Aviva reports underlying operating profits of £725m in Q1 2021

British multinational insurance company, Aviva, reported underlying operating profits of £725m in the first half of 2021, up 17% year-on-year.

This reflects very good results in the general insurance business, both in the UK and Canada, as the group experienced favourable weather and some reduction in claims in motor as customers drove less. That was supported by good cost control in the corporate centre.

Aviva’s cash remittances for HY 2021 stood at £1.1bn, up an astonishing 884% from their HY 2020 results.

Plus, General Insurance Gross Written Premium (GWP) stood at £4.4bn, up 6% from HY 2020 levels. These are their best half-year sales in General Insurance in a decade.

Their HY 20210 results also showed Present Value of New Business Premiums (PVNBP) at £16.9bn, up 13% from HY2020.

There were positive signs for investors too, with interim dividend standing at 7.35p, up 5% from last year.

In their interim 2021 interim results announcement, Aviva proposed an intended capital return of at least £4bn by HY 2022. This includes up to 750m share buyback, which commences on the 13th of August 2021.

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown: “Having spent the last few years suffering a bit of an identity crisis, Aviva seems to have finally settled itself down to life as a fairly boring, but highly cash generative insurance business. Investors are enjoying the fruits of the transition, with bumper shareholder returns.

“The group does have some growth options – most notably sizeable workplace pension and advisor businesses which are scooping up assets, some of which are making their way through to the long unloved Aviva Investors – but the vast majority of the business is more ‘steady-eddie’ than ‘eddie the eagle’.

“General insurance is a difficult market to differentiate yourself in, and bulk annuities aside, the market for guaranteed retirement income is not what it once was.

“A good illustration of the group’s newfound conservatism is the work done to patch up the balance sheet – cutting debt and leaving management with a sizeable capital surplus. Some of that is earmarked for shareholder returns, but aggressive overseas expansion seems to be off the cards.

“Still, Aviva in its current format seems to have a complementary business model, products that resonate with clients and a sense of focus it’s lacked in some previous guises. That should serve it well.”