Global profits have boosted since Maurice Tulloch became chief executive last March, but UK figures fall following the alignment of Aviva’s digital and general insurance divisions

Insurer Aviva’s UK general insurance operating profit has declined by £133m, falling from £383m in 2018 to £250m by the end of 2019.

Net written premiums in the UK, on the other hand, were £4,218m and the combined operating ratio (COR) was 97.9% in 2019.

These figures form part of Aviva’s full-year financial results, published this morning.

Aviva further noted a 10% drop in its underwriting result to £199m, versus £221m in 2018. This included higher expenses for investment in IT infrastructure and less favourable prior year reserve releases, however the firm confirmed lower weather costs compared to 2018.

Operating profit globally for Aviva’s general insurance arm amounted to £594m for 2019 – a decline from the £609m recorded in 2018.

Combined operating ratio (COR) also worsened slightly from 97.2% in 2018 to 97.5% last year. Net written premiums across all GI divisions increased by 2% for 2019, rising to £9.1bn to £9.3bn.

The report stated that many of Aviva’s top-line figures around general insurance have been impacted by the amalgamation of the firm’s UK digital business with UK general insurance and UK life – this adverse impact equated to £113m, said the insurer.

If this is excluded, operating profit increased by 16% to £707m and COR is recorded at 96.3%.

Maurice Tulloch, chief executive at Aviva, said: “In general insurance, net written premiums (NWP) increased 2% to £9.3bn.

“We have continued to gradually and deliberately shift our business mix, with NWP from commercial customers rising 7% in the UK and. Our focus on providing superior service to customers and intermediaries in the SME and mid-market has supported growth in new client acquisition and attractive retention.

“In the UK, reported COR in 2019 has been affected by higher costs following its incorporation of UK digital during the year. Adjusting for these changes, our UK COR was up 0.6 percentage points to 97.9%, with solid results in commercial lines offset by weaker performance in personal lines.”


Aviva has recorded a 6% increase in its group operating profit for 2019, with profits improving from £3,004m in 2018 to £3,184m last year.

Tulloch added: “In 2019, we set out our priorities and financial targets, strengthened our leadership team and remained focused on helping our customers prepare for a better future. We’ve made good progress, but there is much more to do.

“Our return on equity was 14.3% and operating profit increased 6% to a record £3.2bn. Our capital position remains strong and resilient at a 206% solvency cover ratio. The board has increased the full year dividend by 3% to 30.9 pence per share.”

Financial targets

At the firm’s capital markets day last November, Tulloch outlined five key financial objectives that Aviva would be targeting for 2022 – he added that in 2019, “we made a strong start in pursuit of these objectives and we are on track to achieve our targets”.

One of these targets was to achieve a £300m reduction in controllable costs by 2022. To this end, Aviva reported that its controllable costs in 2019 amounted to £3,939m, compared to £3,968m in 2018; this equates to a net saving of £72m as well as implementation costs of £59m.

Tulloch confirmed that the business anticipates a total £150m of savings, prior any implementation costs, in its 2020 results, compared to the 2018 baseline.

Aviva is also striving to cut debt – it seeks to achieve a £1.5bn debt reduction by 2022. In 2019, the company repaid £0.2bn of subordinated debt, which was the total amount maturing during the year.

Aviva predicts debt maturities of £2.7bn in the next three years, which will contribute towards hitting this particular target.

Tulloch added: “Aviva has made important structural changes and achieved good progress in pursuing our first goal of operational improvement.

”Our 2019 results showed evidence of our potential, with improved momentum on customer flows, assets and premiums, and a good start on delivering our financial targets.

“My objective remains to run Aviva better.

”We will improve business performance, enhancing returns through disciplined execution on expenses and underwriting. We will focus capital and resources where we can achieve competitive advantage and strong returns.

”We will take robust action across the portfolio where our performance falls short or where we can see a better way of delivering value to our shareholders.”

Market shocks

The business further plans to keep a firm eye on recent risk developments, such as the coronavirus outbreak.

The report said: ”2020 has begun with the outbreak of a new strain of the coronavirus (COVID-19) in China, with confirmed cases in more than 50 countries, including all of those in which Aviva has material businesses.

”There is a risk of a significant global pandemic and economic disruption. We have reviewed the exposure of our balance sheet and are taking actions to further reduce our sensitivity to economic shocks.

”Notwithstanding our robust capital and liquidity position and the operational and financial actions that we are taking, a deterioration in the situation would have adverse implications for our businesses arising from the potential impacts on financial markets, our insurance exposures and our operations.

”As the situation is rapidly evolving it is not practicable to quantify the potential financial impact of the outbreak on the group.”