Aviva plc Q1 2024 Trading Update

Excellent first quarter results

Strong growth across the Group. Another quarter of consistent delivery

Capital position strong and resilient

Amanda Blanc, Group Chief Executive Officer, said:

“This is another set of excellent results, extending our track record of consistently strong trading. 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. The bulk purchase annuity market also continues 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.”

Continued capital-light growth momentum

• General Insurance premiums up 16%² to £2.7bn.
• UK GI premiums up 19% to £1.7bn with 27% growth in personal lines reflecting continued strong rate discipline in the high inflationary environment, and new business growth. Commercial lines grew 10%.
• Canada GI premiums up 11%² to £0.9bn with personal lines up 16%² driven by rating actions on the existing book and new business growth. Commercial lines grew 5%².
• Group undiscounted combined operating ratio (COR) of 95.8% (Q123: 95.4%). An improvement in the UK COR as the rating actions taken earn through was offset by an increased Canadian COR. Discounted COR of 92.0%.
• Protection & Health sales were up 5%, driven by continued growth in Protection.
• Wealth net flows of £2.7bn were up 15% on the prior year with double-digit growth in Workplace, up 13%, and in Platform up 24%.
• Retirement sales were up 13% driven by higher BPA volumes. Retirement margin improved to 2.9% (Q123: 1.9%) as we focused on pricing discipline.

Strong solvency and liquidity positions

• Estimated Solvency II shareholder cover ratio remains strong at 206%.
• The reduction in the quarter of 1pp was primarily driven by the final dividend, share buyback and the acquisition of Optiom, partly offset by total capital generation in the quarter and completion of the sale of Singapore.
• Solvency II debt leverage ratio of 30.9% (FY23: 30.7%) or 28.7% when allowing for the Tier 2 notes redemption announced on 16 May.
• Centre liquidity (Apr 24) of £2.1bn (Feb 24: £1.9bn), primarily reflecting net proceeds from acquisitions and disposals offset by the share buyback.
• £300m share buyback is progressing well.
• The 2023 final dividend of 22.3p per share was paid to shareholders today.

Progress on inorganic execution

• We continue to make progress in executing strategic deals that enhance value for shareholders. Our focus is on enhancing capabilities or where there are clear financial or strategic benefits to a transaction.
• On 5 January we completed the acquisition of Optiom O2 Holdings in Canada for £100m. The acquisition supports Aviva’s capital-light growth in the attractive Canadian market and strengthens Aviva Canada’s specialty lines business and distribution capabilities.
• We announced the £242m acquisition of Probitas on 4 March: a high quality, fully-integrated platform in the Lloyd’s market, which will expand the market opportunity for Aviva’s Global Corporate & Specialty (GCS) business. The transaction is expected to complete in mid-2024⁴.
• On 18 March we completed the exit from our Singapore joint venture for a total consideration of £937m, further simplifying the Group’s geographic footprint.
• We completed the acquisition of AIG’s UK protection business for £453m on 9 April, accelerating growth in the attractive UK protection market. The acquisition will broaden distribution, with over 2.5m customers across individual and group protection, and deliver capital and expense synergies.

Confident outlook

• We remain confident in meeting the Group targets outlined at our FY 2023 results presentation:
  • Operating profit⁵: £2bn by 2026.
  • Solvency II own funds generation: £1.8bn by 2026.
  • Cash remittances: > £5.8bn cumulative 2024-2026.
• In General Insurance we remain focused on pricing appropriately. We expect the underlying COR⁶ to continue to benefit from rating actions taken in 2023 and so far in 2024.
• We expect further strong demand given supportive market dynamics in Protection, and in Health, as set out at our ‘In Focus’ briefing last month. Wealth is central to our strategy and presents a significant opportunity for Aviva to continue to generate sustainable, capital-light growth. We expect to continue our disciplined approach to BPAs.
• We are committed to delivering for our shareholders. As announced with our full year results, our upgraded dividend guidance is for mid-single digit⁷ growth in the cash cost. Our intentions for further regular and sustainable returns of capital remain unchanged.

Download our first quarter 2024 trading update announcement (PDF 120KB)

Listen to our first quarter 2024 trading update for investors and analysts

_Footnotes

_{1  Sales for Protection & Health (Insurance) refers to Annual Premium Equivalent (APE). Sales for Retirement (Annuities and Equity Release) refers to Present Value of New Business Premiums (PVNBP). Premiums for General insurance refer to gross written premiums (GWP). The first instance of each reference has been footnoted. However, this footnote applies to all such references in this Trading Update. APE, PVNBP and GWP are Alternative Performance Measures (APMs) and further information can be found in the 'Other information' section of the Aviva plc Annual Report and Accounts 2023.
2  In constant currency.
3  Solvency II cover ratio is the estimated Solvency II shareholder cover ratio at 31 March 2024.
4  Completion of this transaction is subject to customary closing conditions, including regulatory approvals.
5  Reference to operating profit represents Group adjusted operating profit which is a non-GAAP APM and is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section of the Aviva plc Annual Report and Accounts 2023.
6  Undiscounted COR excluding the impacts of prior year development and weather versus long term average (LTA).
7  Estimated dividends are for guidance and are subject to change. The Board has not approved or made any decision to pay any dividend in respect of any future period.}

Enquiries

Investor contacts:

Rupert Taylor Rea
+44(0) 7385 494 440

Joel von Sternberg
+44(0) 7384 231 238

Michael O'Hara
+44(0) 7387 234 388

Media contacts:

Andrew Reid 
+44 (0)7800 694 276

Sarah Swailes
+44 (0)7800 694 859

Marion Fischer
+44 (0)7800 693 219

Timings

Analyst conference call: 0830 hrs BST

Notes to editors

• All figures have been translated at average exchange rates applying for the year, with the exception of the capital position which is translated at the closing rates on 31 March 2024. The average rates employed in this announcement are 1 euro = £0.86 (Q123: 1 euro =£0.88) and CAD$1 = £0.58 (Q123: CAD$1 = £0.61). Where percentage movements are quoted on a constant currency basis, this is calculated by applying current year to date average exchange rates to prior year.
• Growth rates in this announcement have been provided in sterling terms unless stated otherwise.
• All percentages, including currency movements, are calculated on unrounded numbers so minor rounding differences may exist.
• Throughout this Trading Update 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 Aviva plc Annual Report and Accounts 2023.
• We are the UK's leading diversified insurer and we operate in the UK, Ireland and Canada. We also have international investments in India and China.
• We help our 19.2 million customers make the most out of life, plan for the future, and have the confidence that if things go wrong we’ll be there to put it right.
• We have been taking care of people for more than 325 years, in line with our purpose of being ‘with you today, for a better tomorrow’. In 2023, we paid £25.6 billion in claims and benefits to our customers.
• In 2021, we announced our ambition to become Net Zero by 2040, the first major insurance company in the world to do so. We are aiming to have Net Zero carbon emissions from Aviva’s operations and supply chain by 2030. While we are working towards our sustainability ambitions, we recognise that while we have control over Aviva’s operations and influence on our supply chain, when it comes to decarbonising the economy in which we operate and invest, Aviva is one part of a far larger global ecosystem. There are also limits to our ability to influence other organisations and governments. Nevertheless, we remain focused on the task and are committed to playing our part in the collective effort to enable the global transition. Find out more about our climate goals at www.aviva.com/climate-goals and our sustainability ambition and action at www.aviva.com/sustainability.
  
• Aviva is a Living Wage, Living Pension and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid carers leave and equal parental leave. Find out more at www.aviva.com/about-us/our-people
  
• As at 31 December 2023, total Group assets under management at Aviva Group were £376 billion and our estimated Solvency II shareholder capital surplus as at 31 March 2024 was £8.5 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
  
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