- Insurer beats consensus again
- UK general insurance strong
- Committed to returning capital
Maybe it is a measure of just how much chief executive Amanda Blanc has achieved since taking the helm at insurance giant Aviva (AV.) that its ‘excellent’ first-half results were greeted with a yawn rather than fireworks.
The shares, which have gained 27% in the past year compared with a 10% rise in the FTSE 100, eased 4p or just under 1% to 484p in morning trade.
(OVER-) DELIVERING ON ITS PROMISES
The insurance and savings group reported double-digit growth in operating profit, cash returns and capital generation, as it promised at the start of the year, and said it was confident in the outlook for the full year and beyond.
Operating profit for the six months to June was up 14% to £875 million, beating the £830 million consensus, thanks to a strong performance by UK general insurance, which continues to benefit from price increases and improved investment income, and retirement product sales.
Own fund generation was £758 million against analysts’ forecasts of around £700 million, which meant the group’s Solvency II liquidity ratio rose to 205%, also ahead of analysts’ forecasts.
‘We have achieved another six months of excellent trading. We have generated growth right across Aviva, thanks to our leading positions in attractive markets such as workplace pensions and general insurance in the UK and Canada. Sales are up, operating profit is up, the dividend is up. Our plan to deliver more for customers and shareholders is working really well,’ commented the chief executive.
CONTINUED CAPITAL RETURNS
The interim dividend was raised by 7% from 11.1p to 11.9p per share, and the firm carried out £300 million of share buybacks in the first half of the year so total ‘remittances’ or capital returns were £959 million, a 16% increase on last year.
Between 2024 and 2026, the firm has promised a total of more than £5.8 billion of cash remittances through dividends and buybacks which is not that far off half its current market cap of £12.8 billion.
‘In our view, Aviva remains the only UK insurer that can reliably deliver long-term special capital returns, accretive M&A, attractive ordinary dividend growth, and consistent EPS growth,’ observed Jefferies’ insurance specialist James Pearce.
