Amanda Blanc, Chief Executive Officer, said:
"We will focus Aviva on our strongest businesses in the UK, Ireland and Canada and aim to be the UK’s leading insurer. We are going to focus on those businesses where we have the necessary size, capability and brilliant customer service to generate superior shareholder returns. This is where we will invest and grow. Where we cannot meet our strategic objectives, we will take decisive action and we will withdraw capital.
We must transform our performance and improve our efficiency. This requires great customer service, stronger innovation and better use of our brand. Our transformation will be underpinned by continuing to manage our balance sheet prudently, reducing debt and increasing our financial resilience.
Aviva’s financial performance in the first half of 2020 was solid. Our financial position is strong and operating profit of £1.2 billion was robust, thanks to our diverse range of products, excellent partners and our swift operational response to the COVID-19 pandemic. I am proud of the way our people have gone above and beyond to help our customers during this crisis.
The Board has declared a second interim dividend in respect of the 2019 financial year of 6 pence per share. While the Board continues to monitor the impact of COVID-19 and the economic outlook, we have decided to take the opportunity to review our longer term dividend policy, in light of our strategic priorities and the future shape of the group, with the objective of a sustainable pay-out and lower levels of debt. We will update shareholders on all dividend matters, including the 2019 final dividend in the fourth quarter.
I have been CEO for one month and I am confident we have many of the ingredients to make Aviva a winner. From this moment on, we must deliver. Nothing else will do. My focus is making sure it happens and at pace."
- Operating capital generation‡# £890 million (HY19: £780 million)
- Solvency II return on equity1,‡ 7.1% (HY19: 11.0%)
- Own funds generation1 £632 million (HY19: £864 million)
- Operating profit2,3,‡# £1,225 million (HY19: £1,386 million)
- Operating EPS2,3,4,‡# 23.4 pence (HY19: 26.1 pence)
- IFRS profit before tax attributable to shareholders £1,076 million (HY19 £1,523 million)
- Basic EPS 20.0 pence (HY19: 28.2 pence)
- Second interim dividend in respect of 2019 of 6 pence per share
Capital & Cash
- Solvency II capital surplus5 £12.0 billion (FY19: £12.6 billion)
- Solvency II cover ratio5,‡# 194% (FY19: 206%)
- Solvency II net asset value5 416 pence (FY19: 423 pence)
- Cash remittances‡# £150 million (HY19: £1,582 million)
- Centre liquidity6 £2.5 billion (February 2020: £2.4 billion)
- Debt leverage ratio7,‡ 32% (FY19: 31%)
- IFRS net asset value per share8 473 pence (FY19: 434 pence)
- Life PVNBP £21.2 billion (HY19: £21.3 billion)
- Value of new business (VNB)‡ £601 million (HY19: £535 million)
- General insurance net written premiums (NWP) £4,748 million (HY19: £4,725 million)
- General insurance combined operating ratio (COR)3,‡ 99.8% (HY19: 96.8%)
- General insurance net IFRS COVID-19 claims impact £165 million
- Controllable costs3,9,‡ £1,912 million (HY19: £1,966 million)
‡ Denotes Alternative Performance Measures (APMs) which are key performance indicators of the Group used to measure our performance and financial strength. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.
# Denotes key performance indicators which are used by the Group to determine or modify remuneration. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.
1 Includes Group centre, debt costs and other items not allocated to the markets.
2 Group adjusted operating profit is a non-GAAP APM which is not bound by the requirements of IFRS. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.
3 On 31 December 2019 the Group adjusted operating profit APM was revised and now includes the amortisation and impairment of internally generated intangible assets to better reflect the operational nature of these assets (see note B2 of the Analyst Pack). Group adjusted operating profit continues to exclude amortisation and impairment of intangible assets acquired in business combinations. Comparative amounts for the 6 month period ended 30 June 2019 have been restated resulting in a reduction in the prior period Group adjusted operating profit of £62 million. There is no impact on profit before tax attributable to shareholders’ profit. Following the change in the definition of Group adjusted operating profit, COR, controllable costs and operating earnings per share were also restated to include the amortisation and impairment of internally generated intangible assets. Comparative amounts for the 6 month period ended 30 June 2019 have been restated resulting in an increase in prior period COR of 0.9%, an increase in prior period controllable costs of £62 million and a reduction in prior period operating earnings per share of 1.2 pence.
4 This measure is derived from the Group adjusted operating profit APM. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.
5 The estimated Solvency II position represents the shareholder view only. See section 3 of the Analyst Pack for more details.
6 Stated as at end July.
7 Excluding the direct capital instrument, which was redeemed in full at first call date on 27 July 2020.
8 Number of shares as at 30 June 2020: 3,928 million (FY19: 3,921 million).
9 Following a review of the presentation of claims handling costs, to achieve consistency in our reporting, comparative amounts have been restated by £41 million for the 6 month period ended 30 June 2019 and £83 million for the year ended 31 December 2019 to include previously excluded claims handling costs attributable to the Life & Health businesses from the UK, Ireland and Poland in controllable costs.
* This announcement contains inside information. The person responsible for making this announcement on behalf of the Group is Kirstine Cooper (Group Company Secretary).
Notes to editors
All comparators are for the half year 2019 position unless otherwise stated.
Income and expenses of foreign entities are translated at average exchange rates while their assets and liabilities are translated at the closing rates on 30 June 2020. The average rates employed in this announcement are 1 euro = £0.88 (6 months to 30 June 2019: 1 euro = £0.88) and CAD$1 = £0.58 (6 months to 30 June 2019: CAD$1 = £0.58).
Growth rates in the press release have been provided in sterling terms unless stated otherwise. The following supplement presents this information on both a sterling and constant currency basis.
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