Aviva PLC

Good morning, everyone, and thank you for joining us for this in-focus session. So today, we'll talk through our Q3 trading results, the progress on the direct line integration, and also our new financial targets. So there's a lot to cover. I'll start with a high-level overview of each of these elements. Charlotte will then provide more detail on the financials. And finally, Jason and Owen will update you on the direct line integration, our progress to date, and why we're so excited for the future success of the personal lines business. And of course, we've left some time for the Q&A. So let me start with the key messages. First, we've delivered another strong set of results in Q3. This continued momentum across Aviva means that we are on track to meet our Group 2026 financial targets at the end of 2025, a full year ahead of schedule. And to be clear, these three-year targets will be achieved before any contribution from DirectLine. That is a huge testament to the strength of the underlying business. Second, we are raising our expectations on the benefits that we will realise from the acquisition of DirectLine. Increasing cost synergies to £225 million and confirming significant capital benefits of at least £500 million. The integration is already well underway and while there is still more work to do, our early wins are very encouraging and have reinforced our belief in the full potential of this deal. And finally, today we are raising our ambitions for the group with new three-year targets, which better reflect the scale of the opportunity we now have, our diversified capital-like business, and our confidence in delivery. To put today's presentation into context, I want to take a moment to look back and reflect on just how far we've come. Over the last five years, we have transformed Aviva, We have put the business on a sustainable growth trajectory, stepping up for our customers and, of course, for our shareholders, returning over £10 billion of capital and more than doubling the share price. 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. We've achieved a huge amount. And at this point, I really want to thank the whole Aviva team, because all the progress made is down to their hard work. And once this is the start of the next chapter for Aviva, our focus is unchanged. We will continue to accelerate capital-light growth, unlock our customer advantage, and deliver on shareholder promises. Now, briefly touching on Q3. I'll share just a few highlights before Charlotte will cover the detail a little later. Quarter on quarter, we've been delivering strong, profitable growth, and Q3 is no different. We are growing across the group, from general insurance in the UK, Canada and Ireland, right through to our number one wealth business, which now has over £220 billion in assets. We're translating this top-line growth into stronger earnings and returns. For the full year, operating profit is tracking towards £2.2 billion, with growth well into the double digits. And we're set to deliver an IFRS return on equity of around 17%, which has almost doubled over the last three years. And there's no shortage of growth opportunities across the businesses, which gives us the confidence to continue raising our ambitions. As I've already said, we are set to achieve our three-year targets a year early on a standalone basis, which is a fantastic achievement. Let me give you the numbers here. We are set to exceed £2 billion of operating profit and £1.8 billion of own funds generation this year. And as you'd expect, we will meet our cash remittance target, which is cumulative, in 2026. I am really proud of Aviva's excellent performance. But obviously, we are not stopping here. There are so many opportunities for us to go after, further and faster. So let me talk you through three of them. Firstly, the potential that we see in DirectLine. Second, continuing to accelerate in Capital Light. And third, our customer advantage. So let's look first at the opportunity with the RET line. With this deal, we have created the leader in UK personal lines. The strategic rationale was always compelling. It enables us to power capital-light growth and expand our customer base. And the financial benefits are just as attractive. In fact, there is even more potential than we first thought. And that's exactly why we're raising our ambitions here. We aim to deliver £225 million in cost synergies. That is in addition to DirectLine's existing commitment for £100 million in cost savings. And we are pleased to confirm at least £500 million of capital benefits. All of this has allowed us to enhance shareholder distributions. We are uplifting our dividend this year and expect to resume share buyback levels at a higher level when we report in March 2026. We are integrating DirectLine at speed, making real progress in only four months. We've got a single personal lines leadership team in place who have a strong technical and commercial grip on the business and trading performance. We haven't missed a beat for customers. And we are leveraging the power of our group model, transferring half of DirectLine's assets to Aviva investors, with more to come. As you'd expect, we are focused on delivering early cost synergies. We are on track for £40 million by the end of this year, a material step towards the £225 million ambition. And work is well underway to unlock the capital benefits. So it's been a great start, and Charlotte and I continue to lead the integration, ensuring that we carry this strong momentum through. Now, let me turn to the second opportunity, Capital Light. We continue to accelerate here. We are set to surpass 75% by the end of 2028 by growing faster in Capital Light businesses and unlocking the synergies from DirectLine. This is a material shift from where we were just a few years ago. This is highly attractive for our shareholders because it means that we are delivering stronger growth and better returns using less capital. Of course, the complementary nature of our businesses remains a unique advantage of Aviva's diversified model. So we will continue to deliver disciplined growth in retirement too, driving capital and cash generation and supporting our dividend. The third opportunity we see is with our leading customer franchise. This is a key source of competitive advantage, which has only grown with the red line. We now have nearly 22 million customers in the UK alone, giving us one of the largest franchises in UK financial services. We are the standout insurer and bigger than most major banks. Over 7 million of our customers have multiple policies. We know the benefits of these customers. They are more engaged and they will stay with us for longer. The sheer scale of this franchise presents a growth opportunity that only Aviva can unlock. We offer a full range of products to support customers throughout their lives. And now, with this acquisition, we've added more products and capabilities, such as Pet, Rescue and Micro SME. Over the last five years, we've invested heavily in digital and our technology, from having all of our customer data in a single view, right through to transforming engagement with artificial intelligence. And we will bring the full Aviva experience to our new direct line customers. Now, to bring all of this together, as you've heard, we are announcing new three-year group targets today. These account for the acquisition of DirectLine and better reflect Aviva's trajectory as a diversified capital light business. We have a new operating EPS target of 11% through to 2028. Linked to this, and on an IFRS basis, we are aiming to deliver a return on equity of greater than 20% by 2028. And we're refreshing cash remittances, now with bigger ambitions of over £7 billion. So that's the high level view. I'm now going to hand over to Charlotte who will take you through the detail on the financials including our thinking on the new target metrics.

Thanks Amanda and great to see you all today. I'm going to start by spending a few minutes covering the key points from our Q3 trading update before moving on to the detail about the new group targets and upgraded direct line synergies. So Q3 was another quarter of strong performance. Across our general insurance businesses, premiums of £10 billion were up 12%. This was strongly supported by 17% growth in UK and Ireland, reflecting the additions of DirectLine and Probitas, as well as continued positive trading. Canada grew by 3%, driven by pricing increases in personal lines. And this was despite some portfolio actions taken in commercial lines that I referred to at the half year. The group on discounted core was 94.4%, an improvement of 2.4 points, with the UK and I achieving 93.8% and Canada 95.4%. These strong results reflect the earn-through of our positive discipline on rate, some modest prior year development and better weather. In IWR, the momentum of our wealth business continues, with net flows of £8.3 billion, representing 6% of opening AUM once again. Performance remains strong and we are on track to meet our ambition of £280 million of operating profit in 2027. Insurance sales were slightly lower year on year, with double digit growth in health more than offset by low volumes in protection. And as I said at the half year, this effect was expected as we consolidated the AIG and Aviva propositions in August of last year. We've seen good increases in new business margins as we've repriced in line with plans and continue with the integration. In retirement, sales of £5.3 billion were lower following a particularly strong Q3 last year. Now, the BPA market remains competitive, and we are pleased to have written £3.9 billion of volumes across 63 deals by the end of Q3. And as of today, this has risen to £4.5 billion, which we expect to be materially consistent for the full year. The pipeline remains healthy into next year, and as always, we remain disciplined, focused on writing business, and strong IRRs. And finally, turning to our balance sheet, which includes direct line for the first time. Our solvency ratio is 177%, in line with our previous guidance to be towards the top end of our 160 to 180 working range. And as a reminder, at this stage, the solvency position is before any of the expected capital synergies, which I'll come back to shortly. Lastly, leverage is 31.4%, allowing for the Tier 2 debt instrument, which we recently announced will be redeemed in December at its first call date. Now, Amanda has already explained that we are on track to deliver our group target a year early. This is a fantastic achievement that I shouldn't and won't walk past. We've seen exceptional performance over the past couple of years, with growth in operating profits right across our diversified business. And this demonstrates the grip we have on performance management to actively manage our businesses through the cycle and outperform our peers. And as you can see on this slide, with a few weeks remaining this year, we are forecasting a full year 2025 operating profit of approximately £2.2 billion. This includes the six months of contribution from direct line of around £150 million. We're also on track to hit our Solvency II owned funds generation target of £1.8 billion in 2025, also before any direct line contributions. And the cash remittances target, which is a cumulative three-year metric, set at greater than £5.8 billion between 2024 and 2026. We are comfortably ahead of schedule. By the half-year, we'd already delivered £3 billion in the 18 months since setting the target, and anticipate to be around 4 billion by the end of this year. So given this excellent progress, now is the time to set out new three-year targets. Targets that reflect the shape of our group now and as we deliver our plans for the next three years to 2028. These new targets are framed as ambitious developments in operating EPS, IFRS return on equity and cash remittances. And in defining and shaping these targets, we've considered market feedback on the measures that matter the most. They allow better comparability with peers and align with our capital management policy and strategic ambition to accelerate growth in capital light business. So the first metric is defined as growth in operating EPS. And we are targeting an 11% CAGR from 2025 to 2028. We've selected this metric to capture both the operating earnings growth as well as the impact of share count reduction from sustainable capital returns. So let me unpack where the 11% compounded growth is expected to come from. Firstly, we expect roughly seven points of the growth to be driven by the power of the underlying business, including the turnaround of direct line. and as we continue to build on the track record of strong, profitable growth across our diversified group. Secondly, we are continuing to integrate direct line. The delivery of cost synergies will drive around two points of the growth. And lastly, we intend to reintroduce regular and sustainable returns of capital in March 2026, which will add around two points through the reduction in share count. And as outlined earlier, we expect to deliver £2.2 billion of operating profit for 2025, or an operating EPS of around 55 pence. Now, we will fix this as the baseline for measuring growth in operating EPS towards the 11% target over the next three years, with 2028 expected to be around 75 pence. And to help with your modelling, we've included a slide in the appendix with further information. The second new target is IFRS return on equity, which we expect to be around 17% in 2025 and target greater than 20% by 2028. To achieve this target requires us to deliver strong returns and continue to shift towards capital light. Now, managing Aviva requires us to focus on both the IFRS and solvency views of the balance sheet, and our capital management framework is unchanged. Defining the target as IFRS return on equity recognises that this measure is more widely used and understood by the market, increasing comparability. And we are well positioned to meet this target and drive attractive returns across the cycle. Again, more details in the appendix slides on the calculation basis for the IFRS ROE. The last target to cover is cash remittances, where we are uplifting the target to deliver greater than £7 billion between 2026 and 2028. This represents a significant upgrade to our previous target and demonstrates the cash generative power of our diversified business model. We have confidence in our capital management framework and the strength of our business to transform strong capital generation into cash remittances and ultimately shareholder distributions. Our track record evidences this. It's also worth remembering that in addition to normal cash remittances, this year we saw some additional remittances internally of £1.4 billion to fund the direct line transaction. Of course, cash remittances underpin our dividends and return of capital to shareholders, which brings me to the next slide. So as you remember, we increased the interim dividend, which represents about one third of the annual dividend, by 5%, in line with our usual dividend policy, and by a further 5% following completion of the direct line transaction. The approach in setting the final dividend is expected to be consistent with this and will be announced in March 26 alongside our full year results. And beyond that point, we will continue to grow the cash cost of the dividend by mid-single digits in line with our dividend policy. And because we also intend to reintroduce regular shade buybacks when we report in March 26, this has an impact on DPS. In previous three years, the buybacks were £300 million. And we expect to increase from this level to reflect the 14% increase in share count. Now, moving on to cost savings relating to DirectLine. Before I talk about the cost synergies relating to the transaction, I'm pleased to announce that direct line ambition of £100 million of savings that was set out in July 2024 has now been completed. Incremental to these savings, we are increasing the cost synergies announced last December of £125 million to £225 million, or about 35% of the direct line cost base. It reflects the opportunity to remove the meaningful overlap between the two personal line businesses. And Jason and Owen will shortly explain the progress on the integration, which is unlocking these synergies. So expect about 45% of the savings to come from the removal of duplication at the head office level. 30% to come from automating, digitising and rationalising insurance operations, and 25% to come from IT. And broadly, these savings are expected to be achieved evenly across the three-year period. The cost to achieve these savings is estimated at £350 million, a 40% increase from the original £250 million, compared with an 80% increase in the synergies. And overall, the ratio of cost to achieve to savings is expected to be around 1.5 times. At the same time, we are investing to bring the whole personal lines business up to a consistently high standard of customer experience and performance. And as an example of this, including continuing to transform the direct line claims process to align with Aviva's. This will bring considerable value in terms of claim costs and customer service. And we're investing around £50 million to unlock this value as well. Finally, an important driver of the direct line transactions comes from the capital synergies, which I am pleased to announce are expected to be greater than £500 million. The capital synergies arise because the capital required to be held for the direct line business is lower when it is part of the Aviva Group than was required when it was a standalone business. This arises from the diversification of risk when modelled on a combined basis with Aviva's UK general insurance business, as well as a further diversification when modelled with the life and Canadian risks at the group level. So on the left-hand side of this slide, I thought it worth illustrating what these synergies represent in terms of the Direct Line Solvency Capital Requirement, or SCR. Since DirectLine reported its 2024 year-end balance sheet, the SCR has increased to £1.4 billion from regular exposure and market developments and a temporary uplift from the forward view of net integration costs. Measured in today's terms, we estimate these synergies would add at least 10 points of solvency benefit to the current 177%. Unlocking this capital synergy is a substantial piece of work and our team is making great progress with approval expected around the end of 2026. Now to help you with solvency ratio modelling ahead of this year end there are a few items worth flagging. We will see some further capital generation in the quarter with the usual guidance of around one point a month still suitable at the moment. We also expect to see further management actions in the fourth quarter, which means that total Solvency II management actions for this year will be above our normal guidance of around €200 million. Offsetting this, we have recently announced that the €900 million Tier 2 instrument will be redeemed at its first call date in December. To allow for each of these factors, we expect the Solvency II position at the full year 2025 to be broadly consistent with the Q3 position of 177% subject to market movements. And, as mentioned before, we are comfortable operating towards the top end of our working range, ahead of the realisation of capital synergies around the end of 2026. So that's all I have to cover, but before I finish, I just want to reflect on the hard work that our team has done to get us here. Aviva has seen significant turnaround in recent years, and we now have real momentum. The opportunity with the direct line acquisition is significant, and we are laser focused on the next phase of our growth, meeting our targets and delivering the direct line synergies. And for more on how we're going to unlock this opportunity, I'll hand over to Jason.

Thanks Charlotte, and good morning everyone. So it's been just over four months since the deal closed, and we are really looking forward to sharing some more details with you today. But just before we get into that, I'd like to start with some context on the role that UK and Ireland's general insurance plays for Aviva. On a standalone basis, we already contribute more than a third of the group's operating profit. Actually, we've more than doubled our profit contribution over the last three years. So UK and Ireland General Insurance is a key driver in Aviva's shift towards capital light. We're already a market leader in commercial lines and now we're also a leader in personal lines. We continue to get great feedback from our customers and brokers across the portfolio. With Ireland and the global corporate and specialty business give us the benefit of geographic diversification. And finally, I should just mention that we've been accelerating our GCS business with the acquisition of Probitas last year. Since completing that deal, and as a result of launching seven new lines of business in Lloyds, fantastic broker support and a number of large client wins, we're already ahead of our plan on revenue synergies. And on the people front, we've now completed the process to transfer Probitas employees over to Aviva. And we've announced new leadership. Now, looking at the personal lines business, which already accounts for around half of our profit and premiums, as you can see, the team has an impressive track record, which is why we're so confident in the turnaround that we can deliver with Direct9. The underlying Aviva business has seen strong growth in premiums well into the double digits. And it's not just pricing. Since 2022, we've added 2.5 million policies and force, and we now serve nearly 7 million customers. We've always been highly disciplined in underwriting and it's paying off with our combined ratio below 94% because of our relentless focus on effective distribution, managing claims well and keeping our costs down. And we've done all of this through various market conditions, which has allowed us to keep investing in the business. And that's why Aviva's Personal Alliance is in such a great position today. Now, with Direct Line, we'll have over £7 billion in combined premiums, and we're the clear number one in the market with unmatched scale. And in personal lines, operational scale is hugely important, because it means we can benefit from lower cost to serve, greater capacity to invest, and game-changing amounts of data. Together with Aviva's technical excellence and pricing sophistication, this is an incredibly powerful combination and one that will extend our competitive advantage and help us to navigate the market cycle even more effectively. But it's not just about efficiency gains. Our leading brands, product offerings and large customer base create fantastic optionality in terms of how and where we can grow this business. And as Amanda said, there's even more potential at DirectLine than we first thought. So we know there's an awful lot more to come from this business. Now moving to the integration, this is a group-wide programme with clear accountabilities across Aviva's EXCO, robust governance in place, as well as dedicated resource and integration expertise. Our integration program has been up and running since January, which is a full six months before we'd even completed the deal. And so it's this preparation that helped us to move so quickly as soon as we got the keys. Not only from a customer, operational and regulatory lens, but also rapidly embedding Aviva's leadership and welcoming our new DirectLine colleagues. So we are in a really strong position and we're very focused on delivering our ultimate objectives. We're acting on every opportunity to transform DirectLine's performance. It's clear that the business had benefited from the harder rates environment in 2024, and we saw this in the DirectLine profitability at the half year. However, the written margins in the first half of 25 were not yet at the levels that we would be satisfied with at Aviva. So while they had been taking some action, we have significantly accelerated the turnaround. I just think that we're moving faster, making better decisions, and we have more at our disposal. We now have a single leadership team in Personal Lines, led by Owen. And beyond the immediate people changes, we've taken swift action across a number of areas. We've brought together our data sets to enhance pricing across the book. We've deployed new and more advanced models. We've broadened our underwriting footprint. And we've completed the rollout of DirectLine onto all four PCWs. And since the beginning of July, we've already unlocked early benefits, improving DirectLine's written combined ratio on motor by four points. And as you'd expect, we will see further impacts as our actions continue to earn through over time. And we're moving just as quickly on cost synergies. We're right-sizing the business to remove over 300 duplicate roles this year, including the leadership transition on day one. And we're optimising our supply chain. We've streamlined more than 70 of DirectLine's non-claims suppliers, with over 200 currently under review. And around 60% of our claims supply chain spend is already shared. So we're focused on harmonising the rates we pay there. As a result, we are well on track to deliver around 40 million of synergies by the end of this year. And all of that was achieved in the last four months alone. So we're really confident about how much more we can do over time. Now, moving to our integration plan, which is focused on four key areas. I'll say a few more words about leadership and organisation and the opportunity we have across customer and integrating operations, before handing over to Owen, who will talk you through how we are approaching commercial and brands. Obviously, to make this a success, we need the right people. So we announced our Personal Alliance leadership team in September. And this is aligned to Aviva's channel focus model, with the benefit of sharing functions across GI and the group. Year after year, we have already proven that this is a winning formula. And why am I so confident that this is the right team? But it's the same team that has driven the impressive transformation of our personal lines business over the last four years. They've successfully navigated challenging market conditions and delivered strong, profitable growth right through COVID, periods of high inflation and the introduction of pricing practices where many others struggled. They've transformed our claims journeys and repair capabilities through SOLUS, with a material uplift to net promoter scores and claims cost savings. And they successfully put the Aviva brand on PCWs, shifting our distribution to majority retail. So for these reasons and many, many more, I know that this is the right team to invest behind. Turning now to the customer opportunity, this acquisition means that we've now got over 12 million of them. So we're working really closely with Cheryl and her team on three key areas. The first is on retention and growth. Two-thirds of DirectLine's 6 million customers are new to Aviva, so our immediate priority is to keep them at Renewal. Second, we want to serve more customer needs. Aviva is well ahead of the curve here, so we're going to offer our broader product range to DirectLine customers. And third, we'll transform their digital experience because we see real value in driving self-serve and digital adoption at DirectLine. And we're also consolidating all the data into our single customer view. This makes a huge difference in delivering the best possible experience because we can see all of their interactions across all of our products. And our My Aviva app is critical here, and we expect the first direct line customers to be able to view their policies on our app by the end of next year, bringing the full Aviva experience to millions more. Next on claims, where we now have unmatched scale with £4 billion in combined spend. And with that scale comes powerful advantages. As I said earlier, we're optimising our supply chain. We're deploying artificial intelligence more widely, like our claim summarisation tool, which is already used by over 500 Aviva handlers and is half the time that our customers are on hold. We're further strengthening our data sets and feedback loops. For instance, we're already sharing critical information like fraud insights and supplier cost trends with the pricing and underwriting teams. And we're capitalising on our owned repair network, which is the only one in the UK. SOLUS is already very high performing, saving us around £500 per repair and halving the time it takes. And we're bringing Aviva's best practice to the direct line network. Finally, we're moving to a single claims operation built on Aviva's proven model with a relentless focus on end-to-end outcomes. We've already successfully re-engineered our motor claims journeys, delivering top-tier experience and unlocking over £85 million of claims cost savings. And we're expecting to deliver at least £50 million of savings in direct line. Finally, let me just touch on technology. We're starting from a really good place because we already have fit for purpose technology. Our platforms are compatible with one another and we have many common applications, especially in the critical areas like pricing and data. So our focus now is to simplify the tech estate in a pragmatic way. We will be moving direct line onto Aviva systems, which we've already modernized over recent years. And we've already firmed up plans to accelerate cloud adoption and close two on-site data centers, as well as to move on to a single claim system. And as in all other areas, we'll be aligning direct line to Aviva's operating model. So there's lots more to do. And I'm really excited about all the possibilities for this business and what we can build on over the next few years. So with that, I'll now pass to Owen to share some more detail on the opportunity in commercial and brands.