Aviva PLC (LSE:AV.) cut a healthy image in today’s first-half financial report, with statutory profit surging 58% year on year and group operating profit increasing 14% to £875 million.
General insurance written premiums increased 15% year on year to £6 billion while insurance, wealth and retirement sales increased 12% to £19.7 billion.
Of note was the 16% increase in cash remittances from its subsidiaries, which includes cash generated from Aviva’s reinsurance offering (although Aviva did not specify the precise amount of the £959 million of cash remittances attributed to reinsurance deals).
Reinsurance deals involve offloading a portion of an insurer’s risk to another insurer to manage its balance sheet.
UK life insurers have been under scrutiny from the Prudential Regulatory Authority for their use of funded reinsurance deals, with the regulator concerned that growth in these transactions could cause a build-up of risk in the sector which could ultimately affect policyholders.
Aviva expects cash remittances cumulatively to exceed £5.8 billion between 2024 and 2026.
“Sales are up. Operating profit is up. The dividend is up. Our plan to deliver more for customers and shareholders is working really well,” remarked a chipper chief executive Amanda Blanc.
“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.
“Aviva continues to benefit significantly from the balanced and diversified business we have built and lead.”
Blanc highlighted that Aviva added 270,000 more customers year to date.
The interim dividend per share increased by 7% to 11.9p and Aviva maintained its guidance for mid-single-digit growth in dividend cash cost. Aviva also completed a £300 million share buyback in the first half.
Aviva’s Solvency II shareholder cover ratio was strong at 205%.
The group intends to grow annual operating profits to £2 billion by 2026.