Aviva has released its 2023 Financial results, reporting a 9% growth in operating profit, to £1,467 million, and general insurance operating profit of £851 million, a 35% increase compared to the year prior.
According to the insurer, the results from the firm’s General Insurance businesses in the UK, Ireland and Canada were a strong contributor to the increase in the 2023 operating profit, which compares to the £1,350 million reported in 2022.
In 2023 UK&I General Insurance premiums, up 16% to £6,640 million, with UK personal lines premiums increasing 24% driven by strong rate discipline in the inflationary environment and new propositions.
UK commercial lines premiums grew 10% due to rate actions and new business growth, Aviva added. Also noting that the growth seen in general insurance operating profit reflected improved investment income and a strong underwriting result.
Protection and Health (Insurance) sales were up 16% to £415 million, driven by strong growth in Health, up 41%, and Individual Protection. The line’s operating profit was 32% lower, driven by adverse mortality experience and a lower benefit from assumption changes compared to the prior year.
Insurance, Wealth and Retirement (IWR) operating profit was lower at £994 million, compared to the £1,199 million reported in 2022. According to Aviva this was primarily due to the impact of the different interest rates used to value assumption changes in the CSM and the reduction in best estimate liabilities, particularly in the Retirement business.
Wealth operating profit was lower reflecting additional investment in growth in the business and beneficial one-offs in the prior year. Heritage operating profit reflected Aviva’s expected run-off of the portfolio, which was more than offset by higher investment returns.
Retirement sales were up 14% to £7,088 million, driven by £5.5 million of Bulk Purchase Annuity (BPA) transactions and increased demand for Individual Annuities in a higher interest rate environment.
For Aviva’s Canada General Insurance, premiums were up 10% in 2023, to £4,248 million, compared to £4,009 million reported in 2022. Operating profit increased 18%, to £399 million, driven by improved investment income owing to higher yields and strong underwriting results.
Canada’s personal lines was up 9% while commercial lines was up 13%, the latest driven by favourable rate environment and strong new business in large corporate and mid-market
Aviva Investors operating profit of £21 million (was lower in the year as a result of challenging market conditions. This figure compares to the £25 million reported in 2022.
Group debt and other interest expense was flat while Group centre and other operations benefited from improved investment returns and lower centre costs.
Amanda Blanc, Group Chief Executive Officer, said: “We have made significant progress in 2023. Sales are up, costs are down, and operating profit is 9% higher. Our position as the UK’s leading diversified insurer, with major businesses in Canada and Ireland, is clearly delivering. Today we have raised our total dividend by 8% to 33.4 pence and have now returned more than £9bn in capital and dividends to shareholders over the last three years.
“We have generated strong organic growth, especially in our capital-light businesses, which make up over half our portfolio. General insurance premiums increased by 13% on the back of strong performances in Canada and the UK. We are the number one provider of workplace pensions, and this business continues to thrive, with a record £6.9bn of net flows, boosted by winning 477 new schemes during the year.
She continued: “Our private health business is experiencing strong demand from businesses and individual customers and sales grew 41% in 2023. The higher interest rate environment boosted the bulk annuity market, where we secured excellent volumes of £5.5bn at strong margins. “We are building a clear track record of strong and consistent performance. In each of the last three years we have grown sales, operating profit and our dividend.
“This momentum gives us increased confidence for Aviva’s future, and so today we are announcing a new £300m share buyback programme, upgrading our dividend guidance to mid-single digit cash cost growth, and upgrading our Group financial targets.”
“Aviva is financially strong. We are trading consistently well. Our prospects have never been better. We have leading businesses in growing markets, a fantastic brand, and we are investing substantially to make service better for our 19m customers. All the ingredients are in place to ensure Aviva continues to deliver an outstanding performance for our customers and our shareholders. I’m certain we will,” Blanc concluded.
