AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights:
- Insurance Premiums Surge: General insurance premiums rose 15% year-on-year, reaching £9.1 billion, driven by strong market demand.
- Record Retirement Sales: Retirement sales increased by 67% to £7.3 billion, supported by significant growth in bulk annuity volumes.
- Robust Financial Position: Aviva maintained a solid Solvency II ratio of 195%, despite impacts from natural catastrophes and strategic acquisitions.
Aviva PLC (LSE:AV), the UK-based life insurer, reported robust third-quarter financial results, underpinned by growth across its core business segments. The company maintained its confident outlook for the year, despite facing challenges from natural catastrophes and economic fluctuations.
Strong Growth in Insurance and Investment Divisions
Aviva’s general insurance division saw premiums increase by 15% year-on-year, totaling £9.1 billion in the first nine months of the year. This growth reflects strong market demand and the insurer’s effective pricing strategies. Net investment flows also rose significantly, up 21% to £7.7 billion, driven by higher workplace pension contributions and increased demand from financial advisers.
Retirement sales marked a highlight for the quarter, surging 67% to £7.3 billion. The bulk annuity business, a key contributor, more than doubled its sales to £6.1 billion, compared to £3.2 billion a year earlier. Aviva noted strong margins and disciplined capital usage within this segment, indicating a solid operational performance.
Resilience in Operating Metrics Amid Market Challenges
The combined operating ratio, an important measure of underwriting performance, was reported at 96.8%. While this was slightly higher than the 95.4% recorded at the half-year mark, it remained within a manageable range, reflecting effective risk management practices. The increase was primarily attributed to higher costs associated with natural catastrophe events in Canada, including severe storms, hail, wildfires, and flooding across Ontario, Alberta, and Quebec.
Aviva’s Solvency II ratio, a key indicator of financial strength, stood at 195% at the end of the third quarter. Although this was down from 205% at the half-year stage, the decrease was linked to several factors, including the economic impact of falling interest rates and the financial strain from strong bulk annuity sales. Additionally, the completion of Aviva’s acquisition of Lloyd’s of London specialist Probitas contributed to a slight reduction in the ratio.
CEO Highlights Strategic Progress and Confidence in Outlook
Chief executive Amanda Blanc expressed optimism about the company’s performance and future prospects. “The third quarter has been very strong, with trading momentum continuing positively across all divisions,” Blanc commented. “We are confident in our ability to deliver growth and meet our financial targets for the rest of 2024 and beyond.”
Blanc also noted that Aviva’s strategy to focus on core products and disciplined capital management has positioned the company well for sustainable growth. The insurer plans to continue investing in its key business areas, leveraging strong market demand to drive expansion.
Navigating External Challenges with Strategic Resilience
Aviva has faced headwinds from macroeconomic factors, including falling interest rates, which have affected its Solvency II cover ratio. The interim dividend also had an impact, reducing the ratio by four percentage points. Additionally, the insurer dealt with operational disruptions from natural disasters in Canada, leading to increased claims costs.
Despite these challenges, Aviva remains committed to its strategic plan, with a focus on strengthening its core insurance and investment businesses. The successful acquisition of Probitas is expected to enhance Aviva’s specialty insurance capabilities, further diversifying its product offerings.
Conclusion: Positive Momentum Continues
Overall, Aviva’s third-quarter results showcase a resilient performance across its key segments, with strong growth in insurance premiums and retirement sales. The company’s strategic focus on core products and disciplined capital usage has bolstered its financial position, setting the stage for continued progress. With a confident outlook for the remainder of the year, Aviva aims to build on its solid foundation and deliver sustained value to its stakeholders.
