Aviva PLC

Good morning, everyone. Thank you for joining us for our half-year results presentation. It's great to be back at 80 Fenchurch Street in our new events space. As always, I'll open with an update on our performance and our strategic progress before handing over to Charlotte, who will take you through the results in more detail. And we'll finish with the opportunity for questions. So let me start with the key messages. Aviva has delivered an outstanding performance in the first half of 2025, extending our track record of delivery. We are moving at speed on the integration of Direct Line, which is critical for our ambitions, and we continue to make excellent strategic progress. All of this shows just how strongly we're pushing Aviva forward. And of course, there are many more opportunities to go after. Everything that we have delivered is ultimately down to our fantastic people. So I want to take a moment to thank everyone at Aviva. Their dedication and relentless focus on delivering great customer outcomes is the driving force behind today's results. And with our new Direct Line colleagues, we will be able to achieve even more together. So let's get into the numbers. As you can see, we've had a very strong first half. Operating profit is up 22%, with operating EPS up an impressive 25%. And we continue to grow capital and cash generation. And for shareholders, today we're announcing an interim dividend of 13.1 pence per share, up 10% year on year. This includes the additional uplift that we promised upon completion of Direct Line, and Charlotte will cover this in more detail later. Underpinning these results is continued delivery, right across our businesses. In general insurance, we've had a very strong six months across the UK, Ireland and Canada. Operating profit is up almost 30% and premiums are up 7%. In wealth, we extended our number one position now with nearly 210 billion pounds of assets and we continue to grow. Net flows are up 16% year on year, an impressive 6% of opening assets. And we capture around 65% of workplace flows into Aviva Investors. In protection, we're improving margins as we integrate business from AIG. In health, we've grown by 14%, reaching £1 billion of in-force premiums with a low 90s combined ratio. In retirement, we've written £2 billion worth of bulk annuities at attractive margins, supported by real asset origination in Aviva Investors in what is a competitive market. And finally, Across all of our businesses, I'm particularly proud of the progress that we are making for our customers. A record 5.5 million customers have two or more policies with us. And our Net Promoter Score is now over 50, which is up more than 15% year on year. Now, let me touch on the acquisition of DirectLine. We completed on the 1st of July, only six months after our recommended offer. The integration is underway and we are moving at speed. Aviva is now in control. New leadership has been put in place and customer service hasn't missed a beat. And of course, we're focused on improving performance and driving financial benefits. In fact, we've already implemented the first of the functional changes. So we see plenty of opportunities and we are as pleased with the deal as when we announced it back in December. With our track record in personal lines, we have real confidence that we'll unlock the full potential of the combined business. And to celebrate and recognise the acquisition, everyone at Aviva, including our new Direct Line colleagues, will receive £500 worth of free shares this September. But Today is all about Aviva's half year results. And we will share more on the detail on the integration and what it means for our ambitions at Q3 results on the 13th of November. So moving now to our excellent strategic progress. We have the right strategy and it's delivering results. We're focused on executing across our four priorities, growth, customer, efficiency, and sustainability. And with the RET line, we will be able to go even further. So let's take a look at these priorities in a bit more detail, starting with growth. As you know, a core element of our strategy is to shift our earnings mix towards capital light. The benefits of this are clear. We're delivering stronger growth and better returns using less capital, which is a win for our shareholders. Less than three years ago, our portfolio was evenly split. Today, we are 66% capital light, and we are on track to push that past 70% with the red line. And the complementary nature of our businesses is a unique advantage of Aviva's diversified model. It means that we are not reliant on just one market or product, which helps manage risk, creates more opportunities for growth, and benefits customers across all of their needs. We will continue to deliver disciplined growth in retirement too, driving capital and cash generation and supporting our dividend. Importantly, we see no shortage of growth opportunities across all of our capital light businesses, and we have very clear plans to go after them. So let me bring this to life. We have a huge opportunity in wealth with £2.3 trillion worth of assets in the market growing at double digits. Doug and the team are taking the business from strength to strength, almost doubling assets over the last five years as we scale and connect our offerings across workplace, advisor platform, succession wealth, and now direct wealth. And we also have the benefit of having leading multi-asset funds in Aviva Investors. So we are on track for 280 million pounds wealth profit by 2027. And with over 5 million wealth customers and our full range of products, we are uniquely positioned for further opportunities that come with a pensions bill and targeted support. Similarly in health, we're on track for £100 million profit by 2026, benefiting from market leading propositions, disciplined pricing and supply chain management. In UK General Insurance, Jason and the team are now building on our number one position in personal lines, as well as leveraging new partnerships in travel and home with Nationwide. And we're extending our leadership in commercial lines. In Canada, Nav and the team are strengthening personal lines. We've launched our new partnership with the financial arm of Loblaw, Canada's biggest supermarket chain. This gives us direct access to 17 million of their loyalty program members. Finally, in global corporate and specialty, we're building on our strong presence either side of the Atlantic and through Lloyds. We're already seeing real potential with seven new lines of business in Lloyds and broader client appeal including our largest ever GCS account win in Q1 this year. Now moving to customer. This is a key source of competitive advantage. With the RET line, we've surpassed 25 million customers globally. And in the UK alone, we now have over 21 million customers, giving us one of the largest franchises in UK financial services, bigger than most major banks. And in fact, around four in 10 adults have a policy with us. This scale gives us a significant growth opportunity that Aviva is uniquely positioned to unlock. We offer a full range of products to support customers throughout their lives. We're a trusted brand, and our digital experience keeps people engaged. And as you hear from Cheryl at the InFocus session last year, We now have the right data and marketing capabilities to bring all of this together. So we continue to push on three focus areas to unlock that customer advantage. We've grown our customer base. Over the last five years, two million more customers have turned to Aviva to protect their future. We're serving more of their needs. By unlocking permissions, we are now able to directly engage with over nine million customers. That's four million higher than 2020, and a big reason why 42% of our sales are to existing customers. We've made big improvements to customer experience. By bringing together all of the customer data into a single view, we can now offer more personalized interactions through My Aviva, and it's paying off. Our online experience score is now over 70%, up by 16 percentage points since 2023. And now we have a big opportunity to bring the best of Aviva's experience to over 4 million direct line customers that we've just welcomed. Turning now to efficiency. This is always a top priority for us. We're driving benefits through major transformation programmes across the group, simplifying our IT estate and building enterprise capabilities. Artificial intelligence is helping us to move faster. We have been using traditional AI for almost a decade, and we're now extending into generative and agentic AI. And because we have so many customers, real breadth of data, and strong product expertise, we're in a great position to get even more value from AI than most. So a brilliant example here is our claims transformation in UK General Insurance, where the team has delivered £80 million worth of run rate indemnity savings. They've implemented best-in-class fraud detection with 12 AI-driven models. They've reduced the time that customers are on hold by 50%. And they have improved repair times and customer experience through our Solus network. This is a win-win for Aviva, but also for our customers. And we will, of course, now bring these capabilities to DirectLine. Finally on sustainability, we're delivering across both climate and social action. Our investment in the UK is a testament to our commitment here. So this includes plans to create a world-leading cancer centre in London, building over 1,000 new homes in Norwich city centre, and continuing to support high-growth UK start-ups, which are the lifeblood of the UK economy. So a great story with real action across all of our businesses. And if you ask me what's behind our continued success, it is of course our fantastic people. Today, Our colleagues are more engaged than ever, united behind our strategy as one Aviva and willing to go the extra mile for customers. They really make the difference. This year, we will launch a new program called Leading the Way, developing Aviva leaders for the next 30 years and beyond. I want Aviva to be the place that develops and attracts the very best leaders The place that makes a lasting impression on current and future generations of leadership from those managing customer facing teams all the way through to our most senior business leaders. And this will of course include our new DirectLine colleagues. So we've made a lot of progress. We are the UK's leading diversified insurer. We are accelerating in capital light. We have a clear customer centric strategy and a reputation for delivery. And we are further enhancing shareholder returns as a result of the direct line acquisition. And that's exactly why we believe that Aviva is a great investment. So that's a high level view. I'm now gonna hand over to Charlotte, who's gonna take you through the results in more detail.

Thanks, Amanda, and good morning, everyone. I'm delighted to be here to discuss yet another set of great results. As Amanda said, the first half of 2025 has been a particularly strong half for Aviva. We are continuing to build on our track record of growth momentum and increasing profits. Operating profit is up 22% to £1.1 billion. Operating capital generation of £957 million was up 33%. And owned funds generation of £909 million was up 20%. This translated to an improved ROE of 16.7%, up 4.3 points, as well as growing cash remittances of over £1 billion, up 7%. Now this is in addition to the remittances brought up for the direct line transaction, which were reported outside of normal cash remittances. The solvency cover ratio remains strong at 206%, increasing by three points since the beginning of the year. And trading in the business units has also been very strong. Group GI premiums were up 7% in constant currency, while the undiscounted core of 94.6% has improved by 0.8 points. In IWR, total sales increased by 9%, while wealth net flows of £5.8 billion represented 6% of opening AUM again. I'll now start my run-through of the businesses by looking at general insurance across the group. In the last few years, we've delivered impressive premium growth with a 9% annual growth rate. And over the same period, we've achieved margin expansion from a two-point improvement in the underlying combined ratio. In the high interest rate environment, and as we continue to grow the book of business, investment returns are higher as well. Combined, these supported a material uplift to operating profit, which has now reached £648 million for the group. And impressively, GI profits now represent over half of the business unit operating profit. I'll now unpack these details in a bit more detail, sorry, in a bit more detail, starting with the GI businesses, starting with UK and Ireland, sorry. So UK and Ireland. Premiums in UK and Ireland increased by 9% to 4.1 billion pounds. UK personal lines premiums grew 3%, a good performance navigating the softer market conditions in motor and home. And we've successfully prioritised strong pricing adequacy in the book over the past few years, and this focus continues. Commercial lines premiums grew 15%, benefiting from rate actions in SME, new business growth in GCS and the addition of Probitas, which wrote £180 million of premiums. The UK's core was 93.7%, reflecting lower frequency, reduced claims costs and some favourable prior year developments. Including Ireland, which was impacted by Stormy Owen in Q1, the UK and I undiscounted core was 94.5%, a 1.3 point improvement. And all of this translates to a 50% increase in operating profit to £430 million. We expect another strong performance for the division in the second half with some moderation to the level of profitability given the rating environment and with the favourable prior year development observed in the first half not necessarily repeating in the second. Premiums in Canada were up 4% in constant currency. Within this, personal lines grew 9%. And personal lines benefited from strong pricing actions, which included double digit pricing increases across auto and property lines. In commercial lines, we have remained disciplined and taken profitability actions in parts of the portfolio. We continue to add rate, but have written lower volume in GCS as we have maintained focus on margins over volume. And the underlying core was four points better a really impressive improvement. And we've been working hard to achieve pricing actions that are earning through and are seeing reduced claims frequency and improvement in auto theft experience. Undiscounted core of 94.7% was consistent year on year as adverse weather was offset by more favorable prior year development. Operating profit was up 7% in constant currency Now let's move to IWR by looking at the business as a whole to start with. Operating profit continues to grow consistently with strength across health, protection and wealth offsetting the runoff in heritage. We are growing our store of future profits on the balance sheet in the contractual service margin known as CSM. Now, releases from the CSM continue to increase and are the most material contributor of operating profits for annuities, protection and heritage. At the same time, due to the growing business, the CSM has increased 6% over the last 12 months to £7.8 billion after taking into account the releases. This is building value and will deliver greater operating profit in the future. And lastly, and as you probably remember, the accounting rules of IFRS 17 mean that the CSM doesn't include the future value of our wealth and health businesses, which are increasingly important parts of our future profitability. Focusing now on protection and health. Although protection sales of 172 million pounds were lower, the volumes in the second quarter of the prior year were elevated before the overlapping propositions of AIG were consolidated in August, 2024. Importantly, we've seen good increases in the business margins as we repriced in line with our plans and the integration is going really well. Retention levels are ahead of expectation and expense and capital synergies in line with our plans. Protection operating profit was up 23% supported by a higher release from a growing CSM. And in health, we continue to grow strongly with enforced premiums up 14%. Operating profit supported by a low 90s core was up 26% to £29 million. And we continue to invest in this business and are on track to meet our ambition for £100 million of operating profit by 2026. Now let's go to wealth, where we are the largest player in the UK and have reached almost £210 billion of assets under management. Net flows increased by an excellent 16% to £5.8 billion. Workplace net flows were 8% higher as we continue to see growth in member contributions and inflows from the onboarding of new schemes. And as I said at Q1, we are now achieving one billion pounds of regular contributions in flows each month, demonstrating the real power of the business. Advisor platforms net flows increased 22% and in May we launched our new onshore bond product. This gives advisors more options for tax efficient investing and inheritance tax planning. We're also making continued progress in developing our direct business, where the operating performance improved by £7 million. And we continue to invest in our wealth proposition, given the significant growth opportunity. Operating profit was up 31% to 76 million pounds in the first half, supported by an improved operating margin. And we remain on track to meet our ambition of 280 million pounds of operating profit in 2027. And our expectations beyond this point are even more exciting. as we continue to grow assets and revenues and as future benefits of operating leverage emerge. The last segment to cover is retirement, where sales were £2.9 billion. This included £2 billion of BPA business, written at comparatively low new business strain. We held our discipline in a market that was increasingly competitive in the first half of the year. Trading has been positive since the end of June, volumes now up to 3.1 billion pounds. And we continue to be active in this important cash generative business, but are selective. Our focus is on writing business that generates high IRRs above our low team hurdle. And I'm confident we'll be able to continue doing this. On the individual annuity side, sales were up 29% in a growing market and following the investment we have made to increase operational capacity. We've also just launched a new guaranteed fixed term product, adding to our suite of retirement options for Aviva and open market customers. And along with equity release, there's a lot of potential in consumer retirement market, an area where we know our brand plays really well. and the changes made to the inheritance tax in last year's budget may increase consumer interest in this area. Retirement operating profit was 3% lower due to reduced investment returns, which offset the benefits from portfolio growth and higher releases of the CSM. So that covers the details of the businesses. Now this is a slide I come back to each time as it sets out our framework for capital allocation and performance management. It sums up the focus we have on driving performance underpinned by financial strength and how this in turn allows us to allocate capital whether through our commitments on the dividend, our investment in the future or our returns of capital to shareholders. We are continuing to invest in our business to support growth and efficiency. Our general insurance distribution ratio has improved over the last two years, benefiting from our efficiency efforts and shift in business mix. Now, at half year 2025, we saw a small increase, which was impacted by the initial costs from distribution agreements, such as nationwide, and the inclusion of Probitas. This has resulted in a temporary uplift in the ratio. In IWR, the efficiency ratio has remained relatively steady. The investments we are making in the wealth, health and individual annuities will drive longer-term growth and efficiency. And the benefits from these investments will continue to emerge over time. Aviva Investors has improved its cost-income ratio by nine points over the last two years, reflecting strong cost discipline. In the last year, we have seen a two-point improvement as revenues have grown while costs have been held flat. And now that Aviva Investors is a scalable operating model, as we grow revenues further in the future, the benefits of this scalability will emerge quickly in the bottom line. Our solvency remains strong, as at the end of June it was 206%, up three points since last year. We saw strong operating capital generation in the first half and benefited from five points of debt actions, partly offset by market movements in the period. Our shareholder asset portfolio continues to perform well and centre liquidity is comfortably above appetite at £2.1 billion at the end of July. Leverage is slightly elevated at the moment, as expected, having issued some Euro-denominated Tier 2 debt, which is available both for normal corporate purposes as well as getting ahead of refinancing needs, Now, this brings me to the acquisition of DirectLine, where we were very happy to complete on the 1st of July. We continue to expect solvency to be towards the top end of the group working range when we report on a combined basis at Q3. And we expect material increases to the solvency ratio over time as we realise the material capital synergies from the acquisition. Additionally, we recently announced that the Direct Line's £260 million of tier two notes have been approved for inclusion in our group solvency. And while leverage is expected to remain above 30% for a period, we have a range of actions available to return it below this level in the medium term. And as a reminder, we funded the deal with £1.7 billion of cash from across the group. So we'll no longer earn interest on those funds going forward. Now a few words about DirectLine's performance in the first half, ahead of the acquisition. So while DirectLine won't be producing a set of accounts for the first half, we wanted to give you some colour on the business's performance. And to be really clear, the numbers I refer to here are produced on direct lines basis with no adjustment to align it to Aviva's accounting policies. And these numbers are not consolidated in Aviva's results today. So premiums were flat, while policies in force were 5% lower, as the business focused on margin over volume, partly offset by better performance on the motability contract. The decline in policies in force in the first half was in line with our expectation, and it is positive that net insurance margin, Direct Line's measure of underwriting profitability, is beginning to make good progress. NIM was 9.4%, an improvement of 7.6 points on half year 24. So the integration of DirectLine has started in earnest and our pre-ownership models and plans are of course being further developed now that we have full access to information. So far, all this hard work gives confidence that we will deliver the improvements required to realise the value of the acquisition. And we're really looking forward to coming back to you in November with lots more detail. This brings me onto the dividend, which has been increased by 10% to 13.1 pence. Now in line with our guidance back in December, we've raised the dividend by the usual 5% and an additional 5% following the completion of the transaction. And we expect to resume buybacks in 2026, increased to reflect the higher share count, which has grown by 14%. So, we remain confident in the outlook for the group in 2025 and beyond. And on a standalone basis, are well on track to meet our 2026 group targets. Recognising the impact of the direct line transaction, we will provide an update on group targets alongside our Q3 results on the 13th of November. Performance has been strong in the first half. And in terms of outlook for the second half, we will remain disciplined across our general insurance business and expect to see continued momentum in the capital light health and wealth businesses. Additionally, while the numbers have benefited from management actions taken in the first half, which is not always the case, we still expect further management actions to come through in the second half. And as I know you expect of us as a management team, we continually apply our performance management and the capital allocation framework across the businesses to drive decision making. This means we trade with discipline in more difficult market conditions and focus where there are growth opportunities to drive optimal results from our diversified business model now and in the future. The group is really well positioned. This is an exciting time for Aviva and we're really looking forward to the next phase of growth. And with that, back to you, Amanda.

So thanks, Charlotte. So before we turn to Q&A, let me just take a moment to bring all of this together. Over the past five years as CEO, I have had the real privilege of leading Aviva through a period of profound transformation. It's been a journey of focus, resilience, and growth, driven by our people, our strategy, and our unwavering commitment to customers. Today, we are the UK's leading diversified insurer, executing on our consistent strategy, extending our track record, and powering growth organically and with M&A. But we know there is still huge opportunity, and as ever, we are focused on accelerating capital light, unlocking customer advantage, and delivering our shareholder promises. So there's a lot to be excited about. And Charlotte and I look forward to coming back at Q3 results with an update on the direct line integration and our future ambitions. Thank you for listening. I'm sure there will be lots of questions. So we'll now move over to Q&A.