The UK’s biggest insurer posts positive numbers

Aviva, which was at centre of rumours about a takeover bid, posts 13% rise in premiums for Q3 2023.

Aviva's Q3 results were positive, which could further fuel takeover rumours.

Aviva, arguably the UK’s largest insurer posted its Q3 2023 results, which showed positive signs for the London-based giant.

“We have clear trading momentum, driven by our uniquely diversified business, as well as our leading positions in growing markets,” said Amanda Blanc, Group Chief Executive Officer in the company’s statement last Thursday.

General Insurance gross written premiums (GWP) for the company was up 13% at constant currency to £8 billion compared to £7.2 billion for the same period in 2022. UK and Ireland GWP was up 15% and Canadian GWP was up 11% at constant currency.

“Both [were] driven by strong rate, new business volumes and retention,” said the statement.

Recently, the company has been at the centre of takeover talks, which saw its shares leap in October, fuelled by rumours reported in the market press. However, others said it would be more likely to engage in M&A itself than be bought.

The company’s shareholder asset portfolio stood at £79 billion at 30 September and “continues to perform well and is defensively positioned”, said the statement.

“The insurance business is cyclical and market conditions
 are evolving quickly.”

Of the portfolio corporate bonds represented £21.9 billion or 28%. “Of this, 84% is externally rated investment grade and 15% internally rated,” Aviva said. “Aviva has a long history in private debt, with a robust internal rating model, and these assets have an average rating of ‘single A’ quality.”

Aviva said its Solvency II debt leverage ratio was 31.6% (compared to H1 2023 rate of 32.3%) includes the redemption of £259 million Tier 2 notes in full at their optional first call date in July. “Our pro forma Solvency II debt leverage ratio is 30.6% (compared to H1 2023 proforma of 30.3%) after allowing for the maturity of €315 million Senior notes in October.”

Other major UK-owned insurers also posted positive numbers, which continued a trend of seen among other parts of the world.

For Beazley, insurance written premiums increased by 9% to $4.32 billion for Q3 2023, compared to Q3 2022’s $3.97 billion.

The company’s investment income was $202 million or 2.1% year to date compared to a Q3 2022 loss of $99 million or 3.6%. “The insurance business is cyclical and market conditions are evolving quickly,” said Adrian Cox, Beazley’s CEO if the results. “We have chosen to exercise underwriting discipline meaning growth to date is less than we had planned at the start of the year.”

They added that on investments, “The benefit of attractive starting yields on our fixed income investments have been offset by further increases in yields throughout the year, generating mark to market losses.” 

Future results

Unlike other insurer’s though, Aviva’s positive figures could also see other effects, as it set out its future plans.

“Surplus capital is available for reinvestment in the business, bolt-on
M&A and/or additional returns to shareholders.”

Many eyes will now turn to whether these results will see recent takeover rumours escalate.

Aviva said it had suffered from the impacts of Storms Babet and Ciarán during the autumn and said “We currently estimate that year-to-date weather-related claims across the Group, including these two recent UK storms, are within our annual long-term average (LTA) weather assumption, which is c.4pp of the undiscounted COR.”

Aviva results also stipulated that its capital framework remained unchanged. “Surplus capital is available for reinvestment in the business, bolt-on M&A and/or additional returns to shareholders,” the statement said. “We continue to anticipate further regular and sustainable returns of surplus capital.”

Past names involved in takeover rumours included Allianz, which has previously bought out some of its non-UK operations and was widely linked again in industry publications when the recent rumours floated.

Whether or not the company is bought, its investment portfolio looks set to continue with few problems in its results.