‘A mixed bag’ is the thoroughly uninteresting term that might be used to describe Aviva’s financial results for 2018 – but how else to describe a performance that saw its general and health insurance operating profit remain flat at £704 million (around NZ$1.366 billion) – the exact same figure reported for full-year 2017.
Perhaps it’s no surprise then that new group CEO Maurice Tulloch spoke about “re-energising” the business.
“We have strong foundations but we are only scratching the surface of our full potential,” he said. “There’s a huge opportunity here. At the heart of it, it’s all about insurance fundamentals, delivering excellent customer experience, tackling complexity and injecting a different pace of change into Aviva. And that will be just the start. I am determined to re-energise Aviva and deliver long term growth for our shareholders.”
Overall, the group’s operating profit rose from £3,068 million (around NZ$5.95 billion) to £3,116 million (around NZ$6.05 billion) thanks in part to an increase in its life business which was up 5% year-on-year at £2,999 million (around NZ$5.82 billion).
In general insurance in its home country of the UK, operating profits were up from £447 million to £453 million; while in Canada they were even at £46 million; in Europe they fell slightly from £223 million to £220 million; and in Asia and other markets they slipped from an £8 million loss to a £16 million loss. Its general insurance combined operating ratio was relatively flat at 93.8% in the UK, compared to 93.9% a year earlier; and the same was true in Canada at 102.4% compared to 102.2%; in Europe at 93.4% compared to 93.3%; and in Asia and other markets at 122.1% compared to 123.2%.
Its normalised COR, however, fell back – with Canada taking the bulk of the blame. It increased to 98.8% from 97.8% with Canada specifically seeing a rise from 100.7% to 103.4% “driven by adverse claims experience, predominantly on personal motor.”
Operating expenses reached £4,026 million (2017: £3,778 million). The increase in expenses, the firm stated, included “the impact of continued targeted investment in simplification and growth initiatives in digital, IT and finance change as well as strengthening capabilities in Aviva Investors and the UK and project expenses that typically relate to mandatory requirements like IFRS 17 and GDPR.”
Overall, chairman Sir Adrian Montague described the results as “steady progress.”
“We grew profits, had a record year for cash remittances and further increased our solvency cover ratio to 204%,” he said. “As a result, the board has increased the full year dividend by 9% to 30.0 pence per share.
“Our key profit measure, operating earnings per share, is up 7%. Just under half our earnings growth is due to higher profits from our major businesses, with the rest of the increase due to our ordinary share buy-back, debt reduction and a higher net contribution from longevity and assumption changes.”