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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 (LON:BARC) reiterating an
“overweight” rating and Jefferies noting improved UK GI margins and strong protection sales.