Aviva PLC (LSE:AV.)’s upbeat tone in this morning’s update and a shift towards more capital-light lines should support a re-rating, according to analysts at US bank Jefferies.
The bank noted Aviva reiterated its 5-7% operating profit growth guidance for 2023 despite higher-than-normal weather claims in Canada.
The higher weather claims resulted in a 96.3% undiscounted COR (underwriting profit) for the first nine months of the year, slightly better than the broker’s estimate of 95.4%.
However, including the impact of UK storms in the fourth quarter, year-to-date weather losses across the group remain within Aviva's long-term average, according to the company.
Jefferies said Aviva's solvency II ratio remains exceptionally strong (200%) despite a number of one-offs and seasonal factors, making it a 'buy'.
KBW Europe added that Aviva’s nine-month solvency and combined ratio was better than it expected, which was fully adjusted for concerns about capital market movements and weather losses in Canada/UK.
That UK weather claims to date are within budget is particularly reassuring, KBW said.
Shares rose 0.3% to 415.3p.