19th Jul 2023 08:11
(Alliance News) - Aviva PLC on Wednesday said it expects to report upper single-digit profit growth in 2023, as the insurer set out annual guidance as it restated the prior year's outturn due to the adoption of new accounting rules.
Aviva said the shift to the IFRS 17 accounting standard, ushered into the insurance sector at the start of the year, does not change its dividend outlook. It still expects to pay out GBP915 million in 2023, which would be a 6.0% increase from GBP863 million. It paid out dividends totalling 31 pence per share in 2022.
Looking beyond 2023, Aviva guided for low-to-mid single-digit growth in the cash cost of its dividend.
"Our intention for regular and sustainable returns of capital to shareholders is unchanged," the London-based company said.
For 2023, Aviva expects operating profit to grow by between 5% and 7% from a revised GBP1.35 billion in 2022. For the half-year, it expects operating profit of GBP700 million, up 5.9% on-year from the revised GBP661 million.
Operating profit for 2022 was restated from the GBP2.21 billion reported prior to the accounting change.
Aviva said the operating profit guidance was subject to normal weather and large claims in the second half of the year.
Chief Financial Officer Charlotte Jones said: "The adoption of IFRS 17 is a significant milestone for the insurance industry, and provides a comprehensive and more consistent approach to accounting for insurance contracts. The operating profit and balance sheet impacts we are announcing today are consistent with our previous guidance, and there is no impact to the underlying economics of our business, our strategy or dividend guidance."
IFRS 17 introduces the concepts of contractual service margin and risk adjustment. CSM is related to profit recognition and timing, while risk adjustment is more focused on the certainty surrounding the amount and timing of cash flows from insurance contracts.
Aviva shares were up 1.2% at 394.20 pence each early in London on Wednesday, having initially declined at the open.
By Eric Cunha, Alliance News news editor
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