|
Aviva PLC on Thursday boosted guidance and suggested it will meet 2026 targets a year early, thanks in part to the acquisition of industry peer Direct Line Insurance Group PLC. Aviva completed its £3.7 billion purchase of Direct Line, a Bromley, London-based car and home insurer, back in July. However, following Thursday morning’s upbeat announcement, Aviva shares fell 4.2% to 663.40 pence in London. The company is targeting Direct Line cost synergies nearly double its original estimate, now expecting £225 million in run-rate savings by 2028. Aviva is eyeing an additional £500 million in capital synergies by the end of 2026. Aviva also expects to meet its £1.8 billion Solvency II [SII] operating own funds generation target a year early. It added that it is ‘on track’ for more than £5.8 billion in cumulative cash remittances by 2026, having reached £3.0 billion in the 18 months since setting the target. For the current year, the London-based firm sees £2.2 billion in operating profit, which is about 25% higher than the £1.77 billion figure posted in 2024. The new target includes an estimated £150 million contribution from Direct Line. Left unchanged is guidance for the cash cost of dividends, which is expected to grow in the mid-single digits from 2026 onwards. Aviva noted that dividend distributions going forward will reflect a 14% rise in its share count as a result of buying Direct Line. The final dividend for 2025 is expected to be consistent with a 10% yearly boost to the interim dividend. Back in August, the firm lifted its first-half dividend to 13.1p from 11.9p the previous year. Looking ahead, Aviva has set a new goal for 11% compound annual growth in operating earnings per share, between 2025 and 2028. By 2028, the company aims for IFRS return on equity above 20%. Aviva was ‘confident’ about trading in the nine months that ended September 30, with General Insurance premiums up roughly 9% to £9.97 billion from £9.12 billion a year earlier. The company noted ‘areas of rate softening’ and the need to remain flexible. In the Wealth division, net flows rose 8% on-year to £8.31 billion from £7.71 billion, while assets under management increased to £224 billion at the end of September, which is about 7% higher than £209 billion at the end of June. The firm noted a ‘material’ improvement in the Aviva Investors segment, where negative net flows narrowed to £19 million from £1.72 billion a year earlier, and AuM edged up to £253 million from £246 million. During the nine-month period, Aviva’s Protection and Health business saw sales fall to £384 million from £403 million, ‘due to the consolidation of propositions following acquisition from AIG’. Retirement sales decreased to £5.3 billion from £7.3 billion on-year, which Aviva described as ‘strong despite being lower than a particularly elevated prior year.’ It added that sales for its Individual Annuity and Equity Release branches had risen by 24% and 39% respectively. Copyright 2025 Alliance News Ltd. All Rights Reserved.
|
