Aviva Shares Rise Post Trading Update

Aviva (LON:AV) shares rose on Thursday after a trading update revealed strong sales despite increased insurance claims in Canada.

At 3:33 am (0833 GMT), Aviva traded 2.8% higher at £467.40.

> “This is a significantly better trading update from Aviva than we expected, with the undiscounted and discounted P&C combined ratio better than we forecast (by 1ppt in 3Q24), better top-line growth in the P&C business and solid life new business profits,” said analysts at J.P. Morgan.

The company reported growth in multiple segments:
– General Insurance premiums up by 15%
– Wealth net flows increased by 21%
– Protection & Health sales rose by 22%
– Retirement sales surged by 67%, reaching £7.3 billion, with £6.1 billion from bulk annuity deals.

Despite facing challenges, particularly in General Insurance due to high catastrophe losses in Canada, the company’s 3Q standalone undiscounted combined ratio rose to 110%.

> “Given the elevated industry-wide catastrophe losses in Canada during 3Q, we're reassured to find that Aviva expects to have incurred claims costs that are broadly in line with their market share,” stated Jefferies analysts.

Aviva’s strong operating capital generation across other segments provided a buffer against the Canadian losses without significantly impacting its Solvency II capital ratio, which dipped slightly from 205% to 195%.

Despite the claims burden, Aviva's performance metrics were largely positive, with the group’s combined operating ratio holding steady at 92.8% on a discounted basis. General Insurance gross written premiums rose 15% to reach £9.1 billion year-to-date.

Additionally, Wealth net flows reached £7.7 billion, marking a 21% year-over-year growth.

Jefferies analysts noted Aviva’s performance benefited from strategic pricing adjustments and improvements in the combined operating ratio. The company’s bulk annuity volumes have reached £7.8 billion year-to-date, with positive growth trends expected despite potential moderation in Protection & Health growth.

Aviva reiterated its guidance for the year, expressing confidence amid a competitive insurance landscape.

> “We believe there will be consensus upgrades to reflect better life new business sales (and therefore, potentially CSM) and better P&C top-line growth and margins than we expected,” concluded analysts at J.P. Morgan.