Aviva: Profit and sales jump at FTSE 100 giant as UK premiums surge
Insurance giant Aviva has reported an increase in operating profit and hiked its dividend amid a jump in insurance premiums for the first half of its 2024 financial year.
The company reported an operating profit of £875m, up 14 per cent from the £765m reported in the first half of 2023. Cash remittances rose 16 per cent to £959m, up from £825m reported in the previous year.
Overall, general insurance premiums written rose 15 per cent to £6bn.
Aviva hiked its interim dividend by seven per cent to 11.9p.
UK and Ireland general insurance premiums jumped 18 per cent to £3.8bn while its UK personal lines premiums grew by 30 per cent “driven by strong pricing discipline in the inflationary environment and new propositions.”
General insurance premiums in Canada were also up by 10 per cent to £2.1bn as the group saw growth of 14 per cent in personal lines and six per cent in commercial lines driven by pricing actions and strong new business growth.
The group’s health insurance premiums grew by 10 per cent.
While income at its insurance, wealth and retirement (IWR) was up 16 per cent, as it generated £5bn of net flows into the group’s wealth business. The wealth business offers workplace pensions and retail savings products and now has over £180bn of assets.
Despite this, the group did note that its retirement sales fell to £3bn during the half, from £3.2bn last year.
Aviva stated this was “driven by contraction of the equity release market and bulk purchase annuity (BPA) sales of £2.3bn (£2.4bn).
Back in March 2023, Aviva set out plans to buy back £300m worth of its own shares from investors. It spent the full amount in the first half and today, it reiterated plans for further sustainable returns of capital in the future.
Aviva said it remained “confident” it would meet its 2026 targets, which include an operating profit of £2bn and cash remittances greater than £5.8bn cumulatively in 2024-26.
Commenting on the results, Amanda Blanc, Group CEO, said: “Sales are up. Operating profit is up. The dividend is up. Our plan to deliver more for customers and shareholders is working really well.
“We have achieved another six months of excellent trading. We have generated growth right across Aviva, thanks to our leading positions in attractive markets such as workplace pensions and general insurance in the UK and Canada.”
“We remain very positive about Aviva’s prospects. Trading conditions across the UK, Ireland and Canada, are excellent. And the UK market, our largest, is highly attractive and growing,” she added.
Adam Vettese, Market Analyst at investment platform eToro, said: “Aviva has beaten analysts’ profit estimates, helped by insurance premiums rising 18 per cent in the UK and Ireland. This won’t be too much of a surprise given the inflationary environment we have been in. The insurer’s cash position is strong and has also nudged up the dividend after completing a £300m share buyback.
“Aviva is looking to achieve £2bn operating profit by 2026, which could be a punchy target if premium growth starts to level off. Investors may then look to the retirement sales numbers which came in lower than last year to rebound in order to pick up the slack,” Vettese added.