Alongside the release of its H1 results, UK insurer Aviva has reported that its reinsurance program is set to absorb £276 million of its COVID-19 losses.
Aviva said that the impact of the pandemic on incurred claims losses is estimated at £441 million, or £165 million net of reinsurance.
Overall, the company reported a 12% decrease in operating income, which stood at £1.23 billion in H1 2020 versus £1.39 billion last year.
Excluding COVID-19 impacts on general insurance claims, operating profit was flat, with strong results in UK annuities and continued recovery in Canadian results.
These were offset by higher weather claims across Aviva’s general insurance businesses and additional expenditure related to community support initiatives.
Notably, operating capital generation for Aviva’s UK Life and IS&R increased 11% to £581 million from £522 million in H1 2019, and Solvency II return on capital fell to 5.0% from 6.5% previously.
Also, UK Life including Savings & Retirement operating profit rose by 9% to £817 million, up from £752 million last year, while Aviva Investors operating profit was down to £35 million from £60 million.
Aviva’s financial performance in the first half of 2020 was solid,” said Aviva CEO Amanda Blanc. “Our financial position is strong and operating profit of £1.2 billion was robust, thanks to our diverse range of products, excellent partners and our swift operational response to the COVID-19 pandemic.”
“Aviva has responded well to the COVID-19 challenge and is well positioned as customers look for trusted brands, good value, and convenient, reliable service,” the company stated alongside its results report.
“However, we are under no illusions that the COVID-19 challenges are behind us. We are all still living with COVID-19 and a return to normality is likely to remain some way off,” it continued.
“As protective measures are eased and Government support withdrawn, economic headwinds and capital market volatility are likely to persist … This means uncertainty in the outlook will persist in the near term and may mean that growth and profitability targets will be harder to deliver.”
“However, as demonstrated in our first half results, Aviva is operationally and financially resilient. As we deliver on our priorities of focusing the portfolio, transforming performance and building on our financial strength, we will unlock value for shareholders.”
