Key Takeaways:
Aviva reported first-half operating profit of £1.33 billion, up 24% and ahead of the £1.26 billion analysts expected in a company-compiled poll.
"The results extend six consecutive years of strong financial performance, with much more to come," Chief Executive Officer Amanda Blanc said.
Operating earnings per share rose 10% to 31.8 pence, IFRS return on equity climbed to 20.3% from 18.2%, and cash remittances jumped 47% to £1.5 billion. The interim dividend rose 7% to 14.0 pence per share.
The Solvency II shareholder cover ratio slipped to 176% from 180% at year-end, reflecting dividend payments and buybacks, though management expects it to recover to the high-180s by year-end as remaining Direct Line capital synergies of more than £350 million receive regulatory approval.
General insurance gross written premiums climbed 29% to £8.1 billion, beating the £7.8 billion consensus, with UK personal lines premiums nearly doubling to £3.68 billion after the Direct Line acquisition completed on July 1, 2025. The personal lines combined ratio improved 0.8 percentage points to 93.1%, while motor policies on price comparison websites grew 7% since the deal closed.
The Direct Line integration is ahead of plan. All employees have transferred to Aviva, nearly £5 billion of assets moved to Aviva Investors, and £100 million of run-rate cost synergies have been delivered toward the £225 million target. Aviva expects about £130 million of cumulative run-rate synergies by year-end.
UK commercial lines premiums fell 4% to £1.93 billion as Aviva held underwriting discipline in a softer rating environment, with the combined ratio at 93.7%. The company expects the softer conditions to persist through 2026 and will prioritize profitable growth over volume, while Global Corporate and Specialty remains a named growth platform.
Wealth net flows rose 32% to £7.6 billion, including £1.5 billion from the Mercer Master Trust, and operating profit grew 34% to £102 million. Aviva won 232 new Workplace schemes in the half.
The health business was the weak spot. New business sales fell 33% to £51 million as Aviva held rate discipline in consumer and SME channels, and the company cut its full-year operating profit forecast to about £90 million on slowing market growth.
The results give Aviva confidence in its three-year targets through 2028, including 11% compound annual growth in operating earnings per share and return on equity above 20%. Investors will watch the Wealth In Focus session in October for an update on the £280 million operating profit ambition for 2027, and the health segment's recovery in the second half.
This article is for informational purposes only and does not constitute investment advice.
