance
• We remain number 1 in Workplace savings
• And Protection & Health profits have returned to growth
Alongside delivering top line growth, we are also improving the efficiency of Aviva. Controllable expenses are down 2%, we are on track to deliver our intended £300m of cost savings by 2022, and we are focused on delivering top quartile efficiency in all businesses.
One of the ways we are achieving this is by digitising our operations, achieving the dual benefit of saving money and improving outcomes for our customers.
Together with delivering for our customers, we are also delivering for society.
Aviva is the clear leader in UK financial services on ESG. We’re the first insurer, globally, to commit to being net zero by 2040, and have recently launched a Climate-focused partnership with the World Wildlife Fund to aid us on that journey.
Our market leading teams in Aviva Investors play a critical role in terms of our impact in society, with £43 billion of Assets Under Management invested across infrastructure and real estate, supporting the transition to Net Zero. And we have committed to investing a further £10bn by 2023, as we seek to support the broader economy and UK government initiatives.
This approach and stand is resonating very positively with customers.
It’s early days, but the flows into Aviva Investors’ ESG funds in the first half of 2021 are literally double those for the whole of 2020 - indicating where the world, and the market, is moving.
Finally, our third priority is improving our financial strength. I’m delighted to say we have accomplished a great deal in the past year, and our balance sheet today is extremely robust.
Today, we are announcing an interim dividend of 7.35 pence per share, an increase of 5%, reflecting our confidence in the strength of the business and the underlying cash flow.
I’ve also been very clear over the past year that we intend to deliver a substantial return of capital to shareholders following the focusing of the portfolio.
And today we are kicking-off that return of capital, with the immediate commencement of a £750 million share buyback, and a clear intent to return a total of at least £4 billion of capital to investors by half year 2022 - subject of course to the deals completing, and obtaining regulatory and shareholder approval for the distribution.
To close, and in summary, I believe these half year results provide clear evidence that we are delivering upon our commitments:
• We have focused our portfolio;
• We remain firmly on track to deliver against our financial targets; and
• We’re creating attractive value for shareholders, both through the return of substantial capital in the short term, and via delivery of a transformed performance over the longer term.
I’m encouraged by the direction of travel, but I’m restless in wanting to deliver more and all of us remain resolutely focused on the job at hand as we look ahead.
1 Subject to regulatory and shareholder approvals, completion of disposals and market conditions.
2 Commencing on 13 August 2021.
3 References to sales represent present value of new business premiums (PVNBP) for our life business and gross written premiums (GWP) for our general insurance business, PVNBP is an APM and further information can be found in the 'Other information' section of the Half Year Report 2021.
4 From continuing operations.
5 Operating profit represents Group adjusted operating profit which is a non-GAAP APM. Operating profit is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section of the Half Year Report 2021.
6 Represents controllable costs excluding cost reduction implementation and IFRS 17 costs.
*This announcement contains inside information. The person responsible for making this announcement on behalf of the Group is Kirstine Cooper (Group Company Secretary).
Enquiries
Investor contacts:
Jakub Rosochowski
+44 (0)7385 382 206
Tegan Gill
+44(0) 7800 691 138
Michael O'Hara
+44(0) 7387 234 388
Media contacts:
Andrew Reid
+44 (0)7800 694 276
Sarah Swailes
+44 (0)7800 694 859
Timings
Presentation slides: 0700 hrs GMT
Real time media conference call: 0730 hrs GMT
Analyst conference call/audiocast: 0830 hrs GMT
Notes to editors
- All figures have been retranslated at average exchange rates applying for the period, with the exception of the capital position which is translated at the closing rates on 30 June 2021. The average rates employed in this announcement are 1 euro = £0.87 (6 months to 30 June 2020: 1 euro = £0.88) and CAD$1 = £0.58 (6 months to 30 June 2020: CAD$1 = £0.58).
- Growth rates in the press release have been provided in sterling terms unless stated otherwise. The following supplement presents this information on both a sterling and constant currency basis.
- Throughout the Half Year Report 2021 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 Half Year Report 2021.
- Aviva exists to be with people when it really matters, throughout their lives. 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 2020, we paid £30.6 billion in claims and benefits to our customers.
- We are focused on the UK, Ireland and Canada where we have leading market positions and significant potential. We will invest for growth in these markets. 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. We also have strategic investments in Singapore, China and India.
- As at 30 June 2021, total Group assets under management at Aviva Group are £522 billion and our Solvency II shareholder capital surplus is £12 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
