16th Aug 2023 14:03
(Alliance News) - Analysts were pleased with Aviva PLC on Wednesday, after it boosted its outlook amid a swing to profit in the first half of 2023.
"CEO Amanda Blanc has done a decent job at Aviva but having divested lots of businesses early in her tenure and returned capital to shareholders, picking the low hanging fruit in terms of turning the company's fortunes around, she has found life more difficult since," said AJ Bell investment director Russ Mould.
However, Mould said that Wednesday's results are "welcome." The London-based insurer reported that it swung to a profit in the first half of 2023 and boosted its full-year outlook.
"Blanc is now into the nitty gritty of eking out a more efficient performance from her charge," Mould commented.
Aviva said its interim IFRS post-tax profit was GBP377 million, compared to a loss of GBP198 million a year before.
General insurance gross written premiums rose 12% to GBP5.27 billion from GBP4.69 billion.
Hargreaves Lansdown Susannah Streeter said this is "hardly surprising given the tales of woe about backlogs in the NHS and the continued strikes by staff in disputes over pay and conditions."
"Clearly many more people are willing to pay to have peace of mind that when they do fall ill, support will be available without the worry of walk-outs and waiting lists," she added.
However, the solvency II shareholder cover ratio in the first half of 2023 declined to 202% from 234% a year prior.
The company declared an interim dividend of 11.1 pence per share, up 7.8% from 10.3p a year before. Aviva is aiming for a total 2023 dividend of 33.4p, up 7.7% from 31.0p in 2022.
"In all, the numbers are slightly ahead of expectations, with new business growth, acquisitions, fresh products and a focus on costs all adding to the group's positive direction of travel. Aviva may be in the driving seat for those factors within its control, but wider questions have weighed heavily on the sector as a whole and this could take some time to reverse," said Richard Hunter at interactive investor.
The wider investment market has experienced various challenges in more recent times. Notably, a higher level of claims and more broadly the more uncertain UK economy.
Looking ahead, Aviva expects to exceed its Solvency II operating funds generation target of GBP1.5 billion per year by 2024. Further, its 2024 target of GBP750 million gross cost reduction is eyed to be delivered a year early.
Operating profit for 2023 is anticipated to grow between 5% and 7% from 2022's GBP1.35 billion.
Aviva shares rose 1.5% to 385.50 pence each on Wednesday afternoon in London.
By Sophie Rose, Alliance News reporter
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