Aviva PLC

and thank you for standing by. Welcome to Aviva's Q1 2025 Trading Update Analyst 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 must advise you that this conference is being recorded. I would now like to hand over the conference to Aviva's Group CEO, Amanda Blanc.

Morning everyone and welcome to Aviva's first quarter episode. As usual, I'll give a brief overview and then hand over to Charlotte to give you the details before we move to questions. So it's been another great start to the year for Aviva. We continue to trade strongly, serving our customers well, growing profitably across the group and demonstrating the resilience of our diversified business. We are well positioned to continue delivering through this current period of market volatility. What today's numbers tell you is that we are continuing to build momentum by executing on our consistent strategy at pace and focusing on capital light growth. Let me just share a few highlights. General insurance premiums increased by 9% with strong performances in both personal and commercial lines. We continue to see high levels of interest in health insurance and we grew sales by 19% with strong demand from consumers and employers. In our wealth business, we secured 2.3 billion pounds of net flows, which is an encouraging 5% of opening AUM, and we increased net flows by 52% in our platform business. Putting customers first remains central to our strategy, and we've continued to deliver for them in quarter one. We helped customers with claims following snow, ice storms, and flooding in Canada, And after Storm AO in an island, we had teams on the ground helping our customers, arranging repairs to damaged properties and providing alternative accommodation. We also made good strategic progress, accelerating our integration of Probitas as we launched another two new lines of business in the first quarter. And our proposed acquisition of Direct Line Group is firmly on track. The DLG shareholder vote was overwhelmingly supportive and we're really excited about the next phase for the group as we accelerate our capital-like growth and bring the best of Aviva to millions more people. In summary, we continue to be very positive about the outlook for 2025, a transformative year for Aviva. Our balance sheet is strong and our market-leading businesses are growing profitably and sustainably. All of this gives me renewed confidence in our ability to deliver our existing group ambitions and targets. With that, I'll hand over to Charlotte to take you through the numbers. Thanks, Amanda, and good morning, everyone.

It's good to speak to you today about the continued growth across our business and another quarter of strong delivery. I'll first cover the highlights from the businesses, starting with general insurance. We achieved premium growth of 9% across the UK, Ireland and Canada. and pleased with the progression of the underlying cause across all markets, a result of our discipline in pricing, strong rate adequacy and cost focus. That said, we experienced elevated weather events in both Ireland and Canada compared to long-term averages. And overall, this led to an undiscounted core of 96.6%, which was 0.8 points higher than Q1 2024. I'll now unpack this a little more for you, noting a very pleasing milestone that across our UK and Ireland GI businesses, we wrote more than £2 billion of premium this quarter. In UK general insurance, we saw strong growth. This was the result of a good balance of new business, volume and rate. And as you would expect, we remain focused on profitability. Personal lines premiums were up 6% to £945 million. Growth was delivered by our intermediated business, both from existing and new partnerships. Premiums in retail were consistent with the strong Q1 2024 levels. We saw good volume growth offset by lower average premiums. This is as expected in the relatively softer market conditions when compared with the hard markets of Q1 2024. Across all channels, we continue to take a disciplined approach. We priced for inflation, with new business demonstrating good rate adequacy and strong written cause. Commercial lines premiums grew to £828 million, and with the addition of probitas to £905 million, up 17%. In GCS, growth predominantly came from new business. Rate was broadly flat, as some lines showed rate improvement, but were offset by some softening in other lines. Meanwhile, in UK SME, commercial lines growth came primarily from strong rate and indexation. The UK general insurance undiscounted core was 95.3%, an improvement of two points, as the benefits of strong trading and rate increases in the past year continue to earn through. Importantly, Q1 written cores support the continued trend of positive underlying performance development. In Ireland, premiums of £151 million were 21% up, with personal lines up strongly. The underlying core remained consistent with the prior year, but as mentioned, weather losses were higher than long-term averages. Stormy Owen led to elevated claims across the market, and we saw losses broadly in line with our market share. This was the largest windstorm to hit the island in over 40 years, leading to significant damage as well as outages that were sustained for days. As a result, the undiscounted core was 117.8%. In Canada, premiums of £904 million were up 5% at constant currency. Personal lines premiums grew 10%, driven by continued rate actions across both auto and personal property. In commercial lines, premiums were 2% lower, as pricing increases taken were more than offset by lower volumes, where we took actions to improve profitability on some accounts. On an underlying basis, core improved, benefiting from rate actions earning through. Lower claims frequency and improving theft trends offset inflation impacts, including an adjustment made for inflation estimates of U.S. tariffs. Canadian undiscounted court was 96.2%, reflecting a number of weather events in the period above long-term averages for Q1. These included floods in Ontario and snow and ice storms towards the end of the quarter. And our losses for these events were broadly in line with our market share. Moving to IWR. In the insurance business, protection and health sales were up 19%. with protection volumes benefiting from the acquisition of AIG. Individual protection benefited from strong sales through estate agents in advance of stamp duty increases in April. And the health business continues to show excellent momentum with in-force premiums up 11%. Wealth flows of 2.3 billion pounds represented 5% of opening AUM, another strong performance. Platform continues to perform really well, up 52% to 1.3 billion pounds. We saw record flows ahead of the tax year end with strong inflows in both advisor platform and direct wealth. In Q1, workplace net flows were an impressive 1.2 billion pounds. Now, whilst this was lower than Q1 2024, this simply reflected the exit of one large scheme to another provider. Workplace flows can be uneven from quarter to quarter. Sizeable scheme wins have transitioned to Aviva in April, meaning that net flows for wealth overall, as at the end of April, were £4 billion, which is up 16% on the same time the previous year. The overall resilience of workplace flows and the strength of our advisor platform business position us well as we look forward in this key growth area. and we remain confident in our ambition that wealth will deliver £280 million of operating profit by 2027. Retirement volumes grew 4% to 1.8 billion, with VNB up 28%, reflecting improved margins as we wrote more smaller BPA schemes. Total BPA volumes were 1.3 billion across 25 deals in the quarter, We continue to invest in our proposition and are now able to provide indicative quotes to schemes through Aviva Clarity within 48 hours, which is a competitive edge. The BPA pipeline remains reasonably strong, though as mentioned in February at our year-end presentation, we are not likely to see a repeat of the volumes achieved in 2024. In individual annuities, it has been positive to see the benefits of the investment we've been making in our operations. with volumes up 32%. That concludes my review of the businesses, and I'll now move to the balance sheet metrics, all of which demonstrate our focus on balance sheet resilience. Solvency of 201% remains strong. And to walk you through the main drivers in the period, total capital generation in the quarter created about five points, including the usual operating capital generation, as well as a small positive from market movements, primarily interest rates. And the full year dividend used about eight points. I'm really pleased with the debt actions we've taken this year, which contributed a small positive to the ratio in Q1 and resolved the last of the legacy capital instrument map. Importantly, we received shareholder approval to cancel the group's preference shares, with the process receiving overwhelming support. And subject to one remaining court approval, this concludes a long-standing legacy matter ahead of this year end, when the instruments would cease to qualify as regulatory capital. And just before the end of Q1, we issued our second restricted Tier 1 debt instrument of £500 million. which was keenly priced and heavily oversubscribed. Now, the market turbulence following Q1 had no substantial impact on the asset portfolio and solvency ratio, a further demonstration of our balance sheet strength. Sensitivities show we have relatively low exposure to market stress, especially in equities where we are well hedged. As an indication, the impact of the significant market volatility since the end of Q1 on our solvency ratio was about a point adverse as at the end of April. Moving to other balance sheet metrics, our credit portfolio continued to perform well in Q1 with limited net downgrades to a lower letter, about 1% of the portfolio. There were no downgrades below investment grade. Our portfolio has shown its resilience through various periods of stress over recent years. And remember, insurance companies like Aviva hold these instruments through the cycle, and so short-term mark-to-market movements have little impact. Leverage on a consistent basis to the solvency ratio, which makes an allowance for the shareholder approval to cancel the preference shares, was 30.1%. And central liquidity was £1.8 billion at the end of April. This is separate to the £1.8 billion of funds which have been remitted to the group for the cash component of the DLG acquisition. These funds are held in escrow in preparation for the transaction closing. So to summarise, Aviva continues to grow, our balance sheet is strong and we have a firm and disciplined grip on performance management. This is a transformative year for Aviva, and there is a huge amount of work underway as we progress towards the completion of the DLG transaction and plan for the integration. We remain on track to complete the transaction around the middle of the year, and we are well prepared for the integration and looking forward to unlocking the full potential of the combined group. More broadly, we continue to deliver for our shareholders, our customers, and our customers. And specifically, I'm confident in our 2026 group targets and business ambitions. While market conditions are uncertain, my view and confidence on the outlook for the group remain very positive. And I'm excited about what the future holds. And with that, I'll hand over to the operator to start the Q&A.