Aviva to pay back shareholders after completion of the disposal programme

Aviva plc (LON: AV) reported strong performance for the first quarter on Thursday and expressed confidence that the profitability of its underwriting will improve further this year.

Aviva shares opened at 401 pence in the stock market on Thursday and climbed to 411 pence in the next hour. In comparison, the London-headquartered firm had started the year 2021 at a per-share price of a much lower 327 pence.

Aviva’s combined operating ratio improved to 90.6% in the first quarter

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Aviva plc said its general insurance segment noted £2.0 billion of gross written premiums in Q1 versus the year-ago figure of £1.9 billion. New business in life insurance, it added, printed at £11.8 billion, compared to a marginally higher £11.9 billion last year.  

On the back of robust underwriting performance, The British multinational’s combined operating ratio in Canada, Ireland, and the United Kingdom jumped significantly from 118.7% to 90.6% in the first three months of the year.

A decline in new claims related to the COVID-19 crisis and favourable weather experience, it added, also helped boost performance. Aviva said:

“While the significant decline in motor rates seen over the last twelve months combined with increasing claims frequency as lockdown restrictions are lifted will have an impact on our combined operating ratio going forward, we still expect our full-year COR to be below 95%.”

At the time of writing, Aviva plc has a market cap of £16.11 billion and a price to earnings ratio of 8.58.

Aviva to complete its £7.5 billion disposal programme later this year

Aviva plc is scheduled to complete its £7.5 billion disposal programme later this year. The insurance company intends to return part of net proceeds from disposals to its shareholders, but the exact amount will be announced after completion. In March, Aviva sold its Polish business to Allianz for £2.5 billion.

According to the London-listed company, its savings and retirement segment posted a 31% growth in net flows in the first quarter. Thanks to strong performance in commercial business, Q1 marked the best quarter for General Insurance with premiums up 4%.

Aviva plc also highlighted on Thursday that the disposal programme helped cut its debt in the first half by £1.9 billion. For the second half, it now expects the borrowing ratio to stand at around 26%. In separate news from the United Kingdom, stockbroker services company AJ Bell reported a 39% increase in its H1 profit.