Aviva profit jumps 20pc ahead of completing Direct Line acquisition

(Sharecast News) - Aviva reported a 20% increase in operating profit to £1.77bn in its full-year results on Thursday, supported by continued strategic and operational momentum. The FTSE 100 insurance giant also raised its total dividend per share by 7% to 35.7p, reflecting confidence in its outlook for 2025 and beyond.

Its underlying Solvency II own funds generation for 2024 rose 18% to £1.5bn, while its solvency ratio stood at 203%, slightly down from 207% a year earlier.

General insurance premiums increased 14% to £12.2bn, with strong growth in both the UK and Ireland as well as Canada, although claims from catastrophic events weighed on results in the latter market.

Meanwhile, Aviva's wealth net flows rose 23% to £10.3bn, contributing to a 17% increase in assets under management to £198bn.

Aviva said its acquisition of AIG's UK protection business helped drive a 42% rise in protection sales, while the firm also delivered its highest-ever bulk purchase annuity sales of £7.8bn.

The firm emphasised its shift towards capital-light businesses, which now accounted for 56% of operating profit, a proportion set to increase further with the proposed acquisition of Direct Line.

Aviva said it expected the deal, set to complete in the middle of the year, would be approximately 10% accretive to earnings per share on a run-rate basis.

Looking ahead, Aviva reiterated its financial targets, including an operating profit of £2bn by 2026 and £1.8bn in Solvency II own funds generation.

The firm said it expected continued improvement in its combined operating ratio, further growth in health insurance, and a sustained strong performance in wealth and retirement.

It noted that funding for the Direct Line acquisition would come from internal resources, with associated remittances classified as special in nature.

"We made clear strategic progress and delivered another set of very good numbers, with higher sales, higher operating profit and a higher dividend," said chief executive officer Amanda Blanc.

"Over the last four and a half years we have completely transformed Aviva, built a track record of consistently strong results, and returned £10bn to shareholders.

"Our success is built on delivering excellent customer service - we now have 17 million customers in the UK, more than any other insurer, and with our diverse range of products across insurance, wealth, and retirement, we're serving more customer needs, which is fuelling growth throughout the business."

Blanc said the proposed acquisition of Direct Line was on track, describing it as a "clear opportunity" to accelerate the company's capital-light growth, deliver service to millions more customers, and support the wider development of the UK economy.

"Aviva is in great shape. We have clear trading momentum which is generating strong and reliable growth. We have increased our dividend, again, and are committed to growing it further.

"There is so much untapped potential for Aviva to go after and I have real confidence in our ability to unlock this.

"So I'm more excited about Aviva's future than ever before, and I'm personally looking forward to delivering this next phase of progress."

At 0817 GMT, shares in Aviva were up 0.34% at 526.58p.

Reporting by Josh White for Sharecast.com.