Aviva PLC (LSE:AV.) latest trading up shows healthy sales across the group's target areas, says Jefferies, notably General Insurance premiums, up 15%, Wealth Net Flows up 21%, Protection & Health sales 22%, and Retirement sales 67% including a big chunk of bulk annuities.
“We also understand that year-to-date Aviva has £7.8bn of bulk annuities, which is at the top end of the £7bn-£8bn expectation.”
Jefferies added it was also reassuring that Aviva expects to have incurred claims costs that are broadly in line with their market share given losses in Canada.
The Canadian undiscounted combined ratio for the third quarter was steep at 110%, note the US bank.
While a heavy claims burden, operating capital generation across the rest of the group remains robust says Jefferies, such that the Solvency II ratio has absorbed both this impact and the capital strain from elevated sales at 195% down from 205%.
Buy with a 550p target in the Jefferies view.
KBW is more cautious on Canada and says the consensus may still need to catch up with the large losses that we already know about but perhaps not everybody has fully captured yet.
“The outlook commentary for the combined ratio is that it should continue to improve and the new business flows we focus on seem slightly above expectations and/or at slightly better margins.”
In short, Canada might have provided drama and hasn’t said KBW, which is good.
'Market perform' with a 495p target is its view,
Shares up 4.8% to 475p.