Examining the H1 2023 results that made up “another excellent half year, delivering profitable growth despite a very challenge economic backdrop” during a media briefing, group CEO of Aviva Amanda Blanc (pictured) highlighted how the decision to refocus Aviva on the UK, Ireland and Canada had paid dividends for its customers, partners and shareholders alike.
The resilience of this diversified proposition is clear, she said, with every part of the business delivering strong growth – including double-digital growth across all three of its general insurance businesses. In addition, the group won 211 new schemes in H1 2023, cementing its number one position in the growing schemes marketplace, and delivered an operating profit up 8% year-on-year to £715 million.
“Aviva is consistently delivering on its promises quarter after quarter, and that means that we are set to exceed the group targets that I laid out 18 months ago,” she said. “But we’re not just focused on today we’ve got one eye very firmly on Aviva’s future. We have invested £1 billion in our business and we’re now seeing very positive results.”
Among those investments was the launch of Aviva Zero – Aviva’s carbon-conscious digital-led motor proposition which has sold more than 250,000 policies since its launch less than 18 months ago. Looking to the future, Blanc said she was “hugely excited about the opportunities Aviva has to grow, to innovate and to deliver more – and it actually feels like we’re only just getting started.”
With the general insurance market at large and the motor insurance market, in particular, facing challenging external conditions, Blanc touched on how Aviva has managed to deliver strong growth consistently across its GI businesses in the UK, Ireland Canada.
“If we think about the composition of our book of business,” she said, “it is pretty much 50/50 commercial lines and personal lines. So, we are getting the benefit of a strong rating environment across all lines of business. So clearly we have priced for inflation, I would say probably ahead of the rest of the market as we were seeing inflation data trends come through at the back end of 2021. We started to price for that, so we got ahead of that and that’s why I think the performance is strong.
“Clearly the inflation challenges have been significant. But in 50% of our book, which is the commercial lines book, we obviously have indexation on top of rating increases – the products are index-linked so the inflation effects increase is in-built. And if we look at the growth in general insurance, it is 60% rating increase and 40% new business. So effectively, technical pricing strength is strong in that line of business.”
On whether Aviva is positioning itself to take more market share in the UK motor insurance market, Blanc highlighted how the insurer has re-examined its UK motor insurance proposition. Over the last 12 months, she said, Aviva has launched its Quotemehappy motor product which allows customers to make a decision regarding what parts of a product they want to include as well as a Quotemehappy Connect proposition for telematics drivers.
Between these propositions and the launch of Aviva Zero, it’s clear that the insurer is open to the opportunities presented by the motor insurance market. However, Blanc noted that it is not seeking significant market share growth. Aviva has the opportunity to allocate its capital across a broad range of products, she said, and her longstanding ethos of “profitability over volume” holds firm.
As far as the new Consumer Duty standard is concerned, Blanc said, Aviva has always been very customer-focused which is embedded in its processes and the way the insurer works.
“We haven’t had to make any direct changes as a consequence of new Consumer Duty,” she said. “We are constantly reviewing products, our product governance and the product propositions and so… From last year, the changes with the pricing practices and the other product reviews as far as the regulator was concerned in general insurance meant that our general insurance business was well prepared for new Consumer Duty.”
With regards to Consumer Duty in the context of Aviva’s general insurance pricing, she highlighted Aviva’s focus on looking after its customers and not passing on excess costs. This was reflected in the profitability data recorded in H1 2023, she said – where the firm’s combined operating ratio rose from 93.8% in H1 2022 to 94.8% this year.
On bolt-on acquisitions, Blanc said, Aviva has spent nearly £500 million, including its purchase of Succession Wealth last year and its acquisition of Barclays home insurance portfolio – the latter of which bought an additional 350,000 policyholders and cemented the insurer’s position in the home insurance market.
“We’ve done some small bolt-ons with Azur and AXA XL which has given us a number one position in high net worth,” she said. “But what we say is, in the way that we think about the capital allocation framework, clearly bolt-on acquisitions, we would like to do some of those. Yes, in commercial insurance, but we’re looking at those areas where they will add strategically to the business or there are some synergistic benefits.”
Addressing a question about whether Aviva is looking to rejoin the Lloyd’s market, Blanc said the group is constantly looking at different distribution channels and ways that it can deliver its product set to a wider audience. Lloyd’s is interesting because it would enable Aviva to access to same types of customers it currently has albeit via different distribution channels. So, as it stands, it’s an opportunity Aviva has looked at and it’s an area, “we are certainly interested in.”
With regards to how Aviva’s strategy is playing out among its broker partners, Blanc highlighted that from research the insurer has carried out among its brokers, the feedback has been strong. Looking at its e-trading proposition, she said, Aviva is not just number one in the electronic trading market but is way ahead of the nearest competitor.
“So, I think we are doing well for our brokers - clearly always more to do, but we do bring the diversified business to them,” she said. “And when we’re speaking to some of our more global brokers, we are talking not just about general insurance, we’re talking about employee benefits, about health, about workplace and about all of the other stuff that we do – and it is a really joined up conversation.”
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