Strong 2022 results, operating momentum continues
Announcing share buyback of £300m1. Total capital return over £5bn since 2021
On track to meet or exceed Group targets, outlook remains positive
|Solvency II OFG‡||Solvency II cover ratio‡,3||General insurance COR‡||Operating profit‡,4||Baseline controllable costs‡,5|
|20212: £1,187m||2021: 244%||20212: 92.9%||20212: £1,634m||20212: £2,854m|
Amanda Blanc, Group Chief Executive Officer, said:
“We are making excellent progress at Aviva. Operating profits and dividends are growing and we have strong trading momentum despite significant market volatility. We have radically simplified Aviva, we are financially strong and we are utterly focused on transforming and growing the business.
“Our core businesses in the UK, Ireland and Canada grew in 2022, and contributed to a very strong, all round performance. Life insurance value of new business is up 15%, general insurance sales6,7 are up 8% and overall operating profit is up 35%. We are investing to make it easier for customers to do business with Aviva and customer numbers in the UK have grown to 15.5m.
“Cash remittances2 are up strongly, our capital position is robust, and we are today declaring a final dividend of 20.7 pence, meaning a total ordinary dividend of 31.0 pence for 2022. We are committed to delivering an attractive and sustainable dividend, and have upgraded our dividend guidance to low-to-mid single digit growth in the cash cost of the dividend. We are confident in the future capital generation of our business, and so we are also announcing today an additional return of capital to shareholders, via the launch of a £300m share buyback, in line with our preference to return surplus capital regularly and sustainably. This takes the total capital return to over £5bn since 2021.
“The diversified model we have built at Aviva has proved its worth, providing clear benefits for customers and shareholders and driving our great results last year. Whilst I am pleased with what’s been accomplished over the past twelve months, I am clear there is significantly more value which Aviva can and will deliver in 2023 and beyond.”
Strong results demonstrating benefits of diversified business model
- General insurance gross written premiums (GWP) up 8%7 to £9,749m (20212: £8,807m) and COR‡ of 94.6% (20212: 92.9%)
- UK & Ireland Life VNB‡ up 15% to £767m (2021: £668m) with sales6 of £33bn (2021: £36bn)
- Operating profit‡,4 up 35% to £2,213m (20212: £1,634m)
- Solvency II operating own funds generation‡ up 37% to £1,623m (20212: £1,187m)
- Solvency II return on equity‡ 16.4% (20212: 10.7%)
- Cash remittances‡ up 11% to £1,845m (20212: £1,662m)
- Baseline controllable costs‡,5 down 3% to £2,771m (20212: £2,854m) reflecting continued focus on efficiency
- IFRS loss of £(1,139)m (2021: £2,036m profit) largely reflects adverse market movements
- Final dividend per share of 20.70p (2021: 14.70p). Total dividend per share of 31.00p (2021: 22.05p), as per previous guidance.
Capital position remains robust – £300m share buyback to commence immediately
- Solvency II shareholder cover ratio‡ of 212% (2021: 244%) and centre liquidity‡ (Feb 23) of £2.2bn (Feb 22: £6.6bn)
- Estimated Solvency II shareholder cover ratio pro forma for further debt reduction and pension scheme payment of 207%. Allowing for payment of the 2022 final dividend and the £300m share buyback the ratio is estimated at 196%.
- Solvency II debt leverage ratio‡ of 31% (2021: 27%), and 30% on a pro forma basis for further debt reduction and pension scheme payment.
- Given our robust capital position, we are commencing a £300m share buyback programme immediately1. Our preference remains to return surplus capital regularly and sustainably.
Continuing strong operating momentum
- Wealth proved resilient in challenging market conditions with net flows‡ of £9.1bn (2021: £10.0bn) benefitting from strong performance in Workplace which added 374 new schemes in the year.
- Annuities & Equity release sales6 were 21% lower at £6,238m (2021: £7,887m) with Solvency II OFG‡ up 34% to £524m (2021: £392m). The outlook for BPA volumes is positive and we are confident in meeting our £15-£20bn volume target over 2022-24.
- Protection & Health VNB‡ up 18% to £221m (2021: £188m) reflecting strong sales, improved margins and beneficial assumption changes, partly offset by the negative impact from higher interest rates.
- UK & Ireland General Insurance GWP, up 7% to £5,740m (2021: £5,352m), and COR‡ of 96.1% (2021: 94.3%). UK commercial lines performed strongly with GWP up 12% while personal lines was up 2% as we retained our pricing discipline amid adverse market conditions. We will continue to take the necessary actions to price appropriately for the inflationary environment in 2023.
- Canada GWP up 16% (9% at constant currency) to £4,009m (2021: £3,455m) and a COR‡ of 92.5% (2021: 90.7%). We saw excellent growth in both commercial and personal lines with GWP up 14% and 6% respectively at constant currency.
- Aviva Investors external net flows‡ remain positive despite challenging market conditions at £1.3bn (2021: £3.3bn).
‡ Denotes Alternative Performance Measures (APMs) and further information can be found in the 'Other information' section of the 2022 Annual Report and Accounts.
1 Commencing on 10 March 2023.
2 Comparatives presented are from continuing operations.
3 Solvency II cover ratio is the estimated Solvency II shareholder cover ratio at 31 December 2022.
4 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 of the 2022 Annual Report and Accounts.
5 Baseline controllable costs exclude strategic investment, cost reduction implementation, IFRS 17 and other costs not included in the 2018 costs savings target baseline.
6 Sales refers to present value of new business premiums (PVNBP) in Life or gross written premiums (GWP) in General Insurance.
7 Constant currency.
Rupert Taylor Rea
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Joel von Sternberg
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Presentation slides: 0700 hrs GMT
Real time media conference call: 0800 hrs GMT
Analyst conference call / audiocast: 0900 hrs GMT
Watch our Group CEO, Amanda Blanc’s 2022 full year results video
Hi, Amanda, and welcome to Solus. It's great to have you here today to talk to me about Aviva's full year financial results. 2022 felt like a big year. Are you pleased with our performance?
Well, before I start on that, Vicky, thank you so much for having us here today. It's absolutely fantastic to be on site at one of our Solus sites. Thank you and the team for everything that you do for our customers. You get them back on the road quickly and efficiently and safely, and that's really terrific. So we really appreciate that. So thank you so much.
Now turning to 2022, Aviva had an excellent 2022. I think the performance was really strong. I want to thank all of the colleagues at Aviva for that because they worked really, really hard. I think what it shows is the resilience of Aviva, and the consistency and the reliability of the performance of Aviva. I think that is really coming through in these results.
I think the performance of the business is only going to get stronger from here. So I'm very excited about that. I think what's really pleasing is how we've achieved that set against what has been a very difficult economic and political backdrop and obviously, cost of living crisis. So I think the performance of the business is even stronger for that.
So, what are the standout financial highlights for you?
Well, there's quite a few, actually, and I think the results are testament to the hard work that everybody's done over the past two years and the real performance management lens that we now have on the business. So just going through,I think a few of the real highlights.
Aviva is growing. The value of new business is growing in the Life company. The wealth fund flows are really strong and we've seen growth in the UK, Ireland and Canadian general insurance businesses.
On top of that, profitability is strong, with the Combined Operating Ratio in the general insurance business resilient in what is a very tough market. Our costs are coming down, again, set against a tough inflationary environment. We're really pleased with the progress that we've made on costs.
And turning to capital, clearly 2022, we returned a significant amount of capital to our shareholders. And you've seen from this morning's announcement that we've been able to announce another return of capital in these results, which I'm very, very pleased about. And the dividend is, as we said, it would be for 2022, and we've also announced an upgrade to the dividend policy this morning.
You said our strategy is the right one. What's next for Aviva and its strategic priorities?
I think the strategy is the right one. And you can see from the results today that we're actually making progress against it. We've got a laser focus on our four strategic priorities of customer, growth, efficiency, and sustainability. And that is really what's allowing us to unlock the competitive advantage in Aviva's model.
So putting customers first is absolutely central to Aviva's strategy. We've made some great progress in 2022. One of the things that I'm really excited about is we've built an engaging mobile-led customer journey, and what that has seen is £600 million of fund flows through to our MyAviva pension platform, which is really great news.
So our second priority is growing the business. Each business plays a critical role in our portfolio. Wealth is a really big focus for us and having an advice capability is really the key to unlocking that growth and hopefully helps us to recapture some of the six billion of flows that leave us each year.
Our third priority is efficiency, and here we've made some great progress. We've simplified our customer journeys, we’ve streamlined our IT estate and we've reduced our property footprint, and this has all contributed to the cost reduction.
Looking to the future, once we've achieved our 750 million cost reduction, our aim is to be upper quartile across all of the key business lines.
And our final priority is sustainability. And I'm pleased to say that we continue to lead the pack on climate change. I'm also pleased that we've been able to donate £38 million to restore Britain's temperate rainforests, which is part of a £100 million donation that we'll make to contribute to biodiversity in the UK.
This year, one of our biggest pushes is into social action. Now we've already committed to investing £10 billion into UK infrastructure investments, but with the cost of living crisis, we wanted to do more for customers and the communities. And so we've committed to working with the Citizens Advice Bureau and the Money Advice Trust to do this.
So how would you sum up Aviva's year?
Well I think Aviva's had an excellent 2022. We have delivered quarter by quarter and I think you've seen that in the strong financial performance that has come through today.
The plan that we put in place is actually working and the resilience of the diversified business model is also working.
And you've really seen the clear benefits of the scale, the diversification and the brand of Aviva coming through here today. We have leading positions in all of our core markets and we've also got high performing businesses. And you combine that with a formidable brand and I think you see the results coming through as they have done today. So we have the strategy, the leadership and the engaged people and of course these results to show that we can and we will deliver on Aviva's promise in 2023.
So thanks, Amanda, for being here today. It's been great to have you.
Look, it's been absolutely brilliant to be here and actually see first-hand what you're doing for customers. Thank you so much for having me.
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 2022. The average rates employed in this announcement are 1 euro = £0.85 (12 months to 31 December 2021: 1 euro = £0.86) and CAD$1 = £0.62 (12 months to 31 December 2021: CAD$1 = £0.58 ). Where percentage movements are quoted on a constant currency basis, this is calculated by applying year to date average exchange rates to prior period.
- 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.
- All percentages, including currency movements, are calculated on unrounded numbers so minor rounding differences may exist.
- 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 of the 2022 Annual report and Accounts.
- We are one of the UK's leading Insurance, Wealth & Retirement businesses and we operate in the UK, Ireland and Canada. We also have international investments in India, China and Singapore.
- We help our 18.7 million customers 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 2022, we paid £23.2 billion in claims and benefits to our customers.
- Aviva is a market leader in sustainability. In 2021, we announced our plan to become Net Zero 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 2022, total Group assets under management at Aviva Group are £352 billion and our Estimated Solvency II shareholder surplus is £8.7 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