Aviva Canada CEO sheds light on H1 2022 results

Aviva Canada CEO sheds light on H1 2022 results | Insurance Business Canada

Aviva Canada CEO sheds light on H1 2022 results

Aviva Canada enjoyed a strong first half of 2022 (H122), successfully navigating several challenging headwinds in the property & casualty (P&C) insurance industry to report a combined operating ratio (COR) of 91.7%

The Canadian business of UK-based Aviva Group saw continued trading momentum, with gross written premium (GWP) growth of 12%, or 6% at constant currency - at £1,854 million (approx. CA$2,886 million) in H1 22, versus £1,661 million (approx. CA$2,586) in H1 21.

Personal lines premium grew 4% at constant currency in H122, predominantly reflecting strong inflationary rate increases. Jason Storah (pictured), CEO of Aviva Canada, said the insurer is watching this portfolio carefully as driving patterns return to pre-pandemic levels, leading to higher claims frequency and severity.

Meanwhile, Aviva Canada’s commercial lines premiums increased by 11% at constant currency, reflecting the strong rate environment, and growth in mid-market and large corporate accounts.

“It was really commercial lines that was the standout performer for us in the first half of the year,” he said. “We’ve seen strong, steady growth across our commercial lines business. We’ve been getting solid rate increases across the portfolio for the first half of the year, and we expect that to continue, although we’re very aware of some of the pressures on rate increases moving forward.”

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Aviva Canada has experienced four years of steady growth in its commercial lines business. Storah attributed this growth to a combination of market conditions – moving from soft to hard conditions, with significant rate increases – and the insurer’s focused effort to write more commercial business.

“We did see some of that momentum in commercial lines start to taper off towards the end of 2021 and early this year, but I think the inflationary pressures that we’re seeing now could prolong the momentum on rate increases,” Storah added. “I certainly feel very bullish about our commercial business and our ability to grow it moving forward.”

The CEO is eyeing growth opportunities across Aviva Canada’s portfolio, while remaining very cognizant of macro trends like inflation.

“In the environment we’re in, we’ve got to be agile and be able to respond to different sorts of volatility,” he told Insurance Business. “One thing we’re mindful of in commercial insurance is that some sectors and segments are attracting more capacity than others, so we’re being very selective about making sure we’re writing business that provides the returns we need.

“We’re not going to be opportunistic and chase market share for the sake of it, especially in this market with inflationary and supply chain pressures, and when we’re heading into a potential recession.”

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As a whole, the Aviva Group had a strong six months, reporting a 14% increase in operating profit to £829 million. The group’s operating profit from general insurance amounted to £375 million in the first half, of which the Canadian business contributed £204 million, trumping £159 million from the UK business, and £12 million from Aviva Ireland.

“Canada, as a component of Aviva Group, had a particularly strong first half of the year,” said Storah. “Our return on capital was the strongest of all the [Aviva businesses], which speaks to our result, but it also speaks to where we are in the [market] cycle in Canada, and the value of the diversification across the Aviva Group of companies.

“Despite all of the headwinds and the challenges ahead, we still see a lot more opportunity ahead of us as a business, both in Canada and as a group. For the second half of the year, I’d love to see us maintain our strong underlying performance. It’s important to look at what businesses are growing from an organic underlying perspective, and where businesses are having to invest in additional momentum in their results. At Aviva Canada, we’ve got great underlying organic momentum.”