13th Nov 2025 10:01
(Alliance News) - Aviva PLC on Thursday boosted guidance and suggested it will meet 2026 targets a year early, thanks in part to the acquisition of industry peer Direct Line Insurance Group PLC.
Aviva completed its GBP3.7 billion purchase of Direct Line, a Bromley, London-based car and home insurer, back in July.
However, following Thursday morning's upbeat announcement, Aviva shares fell 4.2% to 663.40 pence in London.
The company is targeting Direct Line cost synergies nearly double its original estimate, now expecting GBP225 million in run-rate savings by 2028. Aviva is eyeing an additional GBP500 million in capital synergies by the end of 2026.
Aviva also expects to meet its GBP1.8 billion Solvency II [SII] operating own funds generation target a year early. It added that it is "on track" for more than GBP5.8 billion in cumulative cash remittances by 2026, having reached GBP3.0 billion in the 18 months since setting the target.
For the current year, the London-based firm sees GBP2.2 billion in operating profit, which is about 25% higher than the GBP1.77 billion figure posted in 2024. The new target includes an estimated GBP150 million contribution from Direct Line.
Left unchanged is guidance for the cash cost of dividends, which is expected to grow in the mid-single digits from 2026 onwards. Aviva noted that dividend distributions going forward will reflect a 14% rise in its share count as a result of buying Direct Line.
The final dividend for 2025 is expected to be consistent with a 10% yearly boost to the interim dividend. Back in August, the firm lifted its first-half dividend to 13.1p from 11.9p the previous year.
Looking ahead, Aviva has set a new goal for 11% compound annual growth in operating earnings per share, between 2025 and 2028. By 2028, the company aims for IFRS return on equity above 20%.
Aviva was "confident" about trading in the nine months that ended September 30, with General Insurance premiums up roughly 9% to GBP9.97 billion from GBP9.12 billion a year earlier. The company noted "areas of rate softening" and the need to remain flexible.
In the Wealth division, net flows rose 8% on-year to GBP8.31 billion from GBP7.71 billion, while assets under management increased to GBP224 billion at the end of September, which is about 7% higher than GBP209 billion at the end of June.
The firm noted a "material" improvement in the Aviva Investors segment, where negative net flows narrowed to GBP19 million from GBP1.72 billion a year earlier, and AuM edged up to GBP253 million from GBP246 million.
During the nine-month period, Aviva's Protection and Health business saw sales fall to GBP384 million from GBP403 million, "due to the consolidation of propositions following acquisition from AIG".
Retirement sales decreased to GBP5.3 billion from GBP7.3 billion on-year, which Aviva described as "strong despite being lower than a particularly elevated prior year." It added that sales for its Individual Annuity and Equity Release branches had risen by 24% and 39% respectively.
By Holly Munks, Alliance News reporter
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