Despite the challenges of Brexit and the COVID-19 pandemic, UK insurer Aviva has reported operating profit of £3.2 billion (£3.2bn in 2019) and IFRS profit of £2.9 billion (£2.7bn in 2019) for 2020.
While overall operating profit remained relatively flat, year-on-year, operating profit from core markets came in just 3% lower at £2.5 billion, again highlighting the resilience of the firm through a testing time.
In its General Insurance operations, Aviva has reported UK commercial lines net written premiums (NWP) growth of 10% for 2020 to more than £2 billion, while Canada commercial lines premiums jumped 7% to more than £1 billion.
The core markets general insurance combined ratio improved by almost 1 percentage point, year-on-year, to 96.8% for 2020. Aviva explains how the pandemic impacts had 1.1 percentage points adverse impact on the combined ratio, while lower benefits from weather and prior year development also had an adverse impact.
The impact of COVID-19 in general insurance amounted to a loss of £17 million. However, within its core general insurance markets the impact was greater at £84 million, which Aviva attributes to the fact business interruption claims, net of reinsurance, were only partly offset by favourable impacts of reduced economic activity in other lines of business.
Also offsetting the impacts of the pandemic, says Aviva, were strong results in bulk annuities, alongside savings and retirement propositions.
“Over the past year we have supported our customers in the most challenging of circumstances. Across the whole of Aviva our people have been outstanding and I cannot thank them enough for all they have achieved,” said Amanda Blanc, Chief Executive Officer (CEO) of Aviva.
“2020 was a year of significant change for Aviva. We have taken major steps forward in simplifying the business, most recently with the sale of Aviva France and today’s announcement of the sale of the rest of our Italian operations. Our strategic focus is now on the UK, Ireland and Canada where we have leading positions. We are putting customers at the heart of everything we do and I am confident we will transform Aviva’s financial performance and deliver greater value for our shareholders. I recognise we have much more to do and we are getting on with it.
“Our performance in 2020 demonstrates the resilience of our Core businesses and our growth potential. We delivered record sales in group protection; record sales of bulk purchase annuities; and record net flows‡ in savings and retirement, where we are the largest provider of workplace pensions in the UK.
“Aviva is financially strong and following the completion of the major disposals, we will be in a position to make a substantial return of capital to our shareholders. We are also announcing today an £800m debt tender offer. This allows us to accelerate our debt reduction plans and lower debt by a total of £1.7bn in the first half of this year.
“Aviva is proud to be the UK’s leading insurer. We are the only insurer in the UK to meet the needs of customers at every stage of their lives. Our potential is clear and we are determined to realise it for the benefit of our customers, our people and our shareholders.”
