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Aviva plc 2018 preliminary results.


WEBWIRE

Sir Adrian Montague, Chairman, said:

“Aviva made steady progress in 2018. We grew profits, had a record year for cash remittances and further increased our solvency cover ratio to 204%. As a result, the Board has increased the full year dividend by 9% to 30.0 pence per share.

”Our key profit measure, operating earnings per share, is up 7%. Just under half our earnings growth is due to higher profits from our major businesses, with the rest of the increase due to our ordinary share buy-back, debt reduction and a higher net contribution from longevity and assumption changes.

“We increased profit in the UK, where we won more workplace pension schemes and bulk annuity deals, and across our international businesses, where we expanded and diversified our distribution. Aviva Investors had a more challenging year due to difficult investment markets and we have continued to invest in our asset management expertise.

”Looking forward, our capital management plan will prioritise debt reduction for the foreseeable future. We plan to reduce debt by at least £1.5 billion by the end of 2022, saving approximately £90 million per year in interest expenses. This builds on the £1.4 billion of debt repaid over the past two years and will further enhance our financial flexibility.

“The security and sustainability of our dividend remains paramount. We are moving to a progressive dividend policy, which will see the dividend maintained or grown over time depending on business performance and growth prospects.

”We recently announced the appointment of Maurice Tulloch as Chief Executive. Under Maurice’s leadership, we are confident that we can make Aviva a better business for the benefit of our customers and our shareholders.“

Maurice Tulloch, Chief Executive Officer, said:

”I am excited to be taking over as CEO of Aviva. We have strong foundations but we are only scratching the surface of our full potential. There’s a huge opportunity here. At the heart of it, it’s all about insurance fundamentals, delivering excellent customer experience, tackling complexity and injecting a different pace of change into Aviva. And that will be just the start. I am determined to re-energise Aviva and deliver long term growth for our shareholders"

Profit
  • Operating EPS2,#,‡ up 7% to 58.4 pence (2017: 54.8 pence) 
  • Operating profit1,#,‡ up 2% to £3,116 million (2017: £3,068 million)
  • IFRS profit after tax up 2% to £1,687 million (2017: £1,646 million) 

Dividend

  • Final dividend per share 20.75 pence
  • Total 2018 dividend per share 30.0 pence (2017: 27.4 pence)

Capital

  • Solvency II capital surplus4 £12.0 billion (2017: £12.2 billion) 
  • Solvency II cover ratio4,‡ 204% (2017: 198%)
  • Operating capital generation# £3.2 billion (2017: £2.6 billion)
  • IFRS net asset value per share 424 pence (2017: 423 pence) 

Cash

  • Cash remittances‡,# up 31% to £3,137 million (2017: £2,398 million)
  • UK Insurance special remittance £1,250 million (2017: £500 million) 
  • Holding company liquidity £1.6 billion5 (2017: £2.0 billion) 
  • Cash deployed on debt reduction and share repurchase programme £1.5 billion (2017: £0.8 billion)

Performance

  • Value of new business (VNB) down 3% to £1,202 million (2017: £1,243 million). Excluding the impact of divested businesses, VNB grew 2%
  • General insurance net written premium stable at £9,114 million (2017: £9,141 million)
  • General insurance combined operating ratio stable at 96.6% (2017: 96.6%)
  • Longevity reserve releases £780 million (2017: £779 million)
  • Operating expenses3 up 7% to £4,026 million (2017: £3,778 million) 
  • Integration and restructure costs held to zero (2017: £141 million)

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Download the full announcement PDF (2 MB)

Download the results presentation slides PDF (800 KB)

Footnotes:

Denotes Alternative Performance Measures (APMs) which are key performance indicators of the Group used to measure our performance and financial strength. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.

#Denotes key performance indicators which are used by the Group to determine or modify remuneration. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.

1Group adjusted operating profit is a non-GAAP Alternative Performance Measure (APM) which is not bound by the requirements of IFRS. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.

2This measure is derived from the Group adjusted operating profit APM. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.

3This is an Alternative Performance Measure (APM) which provides useful information to enhance the understanding of financial performance. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack.

4The estimated Solvency II position represents the shareholder view as defined in section 8.i of the Analyst Pack.

5Stated as at end February 2019.


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