Aviva PLC (LSE:AV.) has drawn positive responses from brokers after its first-half results beat expectations, with stronger-than-forecast general insurance earnings and progress integrating Direct Line helping offset softer performance in parts of its life business.
Aviva reported group operating profit of £1.326 billion for the first half of 2026, up 24% from £1.068 billion a year earlier, while operating earnings per share increased 10% to 31.8p. Cash remittances rose 47% to £1.498 billion and the interim dividend was lifted 7% to 14.0p.
Peel Hunt, which reiterated a 'buy' rating and 800p target price, said the operating result was better than expected because of a strong property and casualty contribution. Non-life operating profit of £905 million was 16% ahead of its forecast, while life operating profit of £582 million missed its estimate by 9%.
The broker also highlighted Aviva's £1.5 billion of cash remittances, ahead of its roughly £1.1 billion forecast, and management's expectation that 2026 operating EPS growth will broadly match its 11% three-year target rate. Peel Hunt said the outlook remained positive, particularly given stronger-than-expected momentum in property and casualty insurance.
However, negative investment variances of £490 million and restructuring charges of £213 million weighed on net profit and net asset value. Peel Hunt nevertheless maintained its Buy recommendation, pointing to Aviva's earnings valuation and dividend yield.
Panmure Liberum was similarly positive, retaining its 'buy' rating and 543p target price after describing first-half operating profit as 6% ahead of consensus. It highlighted UK and Ireland general insurance profit of £643 million, up 50%, and Canadian general insurance profit of £262 million, up 20%.
Panmure noted that Aviva's 93.3% undiscounted combined ratio was 0.9 percentage points better than consensus, although favourable reserve releases contributed to the result. It also flagged pressure across the bulk annuity market, where volumes are lower and industry margins are tightening, while noting Aviva achieved an 18% internal rate of return on business written.
Capital remains another focus. Aviva's Solvency II shareholder cover ratio stood at 176%, with management expecting it to reach the high-180s by year-end as further Direct Line capital synergies are realised.
The backdrop remains mixed for UK financial groups, with still-elevated interest rates supporting investment income while softer inflation and a more competitive insurance pricing environment create pressure in parts of the market.