14th Aug 2024 10:53
(Alliance News) - Aviva PLC's interim results on Wednesday impressed analysts, beating market expectations, led by the UK General Insurance business.
The London-based insurance company said pretax profit attributable to shareholders jumped 50% to GBP784 million in the first half that ended June 30 from GBP521 million the previous year.
Insurance revenue rose 9.7% to GBP9.82 billion from GBP8.95 billion a year before, as insurance service expense grew 11% to GBP8.53 billion from GBP7.69 billion. Insurance service result was GP896 million, up 2.8% from GBP872 million.
Aviva raised its interim dividend by 7.2% to 11.9 pence per share from 11.1 pence.
Chief Executive Officer Amanda Blanc said: "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 have 270,000 more customers this year and 4.9 million UK customers have more than one policy with us."
UK & Ireland general insurance premiums were up 18% to GBP3.81 billion, while such premiums rose 10% to GBP2.20 billion in Canada.
Protection sales increased 49% following the completion of the GBP453 million acquisition of AIG UK protection in April, meanwhile Retirement sales were down 5.8%.
Aviva said it remains confident it will see positive momentum continue, suggesting it is on track to achieve its operating profit target of GBP2 billion by 2026, up 36% from GBP1.47 billion reported in 2023.
"Aviva continues to demonstrate strong delivery versus its targets, beating consensus expectations across all its headline metrics," said analysts at Jefferies.
The US investment bank said Aviva's operating profit of GBP875 million was 5% ahead of consensus for GBP830 million, largely driven by strong performance in UK General Insurance and Retirement.
Jefferies said UK GI continues to benefit from positive pricing as well as improved investment income. This was partially offset by what appears to be adverse prior year claims development in UK worth around 2.4 percentage points of the combined ratio, it noted.
Solvency II operating own funds generation of GBP758 million was 8% ahead of consensus for GBP700 million, which has supported a strong Solvency II ratio of 205%, also ahead of consensus for 199%.
"In our view, Aviva remains the only UK insurer that can reliably deliver long-term special capital returns, accretive M&A, attractive ordinary dividend growth, and consistent EPS growth," Jefferies said.
The broker reiterated a 'buy' rating on Aviva with a 525 pence share price target.
Aviva shares were down 0.3% to 487.00 pence each in London on Wednesday morning.
By Jeremy Cutler, Alliance News reporter
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