London headquartered insurer Aviva has reported an improved combined ratio of 90.6% from an unprofitable 118.7% for the first quarter of 2021.
The insurer owes this improvement to better underwriting performance, as well as improved weather and a reduction in COVID-19 related claims, compared to the prior year and frequency benefits in motor lines from continuing lockdowns.
The insurer also reported its gross written premiums have risen 4% to £2.0bn, an increase from £1.9bn for the same prior-year period.
This reflected strong new business wins and a favourable rate environment in commercial lines as well as growth and increasing market share in UK retail personal lines.
Its UK commercial lines saw well-priced new business opportunities, strong retention and continued rate momentum with a 17% growth in Global Corporate and Specialty (GCS) lines.
The insurer’s small and medium-sized enterprise sales grew by 10% as volumes in both mid-market and digital increased.
Amanda Blanc, Group Chief Executive Officer, said: “We made very good progress in the first quarter. We concluded the refocus of our portfolio, selling eight non-core businesses which will generate total cash proceeds of £7.5 billion once completed.
“We have made excellent headway in reducing leverage with debt reduction of £1.9 billion in the first half of 2021 and we expect the leverage ratio to be around 26% at the half year. We are now focused on improving the growth and profitability of our businesses in the UK, Ireland, Canada and Aviva Investors. We are pleased with the growing momentum in key areas as we capitalise on our leading market positions.
“Net flows in Savings & Retirement increased by 31% and Aviva Investors is seeing improving flows and investment performance. Demand for bulk purchase annuities was subdued in the first quarter but we have seen a good start to the second quarter.
“Sales in commercial insurance continue to grow strongly, up 13% in the UK and 6% in Canada, while in UK personal lines we maintained premiums while growing market share.
“We have continued to support our customers dealing with COVID, including extending cover and deferring monthly payments for those experiencing financial difficulty. Our positive trading performance in the first quarter of 2021 reinforces our confidence in the targets we announced earlier in the year.
“Nevertheless, we remain sharply focused on further improving performance, recognising we still have much more to do, to deliver stronger returns for our shareholders.”