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Investing.com -- Aviva (LON:AV) posted stronger-than-expected first-half results on Thursday and reaffirmed its guidance, supported by growth across all business lines. The U.K. insurer’s shares rose 2% at the market open.
Operating profit for the six months to June 30 rose 22% to £1.07 billion ($1.45 billion), ahead of the £972 million forecast from a company-compiled consensus, helped by higher premiums and increased net flows in the wealth division.
General insurance gross written premiums climbed 7% year-on-year to £6.29 billion, just below the £6.32 billion expected. Total sales from insurance, wealth and retirement grew 9% to £21.5 billion.
The U.K.-based insurer, which also operates in Ireland and Canada, maintained its outlook through 2026 and said it would update its targets in November to reflect the impact of its recent purchase of non-life insurer Direct Line.
“We are very well positioned to accelerate growth in the capital-light areas of wealth, health and general insurance, and deliver more and more for our shareholders,” Chief Executive Amanda Blanc said.
The company announced an interim dividend of 13.1 pence per share, up 10% from last year and above the expected 12.9 pence.
"With operating profit up +22% (+10% ahead of consensus) and the interim dividend up +10% (+2% ahead of consensus), Aviva’s recent run of success appears to have continued," Jefferies analyst Philip Kett commented in a post-earnings note.
For recently acquired Direct Line, Aviva reported that motor and non-motor premiums were unchanged at £1.34 billion and £500 million, respectively. Motor policy volumes fell 6% to 3.7 million, while non-motor policies were down 4% to 4.9 million. The net insurance margin improved by 7.6 percentage points to 9.4%.
"When combined with flat premiums, [this] implies that prices have risen by a mid-single-digit level at a time when peers cut prices by that amount," Kett continued.
"In our view, this implies that Direct Line’s re-underwriting has continued during this interim period between the deal announcement and completion."
Aviva’s Solvency II coverage ratio for the first half was 206%, compared with 203% at the end of 2024 and slightly above consensus of 205%.