Significant strategic delivery and strong growth in key areas
Amanda Blanc, group chief executive officer, said: “We have made good progress on all fronts in the 12 months since we launched our strategy.
“We are delivering on our commitment to make a substantial capital return to our shareholders. We intend to return at least £4 billion to investors by the end of the first half of 20221, starting with a share buyback of up to £750 million.
“We delivered strong cash remittances4,‡ of £1.1 billion in the first half and we are on track to achieve our objective of over £5 billion in cash remittances‡ between 2021 and 2023. In light of our confidence in the strength of the business and underlying cash flows, the Board has declared a 5% increase in the interim dividend to 7.35 pence per share.
Aviva plc 2021 interim results announcement
”The breadth of Aviva, across life insurance and general insurance, is a key strategic advantage and has driven a 17% increase in operating profit4,5,‡ to £725 million. We also delivered some of our best ever sales figures in the first six months. In UK general insurance we delivered our highest sales3 in a decade. In Savings & Retirement, net flows‡ increased by 24% to a record £5.2 billion, and we’ve added 100,000 new workplace customers, reinforcing our number one position.
“Alongside delivering growth, we continue to focus on reducing controllable costs4,6,‡ which are down 2%. We are on track to deliver our £300 million savings target in 2022 and are focused on achieving top quartile efficiency in all our businesses.
While we’ve got more to do, our half year results show we have what it takes to drive growth in our businesses. We remain completely focused on transforming performance, capitalising on the breadth of Aviva, making insurance simple and easy for our customers, and creating value for our shareholders.”
|Cash remittances4,‡||Interim dividend||Adjusted operating profit⁴,‡||General Insurance GWP⁴||Life new business PVNBP⁴,‡|
|HY20: £108m||2020: 7.00p||HY20: £621m||HY20: £4.1bn||HY20: £14.9bn|
Return of capital to shareholders of at least £4bn by HY 2022 with full details with FY results in March 2021
- Intended shareholder return of at least £4bn (subject to regulatory and shareholder approvals, remaining completions and market conditions) including up to £750m via share buyback to commence immediately2
- Expect additional reduction in debt of c.£1bn and repayment of £0.7bn of internal loan
- Combined with £2bn repayment of debt in H1 2021, expected to utilise all of the cash proceeds from divestments of £7.5bn
- Divestment programme expected to complete by end of 2021.
Strong growth in cash remittances and operating profit
- Cash remittances‡ of £1,296m (HY20: £150m) of which £1,063m from continuing operations (HY20: £108m)
- Group operating profit5,‡ of £1,132m (HY20: £1,225m) and Group IFRS loss for the period of £198m (HY20: profit of £874m) reflecting non-operating items including anticipated loss on disposal of France and investment variances driven by higher interest rates
- Operating profit5,‡ from continuing operations up 17% to £725m (HY20: £621m) and Solvency II operating own funds generation‡ up 12% to £710m (HY20: £632m)
Significant financial strength
- Solvency II shareholder cover ratio‡ of 203% (FY20: 202%) and centre liquidity‡ (Jul 21) of £2.8bn (Feb 21: £4.1bn)
- Solvency II debt leverage ratio‡ of 26% (FY20: 31%) following £1.9bn debt reduction in H1
- Interim dividend up 5% to 7.35p (2020: 7.0p per share)
Continued focus on improving the performance of the business
- Life present value of new business premiums (PVNBP)‡ up 13% to £16.9bn4 (HY20: £14.9bn) with strong growth in Savings & Retirement and lower volumes of annuities in a subdued bulk purchase annuity market – good start to H2 with £2.1bn of BPAs secured in July (£3.7bn July YTD)
- Best start to the year in a decade for General Insurance gross written premiums (GWP) up 6% to £4.4bn4 (HY20: £4.1bn) and combined operating ratio (COR)‡ of 91.6%4 (HY20: 101.4%)
- Controllable costs4,‡ down 2% (excluding cost reduction implementation and IFRS 17 costs) to £1,378m (HY20: £1,408m) and on target to deliver £300m cost savings relative to our 2018 baseline in 2022.