2nd Mar 2022 10:07
(Alliance News) - Aviva PLC on Wednesday reported a rise in annual gross written premiums, unveiled a bumper capital return, and said it has parted with GBP385 million to acquire a UK wealth manager.
"2021 was a year of significant strategic progress, right across Aviva. We successfully completed the sale of eight non-core businesses, generating excellent value for our shareholders. Our financial position is strengthened and Aviva is now a much simpler, leaner business, focused on our core markets in the UK, Ireland and Canada," Chief Executive Amanda Blanc said.
For 2021, pretax profit halved to GBP801 million from GBP1.81 billion. The insurer posted adjusted operating profit of GBP2.27 billion, down from GBP3.16 billion in 2020 as a result of discontinued operations.
Gross written premiums rose 4.4% to GBP19.40 billion from GBP18.59 billion, but premiums written net of reinsurance slipped to GBP14.70 billion from GBP15.09 billion - which was driven Aviva's General Insurance GWP hitting a 10-year high of GBP8.8 billion on a combined operating ratio of 92.9%, improving from 96.8% in 2020.
A combined ratio below 100% indicates underwriting profit.
Net earned premiums fell 4.1% to GBP14.39 billion from GBP15.00 billion. More positively, however, Aviva's net investment income increased to GBP17.14 billion from GBP14.97 billion.
As a result, total income grew by 6.0% to GBP33.18 billion from GBP31.29 billion.
UK & Ireland Life sales rose 22% to GBP35.6 billion from GBP29.3 billion, with strong growth in Savings & Retirement up 33%, and Annuities & Equity Release up 5% to GBP7.9 billion.
Aviva's value of new business increased 6.0% to GBP746 million from GBP704 million with strong performances in Savings & Retirement, Protection & Health, and International Investments, partially offset by lower Annuities & Equity Release due to exceptional corporate bond spreads in 2020.
Blanc said: "The 'focus' and 'strengthen' parts of our strategy are complete and we are now wholly focused on accelerating performance. Our trading in 2021 was strong, reinforcing our confidence that Aviva can grow sustainably. Our general insurance volumes are the highest in over a decade, life insurance sales grew by 23%, and we are on track to reduce controllable costs, by GBP300 million by the end of 2022."
The FTSE 100-listed insurer declared total dividends of 22.05 pence, up from 21.00p in 2020. For 2022, Aviva is targeting a 31.5p payout.
Also on Wednesday, Aviva said it is returning a total of GBP4.75 billion to shareholders - which includes the GBP1 billion share buy-back that is already underway.
The insurer is proposing a return of capital of GBP3.75 billion to the holders of its ordinary shares by way of a B share scheme. The return will be on the basis of one new B share for each ordinary share held.
Aviva also said it has agreed to buy UK financial adviser Succession Wealth for GBP385 million.
Blanc said: "The acquisition of Succession Wealth boosts Aviva's presence in the fast-growing UK wealth market; supports our strategy to grow sustainably; and expands Aviva's ability to offer high quality financial advice to millions of our customers."
Succession Wealth is an independent financial advice firm with approximately 200 planners advising on GBP9.5 billion of assets for around 19,000 clients throughout the UK.
Aviva's total assets under management ended 2021 at GBP401.41 billion, dropping by 25% from GBP534.69 billion the year prior - primarily due to its financial investments falling to GBP264.96 billion from GBP368.29 billion.
Blanc added: "Aviva has the foundations in place to deliver its promise. We've achieved a lot in the last year but we're only just getting started. There is so much more Aviva can and will deliver for our customers and our shareholders."
Shares in Aviva were 2.0% higher in London on Wednesday morning at 414.79 pence each.
By Paul McGowan; [email protected]
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