Aviva issues update on IFRS 17

“IFRS 17 is purely an accounting change and does not affect the underlying economics of our business, our strategy, or the way in which we operate.”

That was the assertion made by insurance giant Aviva Plc in an update in relation to IFRS (International Financial Reporting Standards) 17, which is a new accounting standard for insurers slated for implementation in the New Year.

In its update, Aviva highlighted the following:

• Cash remittances, capital generation, and approach to capital allocation are unchanged by IFRS 17.
• Solvency II remains the key basis under which it manages its business and is unaffected.
• There is no impact on dividend guidance of circa £870 million (c.31.0p) for 2022 and c.£915 million (c.32.5p) for 2023, with low-to-mid single digit DPS (dividend per share) growth thereafter.
• The intention to return further capital to shareholders in 2023 is unchanged.

Aviva, which is on track to meet its financial targets, explained: “Under IFRS 17, total profits will remain unchanged. However, the new standard will impact the timing of when profits emerge, improving the predictability of profit over the long term.

“Aviva has market-leading businesses across insurance, wealth, and retirement in the UK, Ireland, and Canada. Our diversified model is one of our core strengths. IFRS 17 principally impacts annuities and protection which contribute c.40% of IFRS 4 operating profit, with the remaining c.60% largely unaffected.”

Further information on IFRS 17 is provided by Aviva in its presentation slides and video.