News Release

7 March 2024

Aviva plc 2023 Results Announcement

Operating profit up 9%, with continued growth momentum across the Group

Announcing share buyback of £300m and upgraded dividend guidance

Confident outlook for 2024, and new Group targets

Amanda Blanc, Group Chief Executive Officer, said:

"We have made significant progress in 2023. Sales are up, costs are down, and operating profit is 9% higher. Our position as the UK's leading diversified insurer, with major businesses in Canada and Ireland, is clearly delivering. Today we have raised our total dividend by 8% to 33.4 pence and have now returned more than £9bn in capital and dividends to shareholders over the last three years.

"We have generated strong organic growth, especially in our capital-light businesses, which make up over half our portfolio. General insurance premiums increased by 13% on the back of strong performances in Canada and the UK. We are the number one provider of workplace pensions, and this business continues to thrive, with a record £6.9bn of net flows, boosted by winning 477 new schemes during the year. Our private health business is experiencing strong demand from businesses and individual customers and sales grew 41% in 2023. The higher interest rate environment boosted the bulk annuity market, where we secured excellent volumes of £5.5bn at strong margins.

"We are building a clear track record of strong and consistent performance. In each of the last three years we have grown sales, operating profit and our dividend. This momentum gives us increased confidence for Aviva's future, and so today we are announcing a new £300m share buyback programme, upgrading our dividend guidance to mid-single digit cash cost growth, and upgrading our Group financial targets.

"Aviva is financially strong. We are trading consistently well. Our prospects have never been better. We have leading businesses in growing markets, a fantastic brand, and we are investing substantially to make service better for our 19m customers. All the ingredients are in place to ensure Aviva continues to deliver an outstanding performance for our customers and our shareholders. I'm certain we will."

Strong 2023 results with continued profitable growth momentum

•    Group operating profit^‡,1 up 9% to £1,467m (2022²: £1,350m).

•    Solvency II operating own funds generation^‡ (Solvency II OFG) up 12% to £1,729m (2022³: £1,540m), which included a £208m initial benefit from two partnership extensions in IWR. Solvency II OFG excluding management actions and other up 28%.

•    Solvency II operating capital generation^‡ (Solvency II OCG) up 8% to £1,455m (2022³: £1,352m).

•    Solvency II return on equity^‡ 14.7% (2022³: 9.9%).

•    Cash remittances^‡ of £1,892m up 3% (2022: £1,845m).

•    General Insurance premiums^‡,5 up 13%⁶ to £10,888m (2022: £9,749m). Undiscounted COR^‡ of 96.2% (2022²: 95.2%) and discounted COR of 92.7% (2022: 94.3%).

•    Insurance, Wealth & Retirement (IWR) operating value added^‡ up 13% to £1,849m (2022: £1,635m).

•    Baseline controllable costs^‡,7 down 1% at £2,734m, more than offsetting inflation. Our continued focus on cost efficiency has enabled us to deliver our £750m cost reduction target a year early.

•    IFRS profit for the year⁸ of £1,106m (2022²: loss of £1,030m).

New share buyback and upgraded dividend guidance

•    Solvency II shareholder cover ratio^‡ of 207% (2022: 212%) and centre liquidity^‡ (Feb 24) of £1.9bn (Feb 23: £2.2bn).

•    As part of our programme of regular and sustainable capital returns we are commencing a new share buyback programme of £300m immediately, taking the total amount of capital returns and dividends paid to shareholders to more than £9bn over the last three years. Our preference remains to return surplus capital regularly and sustainably to shareholders.

•    Final dividend per share of 22.3 pence (2022: 20.7 pence) giving a total dividend per share of 33.4 pence (2022: 31.0 pence), up 8%.

•    In light of the significant progress we have made and our confidence in Aviva's future, we are upgrading our dividend guidance and we now expect to grow the cash cost of the dividend by mid-single digits⁹.

Continued trading performance

•    UK&I General Insurance premiums^‡,5 up 16% to £6,640m (2022: £5,740m) and undiscounted COR^‡ of 96.8% (2022²: 96.4%). UK personal lines premiums grew 24% driven by strong rate discipline in the inflationary environment and new propositions. UK commercial lines premiums grew 10% due to rate actions and new business growth.

•    Canada General Insurance premiums^‡,5 up 10%⁶ to £4,248m (2022: £4,009m) and undiscounted COR^‡ of 95.3% (2022²: 93.7%). We saw excellent growth of 13%⁶ in commercial lines and 9%⁶ in personal lines driven by rate increases and strong new business growth.

•    Protection and Health sales⁵ were up 16% driven by strong growth in Health, up 41%, and Individual Protection. Value of new business on an adjusted Solvency II basis (VNB)^‡ was 3% lower as the impact of interest rate increases more than offset the growth in sales.

•    Wealth continued to show resilience in challenging market conditions with net flows^‡ of £8.3bn (2022: £9.1bn) representing 6% of opening Assets under Management (AUM)^‡. AUM grew 15% to £170bn (31 December 2022: £147bn).

•    Retirement sales⁵ were up 14% to £7,088m (2022: £6,238m) driven by £5.5bn of Bulk Purchase Annuity (BPA) transactions and increased demand for Individual Annuities in a higher interest rate environment. VNB^‡ was up 9% to £286m (2022: £264m).

•    Aviva Investors is a core enabler of growth for the Group. In 2023, it originated £2.6bn of real assets for our annuities business, and over 60% of Workplace net flows^‡ were into Aviva Investors.

Confident outlook and upgraded Group targets

Our positive momentum continued in 2023 with a strong set of results, and our diversified business model positions us well to navigate the current macroeconomic environment. This reinforces our confidence in the prospects, financial targets and outlook for the Group.

In General Insurance we remain focused on pricing appropriately for the ongoing inflationary environment. Overall, we expect the rating environment to remain favourable in personal lines with some moderation of rate increases in commercial lines. We expect the underlying COR¹¹ to benefit from the earn through of rating actions taken in 2023.

In Insurance, Wealth & Retirement we expect to see continued growth. We expect further strong demand in Protection & Health products given supportive market dynamics. Wealth is central to our strategy, and as we set out at our 'In Focus' briefing in October 2023, the market presents a significant opportunity for Aviva to continue to generate sustainable, capital-light growth. We expect to continue our disciplined approach to BPAs, where the market should continue to benefit from more pension schemes looking to de-risk.

We have now exceeded our existing Solvency II operating own funds generation^‡ target of £1.5bn by 2024, and we have delivered our £750m cost reduction target one year early. We remain on track to exceed our cash remittance^‡ target of >£5.4bn cumulative (2022-2024).

Therefore, we are establishing new, upgraded targets for the Group:

•    Operating profit^‡,1: £2bn by 2026. A new target following the implementation of IFRS 17.

•    Solvency II own funds generation^‡: £1.8bn by 2026. A key driver of value and cash remittances^‡. Upgraded from
£1.5bn by 2024.

•    Cash remittances^‡: >£5.8bn cumulative 2024-2026. Underpinning our sustainable dividend policy. Upgraded from >£5.4bn 2022-2024.

We are committed to delivering for our shareholders. The upgraded targets set out today support our sustainable dividend policy. We now expect the cash cost of the dividend to grow by mid-single digits, demonstrating our confidence and ambition for Aviva as we look to deliver for all of our stakeholders.

Under our capital framework, surplus capital is available for reinvestment in the business, bolt-on M&A and returns to shareholders. We have announced a £300m share buyback today, and anticipate further regular and sustainable capital returns in the future.

Chief Executive's Overview

Overview

2023 was another year of strong, consistent performance for Aviva. We once again extended our track-record of growth and have now achieved our Solvency II OFG and cost targets a year early and are firmly on track to exceed our cash remittance target.

Our consistent strategy has allowed us to deliver precisely what we said we would: strong momentum in both growth and performance. This has been further bolstered by significant investment across the business and bolt-on M&A, enabling us to continue to capitalise on market growth opportunities. As a result, today we have upgraded our targets and dividend guidance and announced a new £300 million share buyback.

Credit for this year's strong performance goes to my Aviva colleagues for everything they do to support our customers every day - be that sorting a claim, or consolidating someone's pension pot, resolving a query or developing a new, better service. Our people work tirelessly to help solve our customers' financial puzzles, so a very big thank you to the whole Aviva team.

Strong consistent performance

In 2023 we have shown continued momentum, growing operating profit¹ by 9%. This reflects strong trading performances right across our businesses, the advantages of our scale and market positions, the benefits of our investment programme, and our continued focus on costs and efficiency.

General insurance premiums⁵ have grown by 13%⁶ overall and the group undiscounted combined ratio (COR) was 96.2%. This is a good performance considering adverse weather in Canada, storms in the UK and the impacts of inflation, reinsurance costs and higher claims frequency.

Our UK & Ireland general insurance business had another strong year with premiums⁵ up 16% and healthy profitability. In Canada, where we are the number two player, we grew premiums⁵ by 10%⁶ with a strong COR of 95.3%. Across our general insurance businesses, we remain focused on extending our best-in-class technical capabilities and the outlook is positive as rate continues to earn through the portfolio.

In our IWR business we increased operating value added by 13%. Health insurance sales⁵ remained very strong and grew by 41%, driven by increased demand across retail and business customers, while Individual Protection sales⁵ grew 13% as a result of strong growth in IFA and direct channels.

In Wealth, our workplace business continues to thrive with a record £6.9 billion of net flows, boosted by winning 477 new schemes during the year. Our platform business continues to see positive net flows, at £2.1 billion, and is positioned to benefit when market conditions improve. Overall, Wealth net flows were 6% of opening Assets Under Management (AUM), while total AUM grew 15% to £170 billion.

In our Retirement business, we transacted on 56 BPA deals in 2023, for total sales⁵ of £5.5 billion. Improved margins have been supported by the launch of our new streamlined service for smaller schemes. The higher rate environment supported individual annuity sales⁵, which grew by 17%, and conversely impacted equity release sales⁵, which were 48% lower.

Solvency II Own Funds Generation (Solvency II OFG) - an important measure of our dividend paying capacity - grew 12% to £1,729 million. This was driven by improved underlying performance across all businesses, whilst also benefiting from the extension of two key partnerships in IWR, which will deliver better customer service, efficiency and systems rationalisation. Cash remittances were also up 3% to £1,892 million.

The Group remains in a very strong financial position with a robust balance sheet and a Solvency II shareholder cover ratio of 207% at the end of the year.

These results are testament to the work we have been doing to improve the underlying performance of our businesses over the last three years and give us high expectations as we look forward into 2024 and beyond.

The UK's leading diversified insurer

These results were also made possible by our unique model, which is a major competitive strength. Our portfolio is diversified across the UK, Ireland and Canada, where we have market leading positions and tangible opportunities for growth. We are also the only major player in the UK which can look after a wide range of customer needs across insurance, wealth and retirement. These multiple lines of business give Aviva's earnings clear resilience and provides advantages to our customers. We now have 4.8 million customers with two or more products with us and we want to grow this number each year.

All elements of Aviva work together to our mutual advantage. Our general insurance, protection, health and wealth businesses are key customer acquisition and growth engines. Our retirement business underpins our cash generation, and Aviva Investors is a critical enabler of growth in Wealth and Retirement.

Taken together they give us scale, in particular an unrivalled franchise of more than 19 million customers that is and always will be at the heart of our success. We're determined to further enhance our customers' experience with Aviva and service more of their needs, to seize those growth opportunities and deliver more value to shareholders.

Strong organic growth

A big part of our growth story comes from that customer base. Our number one brand position is matched by strong sales⁵ to existing customers, with 39% of all new UK sales in the year to existing product holders.

Nor are we positioned where we are by accident. For example, with more people looking after their own retirements, and more inter-generational wealth transfer, we've deliberately designed our wealth business to help. An ageing population can look to us to be there for their retirement. As customer expectations and needs evolve, we can be there for them at the key moments in life, helping them protect what matters, build wealth and look after their health and wellbeing.

Accelerating through M&A

On top of the organic growth we see flowing from societal trends, we're also investing to accelerate our advantage. We made important and deliberate investments in capital-light areas, investing c.£100 million to acquire Optiom in Canada, which will improve our offering and distribution in a highly attractive segment of the market, and £460 million¹⁵ to acquire AIG's UK protection business which has over 2.5 million customers, adding further scale to our award-winning protection business. Most recently, on 4 March 2024, we announced the £242 million¹⁵ acquisition of Probitas, a high quality, fully-integrated platform in the Lloyd's market, which will expand the market opportunity for Aviva's Global Corporate & Specialty (GCS) business.

Investment for the future

We are making significant investment across our business, to make customer service quicker, simpler and slicker; to develop new products and services which make customers' lives easier; and to accelerate the growth of our capital-light businesses. And this investment is paying off. For example, in our protection business, SME customer journeys are now digital, supporting a 5% growth in sales⁵. In Health, we have enhanced our direct quote and buy customer journey leading to increased conversion rates.

We continue to innovate to improve our offering to customers. Aviva Zero, our next generation personal lines proposition is going from strength to strength, while our AI driven pensions tracing service Fabric has seen an >50% increase in transfer-in flows. Digital-led improvements are enhancing the way our customers can interact with us too. This year saw us add 600,000 more MyAviva app users, bringing the total up to 6.3 million. We have also continued to support customers who have struggled with the high cost of living, for example by offering payment deferrals and lower cost, no-frills general insurance products.

We are running Aviva more efficiently and we've exceeded our £750 million cost reduction target and delivered it one year early, reaching £757 million of savings by the end of 2023. We are making the business simpler too, and have reduced our IT applications by approximately 30% since 2020. Being efficient also means setting ourselves up for the future, making things easier for our people and smoother for our customers - that is why we have extended our strategic partnerships with FNZ and Diligenta to simplify and strengthen our operations and technology in our heritage and wealth businesses.

And finally, on sustainability, as well as our continued commitment to climate action, we're focusing on social action too. That includes investing in our communities and the UK economy, such as Aviva Investors' recent investment of £50 million in Hightown Housing Association, supporting them in providing affordable, energy-efficient homes or Aviva Capital Partners' work to develop the London Cancer Hub, creating a life-science district dedicated to cancer treatment and research.

Superior returns for shareholders

Our strong performance, profitable growth and financial strength gives us increasing confidence for the future. We are committed to delivering superior returns to our shareholders, year in, year out.

That means we can deliver on our regular, sustainable returns of surplus capital, by announcing a new share buyback programme of £300 million today. We have also declared a final dividend of 22.3 pence, bringing our total dividend for the year to 33.4 pence, up 8%. In total, over the last three years, we have now returned more than £9 billion of capital and dividends to shareholders.

We know the importance of a sustainable dividend for shareholders, and in recognition of the group's strong prospects, we have also upgraded our dividend guidance to mid-single digit growth in the cash cost (from low-to-mid single digit previously)⁹.

Confidence in Aviva's future

Our confidence also underpins the new Group targets, representing consistent progression from our existing targets.

On operating profit¹, we have set a target to reach £2 billion by 2026. We are upgrading our Solvency II operating own funds generation target to £1.8 billion by 2026. And we are targeting over £5.8 billion in cumulative cash remittances over 2024-26.

We have transformed the performance of Aviva over the last three years. We've grown quarter-on-quarter, year-on-year, and by operating more efficiently, we are turning that into improvements in profitability. Through our dividend growth and regular share buybacks, we are sustainably delivering superior returns to our investors. With our strong momentum and continued investment in the business, I have real confidence in our ability to extend this track record.

Amanda Blanc DBE

Group Chief Executive Officer

6 March 2024

Footnotes

Click on, or paste the following links into your web browser, to view the complete Full Year Results and Annual Report and Accounts for the year ending 31 December 2023:

http://www.rns-pdf.londonstockexchange.com/rns/9091F_1-2024-3-6.pdf

http://www.rns-pdf.londonstockexchange.com/rns/9091F_2-2024-3-6.pdf

The Full Year Results and Annual Report and Accounts will be available shortly on the Aviva corporate website at https://www.aviva.com/investors and both documents have been submitted in full unedited text to the Financial Conduct Authority's National Storage Mechanism and will be available shortly for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

Dividend declaration

Aviva announces a final dividend of 22.3 pence per share on Ordinary Shares (Shares). Subject to shareholder approval at the 2024 Annual General Meeting and the condition below, the final dividend for the year ending 31 December 2023 will be paid on 23 May 2024 to shareholders on the Register of Members at the close of business on 12 April 2024. Holders of Aviva American Depository Receipts (ADRs) will be paid the dividend approximately four business days after the payment to Ordinary shareholders. The last election date for the Dividend Reinvestment Plan is 1 May 2024. The dividend is conditional upon the Directors not having determined (at their discretion) to cancel the dividend at any point prior to its payment.

In compliance with the rules issued by the Prudential Regulation Authority and other regulatory requirements to which the Group is subject, the dividend is required to remain cancellable at any point prior to it becoming due and payable. The dividend is therefore conditional upon the Directors not having determined (at their discretion) to cancel the dividend at any point prior its payment. The Directors have no intention of exercising this cancellation right, other than where they determine it may be necessary or appropriate to do so as a result of legal or regulatory requirements (including without limitation if, prior to payment, the Group ceases to hold capital resources equal to or in excess of its Solvency Capital Requirement, or if that would be the case if the dividend were paid).

Aviva also announces a dividend of 4.375 pence per share on 8.75% Cumulative Irredeemable Preference Shares. The dividend for the six-month period ending 30 June 2024 will be paid on 30 June 2024 to shareholders on the Register of Members on 7 June 2024.

Share buyback

The Company announces it will commence a share buyback programme of its Shares for up to a maximum aggregate consideration of £300 million¹ (the Programme), commencing on 8 March 2024.

Aviva has entered into a non-discretionary agreement with Citigroup Global Markets Limited (the Broker) to undertake the Programme by making market purchases of the Shares. The Broker shall make trading decisions under the Programme independently of Aviva, as principal (except for Aviva's ability to terminate the Broker's mandate in certain limited circumstances). Shares acquired by the Broker will subsequently be sold on to Aviva and, to the extent permitted by law, such purchased Shares will be cancelled. The purpose of the Programme is therefore to reduce Aviva's share capital. The maximum number of Shares to be acquired under the Programme is 280 million¹ and the Programme is expected to complete by 30 June 2024.

Note: Any purchase of Aviva Shares contemplated by this announcement will be carried out on the London Stock Exchange and/or CBOE Europe Limited and will be executed in accordance with Aviva's general authority to repurchase Shares granted by its shareholders on 4 May 2023, Market Abuse Regulation 596/2014 and the Commission Delegated Regulation (EU) 2016/1052 (both as incorporated into UK domestic law by the European Union (Withdrawal) Act 2018), and Chapter 12 of the Financial Conduct Authority's Listing Rules.

¹ During the Programme, the Broker has discretion to notify Aviva of a reduction in the Programme size due to a decrease in trading liquidity of the Shares. If such notification is received, a further announcement will be made.

This announcement contains regulated information as per Disclosure Guidance and Transparency Rule 6.3.

-ends-

Enquiries:

Media:

Andrew Reid                                                                                                      +44 (0)7800 694 276

Sarah Swailes                                                                                                    +44 (0)7800 694 859

Marion Fischer                                                                                                   +44 (0)7800 693 219

Analysts:

Rupert Taylor Rea                                                                                             +44 (0)7385 494 440

Joel von Sternberg                                                                                           +44 (0)7384 231 238

Michael O'Hara                                                                                                  +44 (0)7387 234 388

Notes to editors

•    All figures have been translated at average exchange rates applying for the year, with the exception of the capital position which is translated at the closing rates on 31 December 2023. The average rates employed in this announcement are 1 euro = £0.87 (2022: 1 euro =£0.85) and CAD$1 = £0.60 (2022: CAD$1 = £0.62). Where percentage movements are quoted on a constant currency basis, this is calculated by applying year to date average exchange rates to prior year.

•    Growth rates in this announcement have been provided in sterling terms unless stated otherwise.

•    All percentages, including currency movements, are calculated on unrounded numbers so minor rounding differences may exist.

•    Throughout this report we use a range of financial metrics to measure our performance and financial strength. These metrics include Alternative Performance Measures (APMs), which are non-GAAP measures that are not bound by the requirements of IFRS and Solvency II. A complete list and further guidance in respect of the APMs used by the Group can be found in the 'Other information' section of the Aviva plc Annual Report and Accounts 2023.

•    We are the UK's leading diversified insurer and we operate in the UK, Ireland and Canada. We also have international investments in India, China and Singapore.

•    We help our 19.2 million customers make the most out of life, plan for the future, and have the confidence that if things go wrong we'll be there to put it right.

•    We have been taking care of people for more than 325 years, in line with our purpose of being 'with you today, for a better tomorrow'. In 2023, we paid £25.6 billion in claims and benefits to our customers.

•    In 2021, we announced our ambition to become Net Zero by 2040, the first major insurance company in the world to do so. We are aiming to have Net Zero carbon emissions from Aviva's operations and supply chain by 2030. While we are working towards our sustainability ambitions, we recognise that while we have control over Aviva's operations and influence on our supply chain, when it comes to decarbonising the economy in which we operate and invest, Aviva is one part of a far larger global ecosystem. There are also limits to our ability to influence other organisations and governments. Nevertheless, we remain focused on the task and are committed to playing our part in the collective effort to enable the global transition. Find out more about our climate goals at www.aviva.com/climate-goals and our sustainability ambition and action at www.aviva.com/sustainability

•    Aviva is a Living Wage, Living Pension and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid carers leave and equal parental leave. Find out more at www.aviva.com/about-us/our-people

•    As at 31 December 2023, total Group assets under management at Aviva Group were £376 billion and our estimated Solvency II shareholder capital surplus was £8.8 billion. Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.

•    For more details on what we do, our business and how we help our customers, visit www.aviva.com/about-us

•    The Aviva newsroom at www.aviva.com/newsroom includes links to our spokespeople images, podcasts, research reports and our news release archive. Sign up to get the latest news from Aviva by email.

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