Investing.com -- Aviva (LON:AV) reported solid Q1 results on Thursday, surpassing expectations with strong growth in both Life and General Insurance (GI) segments.
The company’s Life insurance sales rose 10% year-on-year, reaching £10.8 billion on a Present Value of New Business Premiums (PVNBP) basis, driven by a 28% increase in individual protection sales, aided by the acquisition of AIG’s UK protection business.
Margins improved by 10bps to 1.93%, contributing to a 16% rise in new business profits, signaling robust performance amid a challenging environment.
General Insurance also showed strong growth, with total Gross Written Premiums (GWP) increasing by 7% to £2.9 billion.
The U.K. GI segment performed well, with GWP up 11% to £1.85 billion and an improved undiscounted combined operating ratio (COR) of 95.3%.
However, adverse weather events impacted results in Ireland and Canada. In Ireland, GWP grew 18%, but the COR worsened to 117.8% due to Storm Éowyn, the most severe storm in 40 years.
The Canadian business experienced flat GWP growth, but the COR deteriorated due to weather-related losses in Ontario.
Despite these challenges, Aviva’s profitability remains strong. The group’s discounted COR was 92.9%, slightly worse than Q1 FY24’s 92%, while the undiscounted COR rose to 96.6%.
These results reflect the company’s ability to manage weather-related risks while maintaining profitability.
Aviva’s capital position remains solid, with a Solvency II ratio of 201%, slightly down from 203% at FY24.
The impact of a £640 million dividend payout was offset by the tender of preference shares and the issuance of additional Tier 1 debt, alongside positive market movements and strong operating capital generation.
Analysts are largely positive on Aviva’s outlook, with Barclays reiterating an
“overweight” rating and Jefferies noting improved UK GI margins and strong protection sales.