Amanda Blanc

Anna Edwards: Now let's get to some breaking news here in London. We've got Aviva reporting just a few moments ago, and we have a few lines coming through from the business this morning. Announcing a share buyback of £300 million, which seems to be in line with what analysts were expecting. There was going to be a focus on return of cash to shareholders this time around, and Aviva saying it's on track to meet or exceed its targets and the outlook is still positive. Also getting some numbers on adjusted operating profit. £2.21 billion against an estimate of £1.81, so comfortably it would seem beating those estimates.

Let us get into a conversation about these numbers and beyond. Amanda Blanc joins us, the CEO of Aviva. Amanda, very nice to have you with us. Thank you so much for joining us here on Bloomberg TV. Let me get straight to that outlook because that sounds quite bullish, sounds quite positive. We've seen a lot of concern about costs within the insurance industry. Give us your reasons for optimism then as you say that you are on track to meet or exceed targets.

Amanda Blanc: Okay, so morning Anna. Absolutely brilliant to see you. Yeah, I mean we've posted I think, an excellent set of trading results this morning. We've seen some strong top line growth, which is incredibly positive. Operating profit is up strongly and costs in our business are down, and I think set against the backdrop of the market volatility that we've seen over the last 12 months, we feel very confident about these results, which is why we're saying that we're on track to beat or exceed the targets that we set ourselves.

Anna Edwards: Tell me about where the costs are coming down, Amanda, and I mean, I'm looking at other insurance businesses and looking at some of their general insurance, autos insurance, and there's a lot of fear about costs on the rise there, taking profits out of that part of the business. What's your costs experience?

Amanda Blanc: Yeah, so I mean we started on the costs journey some time ago and we've been incredibly disciplined about the way that we manage the business. Where we are seeing costs out, our property costs are down significantly as we've shrunk our footprint. We've simplified the products in the business. We've simplified the systems in the business. We've digitised and automated a number of our customer journeys. I think good cost performance right across the piece. I think the costs you might be referring to in motor insurance are around the supply chain and clearly the increased costs of repairing vehicles for our customers. Obviously, we got ahead of that very early and we've been able to price for that in our motor and our home pricing over the last 18 months.

Anna Edwards: Do you have that kind of pricing power in a market that is supposedly competitive?

Amanda Blanc: I mean, clearly the market is competitive, but I think obviously we've got an incredibly strong brand. We've got very deep data sets. We're 325 years old, and so we have a lot of data about pricing and our models are incredibly sophisticated. I think we have been able to use those real advantages to make sure that we try to keep ahead as much as we can of this very, very difficult inflationary environment in motor and home, particularly.

Anna Edwards: On other matters, Amanda. I know changes are coming to insurance in the evolution of the Solvency II regulations after Brexit. What kind of pool of capital does this open up for Aviva to invest in ways that it wouldn't have done before? What kind of opportunity does it throw up?

Amanda Blanc: It's incredibly significant for us and for the insurance industry. If the Solvency II reforms come across in the way that they meant to, then for Aviva, we've said that it's an additional £25 billion to invest in UK infrastructure and green energy projects over the next 10 years. It is pretty significant, and for the insurance industry, it's £100 billion. We are very keen that the reforms are put into place so that we can get on with it.

Anna Edwards: Does it in particular encourage money into early stage investment where it might have been more difficult for insurers to put money there before?

Amanda Blanc: I think these reforms, not necessarily. I think there are other areas where we're looking around putting money, if you like, the workplace pension money, auto-enrollment money into venture capital at an early stage. But we obviously have to manage that, the risk that is associated with that and across somebody's lifetime, they obviously want their pension returns to be strong and solid, and so we have to just balance that a little bit.

Anna Edwards: Do you think for the sector as a whole, Amanda, that this is a risk worth taking? We recently heard from the Bank of England Governor who was warning about an increase in risk for the sector by allowing this release of capital.

Amanda Blanc: Yeah, so I saw what the Bank of England Governor said, and what he's effectively said is that the risk increases from 0.5% to 0.6%, of which half of that increase is the release of the risk margin, which the regulator was perfectly happy with. I do not see this risk as significant, and I think it is really important that we help the UK economy and we invest in projects outside of the southeast in the rest of the UK. I think that is our role. We have 16 million customers in the UK and I think it's really, really important that we support them.

Anna Edwards: Can I ask you about the private health insurance market, Amanda, thinking about challenges that the UK economy is facing, that the NHS seems to be almost perennially one of those. What levels of demand are you now seeing in private healthcare as a result of the pandemic and its aftermath?

Amanda Blanc: We are definitely seeing increased demand. Our health insurance sales were up 15% and we expect that to continue. There's very, very strong demand as people are looking for alternative options to the NHS, and I think that's a very positive thing because it takes some pressure off the NHS.

Anna Edwards: Right, indeed. Thinking about UK dynamics, I suppose, Amanda, we're not far from a budget. I wonder from the industry or for the business, are there priorities that you would like the Chancellor to focus on? I mean, clearly we remember the mini budget and a lot has changed since then, and I'm sure the industry will not be wanting to see any repeat of that. I wonder if you have any thoughts ahead of this budget?

Amanda Blanc: I mean, for us, clearly economic stability is very, very important. We saw what happened in the aftermath of the mini budget, so that's a top priority for us. But also we would be keen to see what the government's plans are on their own transition to net-zero for 2050. I think as an insurer, we've made our commitment to net-zero by 2040, but we're keen to see what the government's plan is so that we can actually align our finances behind that. It would be good to see that, and also, where they propose to invest in UK infrastructure projects so that again, we can align our money behind that.

Anna Edwards: Just finally, Amanda, I don't want to leave on a downer, but I know that you've spoken up. It's been International Women's Day of course this week, which I'm sure you've noticed. You've spoken about sexism in the past and the sexism that you've faced in your role. You're also a Women in Finance Charter Champion. You've talked about how your experience of sexism in the workplace has actually worsened over time. I wonder if you can give us your thoughts on why you think that is.

Amanda Blanc: Well, I think it becomes more noticeable when you're in an environment where you recognise that certain things are not acceptable. I think there's a period where you just turn your head and say, okay, I'm going to ignore that. But I think today it's just not acceptable to do that, and so you have to call out bad behaviour. Obviously, we saw some of that last year at our AGM and our AGM is coming up shortly, and we very much hope that we do not see a repeat of that this year.

Anna Edwards: Absolutely. Amanda, thank you very much. Thanks for joining us. Amanda Blanc, the CEO of Aviva.

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