Aviva operating profit increases 20%

By Aidan Gregory

Feb 27 - (The Insurer) - UK insurer Aviva grew its operating profit by 20% in 2024 as the company continued its turnaround under CEO Amanda Blanc.

In its 2024 annual results announcement on Thursday, Aviva said it made an operating profit of 1.76 billion pounds ($2.23 billion) last year, up from 1.46 billion pounds in 2023.

The group reported gross written premiums of 12.20 billion pounds in its general insurance operations, in line with analyst consensus. The undiscounted general insurance combined ratio of 96.3% beat consensus by 0.2 percentage points.

The company’s total dividend per share for 2024 has been fixed at 35.7 pence, up 7% from 2023.

As of 2024, over half of Aviva’s operating profit comes from capital-light businesses – a key plank of Blanc’s strategy since she took over as CEO of Aviva in July 2020.

Under Blanc, Aviva has divested non-core international businesses in Italy, France, Poland and Asia Pacific to focus on generating profitable returns in its core markets of the UK, Ireland and Canada.

Aviva has also returned more than 10 billion pounds of capital to shareholders via dividends and buybacks over the past four and a half years.

The strategy moved to a new growth-orientated phase in December last year with Aviva’s successful 3.6 billion pound bid for UK rival Direct Line Group. The deal is expected to close in 2025, subject to regulatory approval.

“For Aviva, this is a positive development,” Helena Kingsley-Tomkins, insurance credit analyst at Moody’s, told The Insurer on Monday ahead of Aviva’s results announcement. “They are sweeping up a rival. I think it also feels like it's an acceleration of their strategy towards the sort of capital-light segments. It kind of reminds me of the Zurich strategy – a more P&C-oriented, higher sort of return on capital business segment.

Once the Direct Line Group acquisition closes, Aviva said it will revisit the financial targets outlined in 2023 of operating profits of 2 billion pounds by 2026, Solvency II own funds generation of 1.8 billion pounds by 2026, and cash remittances of 5.8 billion pounds between 2024 and 2026.

Shares in Aviva are up more than 17% from one year ago and more than 52% over the past five years, giving the UK insurer a market capitalisation of 14.1 billion pounds on the London Stock Exchange.