Aviva plc Q3 2021 Trading Update

Remain on track to meet or exceed cash remittance and cost saving targets Strong solvency and liquidity positions. Capital return of at least £4bn underway with c.£450m of the £750m share buyback completed

Savings & Retirement	Annuities & Equity Release	General Insurance1	Aviva Investors	Solvency II
£7.3bn	£5.3bn	£6.5bn	£1.6bn	215%
Net flows +21%	PVNBP (14)%	GWP +5%	Ext. net flows +37%	Cover ratio +12pp
9M20: £6.0bn	9M20: £6.2bn	9M20: £6.2bn	9M20: £1.2bn	HY21: 203%

Amanda Blanc, Group Chief Executive Officer, said:

"Aviva has delivered strong performance in the first nine months. Record inflows in Savings & Retirement and excellent growth in General Insurance support our confidence in Aviva's growth potential. Savings & Retirement net flows were up 21% year-to-date, continuing the strong first half performance. Bulk annuity volumes accelerated sharply in the third quarter. General Insurance premiums¹ grew 5% year-to-date reflecting solid customer retention and new business wins, particularly in commercial lines.

"We continue to make excellent and rapid strategic progress, right across Aviva. The completion of disposals in France and Italy GI since the half year are significant milestones as we deliver a radically simplified and refocused Aviva. We are delivering our commitment to return at least £4bn of capital to shareholders, with c.£450m of the £750m share buyback already successfully completed.

"Aviva is targeting Net Zero by 2040 and we welcome the Government's plan, mandating financial institutions to publish transition plans. This will help to ensure that every firm making a Net Zero commitment - whether an insurer, a bank or an asset manager - is doing so in a robust and consistent way.

"We look forward with confidence. We expect the good trading momentum to continue in the fourth quarter, and we remain on track to meet or exceed our cash and cost saving targets."

Strong growth in Life sales² and GI premiums

• UK&I life sales of £25.3bn (9M20: £21.8bn) with strong growth in Savings & Retirement. Improved annuity volumes versus the first half with £2.4bn BPAs written in Q321, bringing 9M21 volumes to £4.0bn (9M20: £5.0bn).
• General Insurance gross written premiums (GWP)¹ up 5% to £6.5bn at 9M21 (9M20: £6.2bn) and COR¹ 92.4% (9M20: 98.1%).

Continued focus on cost efficiency

• Controllable costs^1,3 down 2% (excluding cost reduction implementation and IFRS 17 costs) to £2,045m at 9M21 (9M20: £2,080m) despite the headwinds of inflation and targeted investments in growth.
• On track to achieve savings target of £300m in 2022 relative to our 2018 baseline and net of inflation. Focus over the longer term remains to deliver top-quartile cost efficiency.

Positive outlook for cash remittances

• Expecting strong growth in cash remittances for the year from the £1.4bn achieved last year (9M21 continuing cash remittances: £1.1bn) and we remain on track to achieve our target of over £5bn in cumulative business unit cash remittances¹ in 2021 to 2023.

Solvency and liquidity remain strong

• Solvency II shareholder cover ratio of 215% at Q321 (HY21: 203%).
• Pro forma prospective cover ratio at Q321 of c.197%, adjusted for remaining disposals, illustrative capital return, further debt reduction, and also for the estimated impact of interest rate reduction between 30 September and 5 November 2021 (HY21: 195%) - please refer to page 5 for further details.
• Centre liquidity (Oct 21) of £4.5bn (Jul 21: £2.8bn), with the increase since July mainly reflecting divestment proceeds received.
• Solvency II debt leverage ratio of 28% at Q321 (HY21: 26%).

Focus the portfolio nears completion. Capital return underway

• Recently completed disposals of France for £2.8bn and Italy GI for £284m. The remaining completions in Poland, Italy (Life) and Vietnam are expected by the end of the year, bringing to a conclusion the £7.5bn divestment programme.
• £750m share buyback commenced with c.£450m completed. We expect at least £4bn to be returned by HY22 with further details to be provided at FY21 results in March 2022 (subject to regulatory and shareholder approvals, remaining completions and market conditions).

Download our trading update - third quarter 2021 announcement PDF (550 KB)

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Watch our Group CEO, Amanda Blanc's third quarter 2021 trading update film

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Download Amanda Blanc's third quarter 2021 trading update video transcript PDF (77 KB)

_{1 From continuing operations.}

_{2 References to sales represent present value of new business premiums (PVNBP) which is an Alternative Performance Measure (APM) and further information can be found in the 'Other information' section of the 2021 interim results announcement.}

_{3 Controllable costs represent other expenses from continuing operations of £1.7bn for 9M21, reported in the IFRS consolidated income statement, and adjusted to show the controllable operational overheads associated with maintaining our businesses (for example adjusted to include indirect acquisition costs, and exclude certain amortisation and impairment charges and premium based taxes, fees and levies that vary directly with premiums). Controllable costs is an APM and further information can be found in the 'Other information' section of the 2021 interim results announcement.}

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Analysts:

Rupert Taylor Rea
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