Aviva’s General Insurance Premiums grew 9% in the first quarter to £2.9bn, helped by 12% growth in the UK & Ireland which was boosted by the Probitas acquisition.
The wealth division saw net flows of £2.3bn, equivalent to 5% of opening Assets under Management. This was held back by the loss of a significant workplace client, with growth of 52% in the adviser platform being the bright spot.
The Solvency II ratio, a measure of balance sheet strength remained ‘strong’ at 201%, down from 203% at the end of 2025.
Aviva remains confident of the outlook for 2025 and of achieving operating profit of £2bn by 2026. The acquisition of Direct Line Group is expected to close in the middle of this year. Thereafter, Aviva expects to reframe its targets for the enlarged group.
The shares were flat in early trading.
Our view
Aviva’s seen encouraging growth in the early part of 2025, with some well-targeted acquisitions helping reduce the reliance on capital-intensive business. But recent strength in the valuation meant it wasn’t enough to lift investor sentiment on the day.
Aviva brings insurance, wealth, and retirement under one roof and the planned acquisition of Direct Line will bolster its market-leading positions in key areas like UK motor and home insurance. The deal terms require a decent chunk of cash so Aviva will tap its strong capital levels, and it’ll mean no buybacks for 2025, but we think the deal looks a good long-term move. Aviva’s hopeful of a speedy closure, but with an inquiry opened by Competition and Markets Authority there can be no guarantee.
General insurance in the UK & Ireland has had a strong start to the year. New business is moving in the right direction, suggesting Aviva’s got its price point right, and the division’s also been boosted by acquisitions and partnerships. The Canadian business is also seeing decent growth, supported by ongoing pricing actions.
Aviva's bulk annuity business (BPA), where it takes on final salary commitments from pension funds, has grown rapidly. The focus continues to be on finding the right new business rather than pushing for market share. These contracts feed significant quantities of new assets into the business, which Aviva Investors can manage - increasing scale and profitability. Volumes are flat so far this year, but we support the shift in focus towards improving margins.
Being a huge workplace pension provider is the logic behind increasing its presence in the wealth management market. Plans are also underway to expand the advisory offering which will help increase exposure to capital light businesses. Performance this year has been decent, but it’s a tough market, so it's one to watch.
The retirement products sit alongside Aviva’s protection business (this includes products such as life assurance and income protection policies). And the acquisition of AIG Life UK has seen protection sales soar. This also houses the Health business which has been a benefactor of increased demand for private health insurance – a trend we see continuing.
Aviva is a diversified player with fingers in basically all the pies. The insurance business is starting to benefit from an improving market, momentum in the wealth management division continues to be impressive, and Aviva’s capitalising on the resurgence of activity in the bulk annuity market.
We like the mix, and with a strong balance sheet, the 6.8% prospective forward yield looks attractive. However, there are no guarantees, and there’s more pressure to deliver than there’s been for some time, increasing the risk of ups and downs.
An independent Non-Executive director of Harp BidCo Ltd (parent company of the Hargreaves Lansdown Group) is also an Independent Non-Executive Director at Aviva.
Environmental, social and governance (ESG) risk
The financials sector is medium-risk in terms of ESG. Product governance is the largest risk for most companies, especially those in the US and Europe with enhanced regulatory scrutiny. Data privacy and security are also an increasingly important risk for banks and diversified financial firms. Business ethics, ESG integration and labour relations are also worth monitoring.
According to Sustainalytics, Aviva’s overall management of material ESG issues is strong.
Aviva values ESG management and focuses on transparency around key issues. The company actively addresses physical climate risks, data privacy, security, and sustainable finance. Aviva aims to boost sustainable investments by 2025 and integrates ESG factors into its investment strategies. The absence of customer satisfaction targets in FY2022 is a potential area for improvement.
Aviva key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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