Aviva PLC

Welcome to Aviva's 2024 Q1 Trading Update Call. If you wish to ask a question, please press star 1 on your telephone keypad. You will hear a tone to confirm that you are in the queue. If you wish to withdraw your question, you may do so by pressing star 2 to cancel. I would now like to hand the conference over to Aviva Group's CEO, Amanda Block.

Good morning everyone and welcome to Aviva's first quarter update. As usual, I'll start with a brief overview and hand over to Charlotte to give you the details before we move to your questions. It's been another excellent start to the year for Aviva. Today's numbers are clear evidence that we are continuing to deliver on our promises as we have seen strong growth across the board. As you know, our strategy is to accelerate growth in the capital light businesses with balanced growth in retirement. And we have continued to do just that. We deliver double digit growth in general insurance premiums and in wealth net flows. And sales in our retirement business are also up by double digits. We have also made great progress on M&A activity. We completed the acquisitions of Optium in Canada and the AIG UK protection business that will solidify our number one position and deliver capital and expense synergies. We also announced the acquisition of Probitas, a high-quality, fully integrated platform in the Lloyds market. This will expand the market opportunity for Aviva's GCS business and is expected to complete in mid-2024. And we completed the sale of our remaining stake in Singapore for £937 million, further simplifying the group's footprint. So today's update shows further excellent progress and we remain extremely confident in the outlook. We have real growth momentum and we are delivering reliably and consistently. All of this is possible because you have the right strategy, a disciplined approach to capital allocation, a strong grip on performance management, and, of course, the right team here at Aviva that are continuously delivering for customers and shareholders. And with that, I'll hand over to Charlotte to talk you through the numbers.

Thanks, Amanda, and good morning, everyone. I'm delighted that we have another set of really strong results to talk to you about today. We've seen continued growth momentum right across the group with another quarter of consistent delivery. I'll cover the highlights from the businesses and then the group capital and liquidity positions, starting with general insurance. We delivered excellent top-line growth. Premiums grew by 16% as we achieved double-digit growth in the UK and in Canada. The undiscounted core for the group was 95.8% as we start to see the benefit of the strong race actions taken in 2023 earn through. Core, on a discounted basis, was 92. Going forward, we expect the underlying core to show further incremental improvement as we continue to earn through more of the rose rating actions. In the UK, our track record of growth continued, with premiums up 19%. Personal line premiums grew by 27%, split evenly between rate actions and volume growth. This strong volume growth reflects new business in our PCW and Aviva Zero propositions as we capitalise on current market dynamics. We are well positioned given our disciplined approach to rating in recent years. Commercial line premiums also grew by double digits, up 10%, driven by strong retention in mid-market and new business in global corporate and specialty lines. Similar to the personal line trends, about half the growth was from rate and the other half from portfolio growth. The UK undiscounted core of 97.3% improved from 98.4% last year, reflecting targeted growth in the high margin retail business and the benefit from strong rating actions taken in the last year. We continue to show discipline in costs and claims management. In Canada, it's a similar story of growth, with premiums up 11% overall. Personal lines premiums were up 16%, reflecting auto and property new business alongside rating actions in the inflationary environment. We have further high single-digit rate increases filed and in place in Ontario in Q2. Commercial line premiums were up 5%, reflecting new business in GCS and strong retention across the book. The undiscounted core of 93.7% reflects some large loss experience in commercial lines. And as others have observed, auto severity has increased, but has been in line with expectations and we are managing our rate accordingly. Turning to insurance wealth and retirement. In insurance, protection sales were up 9%, with particularly good performance in group protection, reflecting strong new scheme wins. Health sales were lower, as expected, given the prior year included the benefit from Cigna's exit from the corporate market. That said, total in-force premiums were up double digits on the prior year, with strong momentum in the consumer and SME channels. As outlined in our in-focus session last month, health is a core component of our strategy, and we have an ambition to reach £100 million of operating profit by 2020, underpinned by double-digit in-force premium growth. Wealth net flows were up 15% to £2.7 billion, representing a really good 6% of opening assets under management. And Wealth AUM is now over £180 billion. The business is performing really well as it drives towards its ambition of £280 million of operating profit by 2027. Of course, the biggest component of this target is workplace. This is an incredibly resilient and reliable business. and won an impressive 136 new schemes in Q1. Combined with the ongoing impact of salary inflation, this led to growth in net flows of £2 billion, up 13%. We are already the number one player, and the business is going from strength to strength. Platform net flows grew by an excellent 24%. We achieved record gross inflows for the quarter, evidence that advisors value our attractive proposition and that investment activity is starting to show signs of green shoes. However, outflows remain elevated across the market. And in retirement, sales were up 13%. BPA volumes were up 26% to £1.3 billion as we won 18 new deals. and announced the launch of a new streamlined service for schemes up to £100 billion last month. Today, volumes are at £2.2 billion. BNB was an impressive 74% up, reflecting BPA growth and an increased proportion of higher margin small schemes. I'll now move to cash and capital. The group's capital position remains very strong and robust at 206% compared to 207% at the full year. The movement in the quarter was primarily driven by the 2023 final dividend and share buyback, which together reduced solvency by 11 points. This was mostly offset by the beneficial impacts from the sale of Singapore and operating capital generation in the quarter. Market movements had a minimal impact in aggregate. Looking beyond the quarter, the impacts of the Tier 2 redemption announced last week and the completion of the AIG UK protection acquisition will be a call on solvency in Q2. We will of course generate operating capital that will partly offset this. Liquidity remains extremely healthy at £2.1 billion, up on the full year reflecting net proceeds from M&A activity. And finally, leverage was 28.7% after allowing for the Tier 2 redemption. And so to summarise, it's been another excellent quarter of delivery, with consistent strong growth momentum all across the group. We set out our new upgraded group targets at our full year results presentation, and we are confident in meeting them. And we have positive outlook for cash generation that supports our guidance of mid single digit growth in the cash cost of the dividend and our intentions for further regular and sustainable returns. With that, I'll hand over to the operator to start the Q&A.