Increased confidence – dividends up, targets up, substantial capital return
Increased confidence - dividends up, targets up, substantial capital return
£4.75bn total capital return1, meeting our commitment
Estimated c.40% increase in 2022 dividend per share to c.31.5p (based on illustrative share consolidation)1,2,3
Increased cumulative cash remittances target to >£5.4bn (2022-24)
Upgraded cost savings target of £750m gross of inflation (2018-24)4
|Cash remittances5,‡||Total 2021 dividend||Adjusted operating profit5,6,‡||General Insurance GWP5||Life new business sales5,7|
|2020: £1.37bn||2020: 21.00p||2020: £1,806m||2020: £8.3bn||2020: £29.9bn|
Amanda Blanc, Group Chief Executive Officer, said:
"2021 was a year of significant strategic progress, right across Aviva. We successfully completed the sale of eight non-core businesses, generating excellent value for our shareholders. Our financial position is strengthened and Aviva is now a much simpler, leaner business, focused on our core markets in the UK, Ireland and Canada.
"Today we are announcing a total capital return to shareholders of £4.75bn1, including the existing £1bn share buyback, delivering on our promise to shareholders by returning more than £4bn. We are confident in the future and are setting out plans for further investment to enhance our capabilities and accelerate growth, starting with the acquisition of Succession Wealth, a leading national financial advice firm, which we have announced today.
"Our people are central to our success, and it’s only right that they share in the value they’ve helped create. So we are giving each of our 22,000 employees £1,000 in Aviva shares, to say thank you.
"The Focus and Strengthen parts of our strategy are complete and we are now wholly focused on accelerating performance. Our trading in 2021 was strong, reinforcing our confidence that Aviva can grow sustainably. Our general insurance volumes are the highest in over a decade, life insurance sales7 grew by 23%, and we are on track to reduce controllable costs4,‡ by £300m by the end of 2022.
"The progress we’ve made in the last year shows Aviva has what it takes to produce attractive and sustainable returns for shareholders. Our performance and progress give us the confidence to announce today an update to our dividend policy, with estimated dividend per share growth of c.40% in 20222,3 to 31.5p, based on the illustrative consolidation ratio.
"Aviva has the foundations in place to deliver its promise. We’ve achieved a lot in the last year but we’re only just getting started. There is so much more Aviva can and will deliver for our customers and our shareholders."
Delivering on our promise to shareholders – capital returns and updated dividend policy
- Total shareholder returns of £4.75bn comprising £3.75bn via B Share Scheme announced today1,2 on top of existing £1bn share buyback
- Final dividend per share for 2021 of 14.7p (2020: 14.00p), with total dividend per share for the year up 5% to 22.05p (2020: 21.00p)
- In light of the significant progress we have made, and our confidence in the outlook for Aviva, we are announcing clear guidance on dividends for the next two financial years2,3:
- For 2022 we estimate we will be able to pay a dividend of approximately £870m. Following the proposed B Share Scheme and share consolidation announced today, this would be equivalent to an illustrative per share amount of c.31.5p, an increase of c.40% on 20212,3
- For 2023 we estimate we will be able to pay a dividend of approximately £915m, growth of 5% giving an illustrative 33p per share2,3
- Thereafter we expect low-to-mid single digit growth in dividend per share. These cash dividends represent an attractive payout level from long-term, sustainable cash and capital, underpinned by our upgraded cash remittance target5
- Surplus capital above target levels is available for investment in the business or return to shareholders over time
There are important notices relating to the B Share Scheme and illustrative share consolidation ratio and illustrative future dividend per share on page 9 of the press release. Please read those notices in full in order to obtain a comprehensive understanding of the Company’s proposals.
‡ Denotes Alternative Performance Measures (APMs) and further information can be found in the 'Other information' section | 1 Subject to shareholder approval and customary conditions including no material deterioration in market conditions or the Company's financial position | 2 There are important notices relating to the B Share Scheme and illustrative share consolidation ratio and illustrative future dividend per share on page 9 of the press release. Please read those notices in full in order to obtain a comprehensive understanding of the Company’s proposals | 3 Estimated dividends are for guidance, these are calculated using the illustrative consolidation ratio and are subject to change. The Board has not approved or made any decision to pay any dividend in respect of any future period | 4 Controllable costs excluding cost reduction implementation and IFRS 17 costs | 5 From continuing operations | 6 Operating profit represents Group adjusted operating profit which is a non-GAAP APM. Operating profit is not bound by the requirements of IFRS. Further details are included in the 'Other information' section | 7 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.
Watch our Group CEO, Amanda Blanc's 2021 full year results video
Thank you for having me here today to talk about the results with you.
So, Amanda, are you pleased with the progress so far that Aviva's made under your leadership?
Sarah, good to be with you again.
Yeah, I'm really pleased with today's results. I think that we've made great progress in the three areas of the strategy that we said we would.
We've completed the disposal programme, which I think is terrific.
We've actually rebuilt our financial strength, which is something that we committed to do, less than 20 months ago.
But I think today I'm so pleased about the actual performance of the group.
If you look at the growth results, they're really strong, but also we've seen the cost reduction that we've committed to.
So I think overall, really good operating momentum, and I'm very, very pleased with that.
Can you give us an update on how much capital we're going to be returning to shareholders?
I can. If you remember, we said that we would be returning at least £4 billion to shareholders but I'm really pleased that today we can say that we will be returning £4.75 billion to shareholders, which I believe is a very, very good outcome.
And as well as that, I'm very pleased that due to the value that's being created by all of the people, all of our colleagues at Aviva, each of our colleagues will get £1,000 of free shares, which shows that we really value their commitment to the group.
So even after returning £4.75 billion, we have the capacity and the confidence to invest in the business and what we show today is that we will invest £300 million to accelerate some of the great growth opportunities that there are in the market. But we will also invest £200 million in the cost and efficiency of the business which will help us of course to grow the profitability.
So how did Aviva's core businesses perform in 2021?
Each of the core businesses made a really great contribution to 2021.
So let's look at each of them in turn.
If we look at the Life company and the Savings and Retirement business, £10 billion of net flows in 2021, that's a really terrific achievement.
We saw robust margins in the BPA business and volumes at over £6 billion, which I think is great.
In the General Insurance business, both in Canada and in the UK, the volume is now £8.8 billion of gross written premium, which I think we're all incredibly pleased with.
Aviva Investors made good progress on reducing their costs, which was a key challenge for them during 2021 and their fund performance improved.
And overall, we saw our costs come down because I think we were always conscious of the fact that we needed to be more efficient for the benefit of our customers and I think we've started to really see that come through.
Of course, cash is key to Aviva's results, Sarah, and the cash remittances are up 22%. So a very, very strong performance.
So given Aviva's performance and outlook, what does this mean for shareholder dividends?
Well, today we're announcing that the final dividend for 2021 is just over 22p, which is 5% up on 2020.
So I think that's very good news for our shareholders.
We're also today announcing an updated dividend policy. And I think it shows the real confidence that we have in the group going forward. It's very attractive but also sustainable.
What are the main priorities for 2022 and beyond for Aviva?
We see so many opportunities in the markets in which we operate, UK, Ireland and Canada, in the wealth space and in the general insurance space and the opportunity for the Life company to work together with Aviva Investors I think really plays to that.
So we're really confident that the macro growth opportunities and the Aviva capabilities sit side by side.
So we've announced today the acquisition of Succession Wealth.
One of the areas that we've long spoken about is our desire to really bolster our capabilities in the advice space and Succession Wealth does just that. So we're really pleased to welcome the Succession team to the group.
I'm very excited that this gives us a great enhancement to our current capabilities in this area.
So the second priority for Aviva is around our customers. We have over 18 million customers across the group. And what we want to do is make their experience of dealing with Aviva easier.
So whether that's in the way that we transact our business with them, whether that's digitally or over the phone, or in the simplicity of the products that we provide to them.
We know that financial services can be a complex space. We have a real opportunity to make a big difference to our customers in the way that we present those products to them.
In the way that we build those products sustainably, I think that that is what customers are looking for.
We have a very strong ESG proposition and we're making sure that we would build that into the products that we develop.
Our third priority area is around efficiency. Aviva is often being accused of being a complex organisation. It's not so complex today. We have the UK, Ireland, Canada and Aviva Investors.
So we've simplified the portfolio, now we need to simplify the businesses within the portfolio and you'll have seen we've made great progress on the cost reduction.
That means that we have less products. It means we have less systems. So we're simplifying the business, and that will have a good impact on our customers because our cost to serve those customers will be reduced.
And finally, our fourth priority is sustainability.
Aviva has a strong history in this area, and we don't want to become complacent. We want to continue to build on that. We're building sustainable products in the wealth business. We are having fantastic success in the funds that the Aviva Investors team are launching and we will continue to look for more opportunities, as we'll have seen in the last week with the launch of Aviva Zero, which is our net-zero proposition for motor insurance.
So we continue to build upon that and I think play a really important role in society by our infrastructure investment, which is, of course, all part of the levelling up agenda in the UK.
So you announced some upgraded targets today. Can you tell me a bit more about those?
Yes, so I think it shows the confidence we have in the outlook for the group that we've been able to do that.
The first is cumulative cash remittances, over the next three years of greater than £5.4 billion.
The second target is a growth target. It's a new target and it's on own funds generation and the target is to be at £1.5 billion by 2024.
The third target is on cost reduction, where we've upgraded our current target to £750 million gross of inflation.
So if you could possibly whittle it down to a few key takeaways for people listening to our 2021 results, what would they be?
So we've made really rapid progress and I think that's a good thing because that allows us to now move on.
And the next phase is about delivering Aviva's promise. And that's where the whole of Aviva, whatever part of the organisation you work in is going to come together to deliver for our customers.
So I guess the final thing I would say is just thank you to everybody for everything that they've contributed to get us this far.
*This announcement contains inside information. The person responsible for making this announcement on behalf of the Group is Kirstine Cooper (Group Company Secretary).
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Notes to editors:
- All figures have been retranslated at average exchange rates applying for the period, with the exception of the capital position which is translated at the closing rates on 31 December 2021. The average rates employed in this announcement are 1 euro = £0.86 (12 months to 31 December 2020: 1 euro = £0.88) and CAD$1 = £0.58 (12 months to 31 December 2020: 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.
- Throughout this report we use a range of financial metrics to measure our performance and financial strength. These metrics include Alternative Performance Measures (APMs), which are non-GAAP measures that are not bound by the requirements of IFRS and Solvency II. A complete list and further guidance in respect of the APMs used by the Group can be found in the 'Other information' section.
- We are the UK's leading Insurance, Wealth & Retirement business and we operate across our core markets of the UK, Ireland and Canada. We also have international investments in Singapore, China and India.
- We help our 18.5 million customers (core markets) make the most out of life, plan for the future, and have the confidence that if things go wrong we’ll be there to put it right.
- We have been taking care of people for 325 years, in line with our purpose of being ‘with you today, for a better tomorrow’. In 2021, we paid £30.2 billion in claims and benefits to our customers.
- Aviva is a market leader in sustainability. In 2021, we announced our plan to become a Net Zero carbon emissions company by 2040, the first major insurance company in the world to do so. This plan means Net Zero carbon emissions from our investments by 2040; setting out a clear pathway to get there with a cut of 25% in the carbon intensity of our investments by 2025 and of 60% by 2030; and Net Zero carbon emissions from our own operations and supply chain by 2030. Find out more about our climate goals at www.aviva.com/climate-goals and our sustainability ambition and action at www.aviva.com/sustainability
- Aviva is a Living Wage and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid carers leave and equal parental leave. Find out more at www.aviva.com/about-us/our-people
- As at 31 December 2021, total Group assets under management at Aviva Group are £401 billion and our Solvency II shareholder capital surplus is £13.1 billion. Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.
- For more details on what we do, our business and how we help our customers, visit www.aviva.com/about-us