Aviva PLC

Okay, good morning, everybody, for a pretty full room. Thank you for joining us for our half-year results presentation. So as always, I'll start with an update on our performance and strategic progress, and then I'll hand over to Charlotte, who will take you through our results in more detail. And we'll obviously finish with an opportunity for questions. Today's numbers once again demonstrate Aviva's accelerating momentum. Yet another six months of excellent progress We have fantastic opportunities right across our markets, the UK, Canada, and Ireland. And what you're seeing is a business which is capitalizing on those opportunities and delivering results quarter after quarter. We're executing on our consistent strategy with a unique diversified model. We're growing right across our business and accelerating in capital light areas. And we are delivering for our customers and shareholders with Aviva colleagues at the very heart of our success. And yet, as I always say, there is so much untapped potential for Aviva to go after. So you should expect much more where that came from. So let's get to the results. As you can see, we've had another really strong half. We're growing exponentially. Premiums are up 15% in general insurance. Net flows are up 16% in wealth. And sales are up 12% in insurance, wealth and retirement. We're more profitable. With operating profit and owned funds generation both up double digits, translating into strong cash generation. We're delivering all this by growing our customer base and consistently hitting the mark for our 19.5 million customers. Our transactional net promoter score is up by almost four percentage points in the last six months alone. And we're delivering for shareholders too. In June, we completed another £300 million share buyback. And today, we're announcing an interim dividend of 11.9 pence, up 7% year on year. These strong results further build on our performance track record. They're testament to our resilient business model and our customer-centered strategy. We know that our strategy to be the go-to customer brand across insurance, wealth, and retirement is the right one for Aviva. It builds on the strengths and advantages of our model. We're laser-focused on executing our four strategic priorities, growth, customer, efficiency and sustainability. And this focus is generating results. And because we've never complacent, we upgraded our targets at full year. And we have absolute confidence that we will deliver against them. As I said, there is no shortage of growth opportunities across all of our markets. But I would like to focus on the UK for just a moment, as there's been a lot going on here. There are many reasons to be positive about the UK. Significant wealth, structural growth opportunities, greater political certainty and economic stability, and a welcome focus to accelerate the UK growth agenda. As a leading UK insurer, we are incredibly well placed to take full advantage and expand our franchise. So just to bring this to life for you, We're already supporting pension savers with our number one wealth business. And this market is expected to triple over the next 10 years to almost five trillion pounds. But with four in 10 people under saving for retirement and a growing advice gap, we need to go even further. So we're working with the government to support better retirement provision, open up access to advice and stimulate greater investment in the economy. In short, we are confident in the future of UK financial services and the wider economy. And we have the necessary scale, skills and model to capitalise on this. Our complementary portfolio is a real advantage. It provides resilience and the ability to grow in different market conditions. It also benefits our customers across all of their needs. As you know, our strategy is to accelerate in capital light. And hitting our plans, we'll see this approach 70% by 2026, delivering more growth and higher returns for shareholders. We're achieving this by investing organically and through targeted M&A. So let me give you a little bit more detail on the next slide. To change our mix of earnings over time, organic growth is a key lever. And as you can see, we're already delivering right across the business. We have disciplined growth in retirement and we are winning across the capital light businesses. In wealth, Doug and the team have been cementing our leading position with £186 billion in assets. We've won 249 new workplace schemes and we've driven more than 3,500 qualified leads from Aviva to into succession wealth. And Mark and the team are capturing almost 70% of workplace flows into Aviva Investors, demonstrating the power of our connected wealth proposition. In health, premiums are up 10%. And in protection, we are the clear UK number one player with integration of AIG protection firmly on track. In general insurance, we're delivering double-digit growth across the board. In the UK, Jason and the team have continued to post leading growth in retail and are expanding our leadership position in commercial lines. And in Canada, Tracy and her team are building on the success of our RBC partnership and growing commercial lines with multiple large client wins. This is an incredibly powerful model, and we continue to add new growth opportunities. Now, last time I stood here, we had just announced the acquisition of Probitas, our new Lloyds business. So let me tell you why we believe it will accelerate growth for us in global corporate and specialty. We are now better positioned to serve multinational clients. And we're seeing brokers come to Aviva for even more of their needs. We've more than doubled our distribution opportunity as a dual platform player. And we've further deepened underwriting capabilities across our business, with Probitas' track record of a low 80s average combined ratios. And having strong presence either side of the Atlantic is a real advantage. This global market is highly attractive, with £200 billion of premiums, double-digit growth and strong profitability. And though we will remain disciplined on risk appetite, we see GCS as a significant opportunity to deliver more diversified growth for Aviva. Moving next to customer. A big part of Aviva's growth story is within our customer base. So I know you've seen this chart before, but I want to show it again because it truly sums up the power of our franchise. In the UK, we're operating at a similar scale to the leading banks. And we're growing by almost 700,000 customers since 2022. Most importantly, we have 8.7 million customers who have given us marketing permissions. This means we can contact them directly to deepen relationships and build greater levels of trust and loyalty. And we're doing just that. In the UK... We now have 4.9 million individual customers with two or more Aviva policies. And more than 40% of our new sales are to existing individual customers. So that is really encouraging. But we are only just getting started here. And later this year, we'll host a customer in focus session where Cheryl and her team will give you more insight into these opportunities. Realising our ambition comes down to how we live up to our purpose with you today for a better tomorrow. So we are resolutely focused on delivering the right outcomes and improving experience for our customers. So let me give you a few examples. We're providing affordable insurance with our quote me happy essentials range of products. We're helping people offset emissions with Aviva Zero. We've now sold over 800,000 policies since launch two years ago. Value for money is always front of mind. So we conduct regular product assessments, making sure we're providing the right support in the right ways. And we recently rolled out our next generation My Aviva app. With almost 7 million users, it's a crucial engagement tool for us. And we're making it even easier for our customers to access all of Aviva in one place. Earlier, I spoke about how pension savers is a critical priority for the UK. With the number one workplace business and 4.7 million customers, we can have a real impact here. And we're investing to build new solutions. With our find and combine service, we are using AI to help customers trace their lost pensions in minutes. We're already seeing benefits with over £1 billion worth of transfers into workplace this year. We've launched a hybrid proposition, Aviva Simple Wealth, to make advice more accessible. Fewer than one in ten people pay for traditional financial advice, so this is a clear gap in the market. And long-term asset funds, or LTAFs, which open up alternative assets to investors, are another great example. Our two existing LTAFs have AUM of £2 billion. And our real estate-focused fund was one of the first in the market. We are now planning to launch a new venture and growth capital strategy. Powered by Aviva Investors, this will open up new investment opportunities for our pension customers and could help unlock billions of pounds of investment into unlisted growth companies. To conclude, we've often been asked about how we've managed to consistently deliver strong results like today. And the answer is, of course, our fantastic people, our high-performance culture, and the ability to execute. I'm absolutely delighted that we have a colleague engagement score of 90%, which is well above the financial services benchmark and a step change for us. Everyone at Aviva is unified by our strategy and willing to go the extra mile, which puts us in an incredibly strong position to achieve our big ambitions. And we've invested heavily in leadership across all levels, which is paying off So I just want to take a moment to thank everyone at Aviva, not just for their performance, which is market-leading, but also for their belief in what we're trying to achieve here and for their relentless focus on our customers. It's our 23,000 employees who keep us on the right track every single day. So that's the high-level view of our progress in delivery. I'll now hand over to Charlotte, who's going to take you through the results in more detail.

Thanks, Amanda, and good morning, everyone. It's lovely to see you all again today and to be in a position to present such great results. As usual, I'll start with a high-level view of the results before going into the business units in more depth. It's been another strong first half for Aviva. We've continued with the growth momentum that you've come to expect from us right across the group. Operating Profit. was up 14% to £875 million. OFG was up 10% to £758 million, with underlying OFG up an impressive 27%, supporting an improved return on equity of 12.4%. We generated £722 million of operating capital, up 17%. and saw strong growth in cash remittances. Our capital position remains very strong, with a cover ratio of 205%. Turning to our business units, they continue to deliver excellent and consistent trading momentum. We achieved double-digit growth in GI premiums, IWR sales, and wealth net flows. And the undiscounted combined ratio remains a very strong 95.4%. modest improvement on Q1. So let's unpack this in a little bit more detail. I'll start with our general insurance business in the UK and Ireland. Premiums were up 18% to £3.8 billion overall. In personal lines, almost half of the 30% premium growth came from pricing actions. The other half was from new business. Mainly in retail, which is mostly sold through price comparison websites and the Aviva Zero proposition. Retail is now more than half our personal lines premium and in line with our ambition to shift the portfolio mix. Commercial lines also saw double-digit growth in premiums, split fairly evenly between new business and pricing impacts. So overall, the UK and I undiscounted core was 95.8%. half a point better than the same period last year. This reflects the impact of pricing actions earning through, the beneficial operating leverage from the business growth and mix shift impacts, weather was favourable to plan, although a little less so than last year, and prior year development on reserve movements was a small headwind. These impacts to the underwriting result, together with higher investment returns, meant operating profit improved by 25% to £287 million. In Canada, top-line trains were similar to the UK. We delivered 10% growth overall, with personal lines up 14% and commercial up 6%. Strong pricing actions were a feature across both segments, with new business growth in personal auto and and in GCS. In auto, we've rolled out more partnerships with repair centres, and we've planned the launch of our first wholly-owned repair centre in Ontario. Now, as anticipated, the undiscounted core of 94.7 was higher than last year. And you may recall, last year we reported exceptionally strong commercial lines results. This year, there have been a small number of commercial large losses, which offset an improved personal lines performance. As a result, operating profit was lower at £216 million. Now let's move to IWR. I'll start with an overview and then walk you through the components in more detail. Top line growth remained strong and accelerated in the capital light insurance and wealth segments. Operating profit was up 9% driven by strong improvements in wealth and retirement. The contractual service margin, or CSM, grew by 10% over the past 12 months and by 1% since the beginning of the year to £7.3 billion. The prior half year included a significant one-off benefit from management actions that did not repeat this half. This was expected as the assumption reviews that feed into management actions typically occur in the second half of the year. So as a result, operating value added of £515 million and OFG of £412 million were lower than the prior year. However, underlying OFG, which excludes the impact of management actions, was 19% higher, reflecting growth in new business and better BPA margins. So again, let me unpack these headlines in a bit more detail. starting with protection and health. We completed the AIG acquisition in April, so protection sales grew 49%. Excluding the impact of the acquisition, sales were broadly consistent year on year. Operating profit and protection was up 31% to £46 million, reflecting growth in the portfolio. For the health business, in-force premiums were up 10%, due to strong new business and pricing actions. Operating profit of £23 million reflected portfolio growth, offset by cost of investing in the business, claims normalisation and inflation impacts. Now, pricing actions have minimised these effects and will continue to earn through. We're continuing to invest in this business and are really confident in reaching our ambition of £100 million of operating profit by 2026. Now let's move on to wealth. We are the largest player in the UK with £186 billion of AUM and a high performing business. Net flows continues to be very strong, up 16% to £5 billion or 6% of opening AUM. Within that, workplace is the largest component, with 4% growth in net flows to £3.5 billion. Net flows into the advisor platform were up a very strong 45%. Q1 was excellent, and inflows in Q2 were higher still, further demonstrating the strength of our attractive proposition with advisors. Wealth operating profit was up 27% overall to £58 million, driven by growth in workplace and platform. Profit from these businesses plus IPP and advice were up 53% to £77 million. This was partly offset by the investments we're making to build our direct wealth business, such as relaunching the proposition with Aviva Simple Wealth. We have big ambitions for wealth. as we drive towards our goal of 280 million pounds of operating profit by 2027. We are continuing to invest to ensure we capture the significant growth opportunity. So now to the final segment, retirement. Book purchase annuity sales were 2.3 billion pounds in the first half. As of today, volumes have reached 4.1 billion pounds. and we have preferred provider status on a number of deals in the market. So this means we're expecting to write full-year volumes of between £7 and £8 billion, in line with our ambition for £15 to £20 billion over the period from 2022 to 2024. Demand continues to grow for individual annuities as yields remain high, but equity release market has seen further contraction. Aviva Investors continues to source high quality assets for the business, originating 1.4 billion this year. And the margin for retirement as a whole was very strong at 3.4%. For the reasons I covered earlier on slide 19, operating value added and OFG were lower than last year. However, Operating profit was up 21% to £347 million, reflecting better investment returns and the growing portfolio. Now, before I go on to talk about the group topics, I'll cover efficiency. As you know, we achieved our £750 million cost reduction target last year. Our ongoing focus is on cost efficiency and operational leverage as we grow. and we have made further good progress here. As I mentioned earlier, group operating profit has grown by 14%, and against strong top-line growth, controllable costs increased by just six. So we are delivering growth whilst opening up the operating jaws. In UK GI, our distribution ratio improved by just over two points, driven by growth in retail. while in Canada, where we're already very efficient compared to peers, the ratio remains broadly consistent. In IWR, the aggregate measure is the cost-asset ratio, and here we continue to see improvement, with the ratio half a point lower, linked to growth in assets under management. And finally, in Aviva Investors, revenue growth together with the resizing of the cost base over the past couple of years increased. supported an improvement in the cost income ratio. There is, of course, still more to go after across the group. The efficiency improvements from business growth, mix shift and ongoing cost initiatives. Going forward, you'll hear us talk more about cost and operating efficiency. It's such an important underpin in driving value for our customers and in growing our profits. Onto OFG, which grew by 10% at a headline level. Importantly, the prior year included £81 million of management actions, and so on an underlying basis, which excludes that impact, OFG grew strongly, by 27% to £768 million. And it was UKGI and IWR that drove the improvement. Overall, the growth in OFG drew of an improved group return on equity of 12.4% for the first half. Turning next to our balance sheet, it remains extremely healthy. Our cover ratio of 205% is strong. We remain well placed to withstand changing economic conditions. And since the year end, the capital used for the final dividend, share buyback and the tier two debt redemption was mostly offset by operating capital generation and positive non-operating items, such as market movements and the effects of Solvency UK reforms. Our defensively positioned asset portfolio continues to perform well. And following the Tier 2 redemption in July, our leverage ratio of 29% is in line with our preference to operate below 30%. Before I finish, I'd like to cover our framework for deploying resources and performance management across the group. And I'm sure you'll remember this slide from the full year presentation. This version shows it working in action, linking what we do in each component of the framework to the numbers I've just talked through. One area I haven't covered is our focus on growing the regular dividend. And the interim dividend we've announced today is 7% up, to 11.9 pence, with cash cost growth of 5% in line with our guidance. Overall, the examples on this slide are clear evidence of the strength of our performance, culture, and grip, and show that our framework for capital allocation supports the delivery of great results from our diversified business model. So on to some final thoughts on Outlook. We're really positive about Aviva's future. We remain absolutely confident in meeting the medium-term group targets that we set out earlier this year. Looking to the second half of this year, we will remain focused on pricing appropriately across our general insurance businesses, and we expect the underlying combined ratio will continue to benefit from the pricing actions taken last year and so far this year. In our wealth and health businesses, we anticipate continued growth in the second half, while growth in protection is expected to moderate. And in retirement, we expect to complete our three-year ambition to write between 15 and 20 billion pounds of BPA volumes by writing between 7 and 8 billion this year. On dividends, our guidance for mid-single-digit growth in the cash cost remains unchanged. and we anticipate further regular and sustainable returns of capital. So in summary, Aviva has had another great first half. We remain confident in the business, and our track record of consistent delivery continues. And with that, it's back to you, Amanda.

Thank you very much. Thank you, Charlotte. So before we turn to Q&A, let's take a moment to bring all of that together and remind you why we believe Aviva is a great investment. Firstly, we're the UK's leading diversified insurer with a complementary portfolio, growing our capital light businesses, and we have fantastic businesses in Canada and Ireland. Nobody in this market can replicate this successful model. Second, we have a consistent strategy, which is working with investment identified for the future. Third, we have strong organic growth in all our markets and we've accelerated through targeted M&A. This is evidence in the numbers we're producing and we are confident that we can sustain that performance. Fourth, we now have a track record of delivery built over the last four years. And finally, we're delivering superior returns for shareholders with growing dividends and regular capital returns. So, in summary, we've had an excellent first half. but there is still much more where that came from. We have a unique platform, we have excellent people, and we have clear focus areas for the next wave of growth. Thank you very much for listening, and we'll now move on to Q&A.