December’s deep freeze: Cost of living crisis leaves Aviva with a £50m bill for burst pipes and water tanks
Aviva said last December’s freezing weather meant it had to pay out £50m to policyholders claiming for damage caused by burst pipes and water tanks.
An Aviva spokesperson told Morning Wire said soaring energy costs had led to more frozen pipes because households were more reluctance to turn on the heating, leading to more extremes in temperature.
Aviva brushed aside the financial hit and pledged to retain its dividend at current levels as it continues to face pressure from activist investors.
Shares in Direct Line collapsed earlier this month after the insurer said announced plans to scrap its 2022 dividend after have taken a £140m hit from the freezing weather.
A spokesperson for Aviva told Morning Wire the £50m hit to Aviva’s insurer’s balance sheet had been negligible, and said the cost of the December freeze was in line with industry averages.
In a presentation outlining its general insurance segment’s financial results, the firm said it expects full-year weather costs to sit in line with its own long-term averages.
The announcements came as Aviva faces prolonged pressure from activist fund Cevian Capital – which now has a less than five per cent stake in the insurer’s business – to increase shareholder returns.
Aviva, which in October struck with US insurtech company Lemonade, made a series of disposals during 2022 in a bid to raise cash to return to investors.
The disposals followed calls from Cevian for the firm to give back £5bn.
In a briefing today, Adam Winslow, chief executive of Aviva’s general insurance business, said Aviva was seeking to capitalise on the rise of renting through the Lemonade deal.
Winslow said Aviva’s deal will give it access to “a part of the market that historically we haven’t been in” due to the US firm’s focus on younger private renters. “We think that market is going to grow,” Winslow said.
At the time of writing, shares in Aviva are up 3.1 per cent.