Aviva PLC

Okay, good morning everyone and thank you for joining us today for our full year results presentation. I'll start with a quick update on our 2025 performance and how Aviva will deliver today and for the future before Charlotte takes you through the results. Then we'll open for questions. So let me begin with the key messages. Aviva has delivered another outstanding set of results in 2025, extending our multi-year track record of delivery. We have achieved our 2026 targets of full year early and have now raised our ambitions. And we have enormous potential to go even further for the longer term. We are set up to make the most of the opportunities across the market, whether that's with artificial intelligence as technology changes the game, general insurance as the importance of scale and brand grows, wealth as the market expands with regulatory tailwinds, or in retirement for the next wave of pensioners as the UK ages. And I'll cover some of these in more detail later. So let's get into the numbers, which include the six-month contribution from DirectLine. As you can see, it's been a great year. Operating profit rose 25%. IFRS return on equity increased. And cash and capital generation are growing. We now have over 25 million customers and an opportunity to serve even more of their needs with over 7 million of those customers being multi-product holders. Operating EPS growth is well into the double digits and today we are announcing a final dividend of 26.2 pence per share up 10% year on year. and we are resuming the share buyback, now at a higher level of £350 million. Every business contributed to these results. In general insurance, premiums are up 18%. We are now approaching the sub-94 combined ratio ambition, and we are already achieving this in our UK business. In wealth, we are extending our number one position with over £230 billion of assets. And we are growing, with record net flows of almost £11 billion. In protection, we have improved margins and are nearing completion of the AIG protection integration programme. In health, we have grown in-force premiums by double digits, with a low 90s combined ratio. And in retirement, we have written £4.6 billion of bulk annuities at attractive returns, supported by real asset origination in Aviva Investors. Turning now to targets. As I've said, today's results mean that we have already delivered our 2026 targets. This is a fantastic achievement and I'm really proud of Aviva's performance. So I want to thank the whole Aviva team for their hard work. In November, we set new three-year targets across operating EPS, IFRS return on equity and cash remittances. These now include direct line and better reflect our trajectory as a diversified capital-light business. Charlotte will cover more details on the numbers shortly, but now I'd like to talk about Aviva's longer-term potential. This has been a journey where we have driven sustained growth served more customers and stepped up for shareholders year in and year out. And we continue to create longer term value with smart strategic M&A. Resulting in today where we are the UK's only diversified insurer with a clear strategy that is delivering results. Our focus is now on hitting the new targets, further accelerating beyond 75% capital light and realising the full benefit of direct line. But this is just the next step in our journey. There is more long-term potential beyond this three-year time horizon. Clearly, we are set up to capitalise on a range of opportunities across all our markets. But I'll prioritise three of these today. First, how we outperform right through the cycle in general insurance. Secondly, why we are uniquely positioned to lead in wealth. And thirdly, how we are using artificial intelligence to shape the future Aviva. And supporting all of this is one constant, our leading customer franchise and preeminent brand. So let's start with general insurance. This is, and always will be, a cyclical market. And after more than 325 years in the industry, We know how to navigate cycles. And we have been through disruption time and time again. DirectLine changed the industry by selling directly over the phone. Price comparison websites then reshaped the market. And now we have generative AI with autonomous vehicles to come. And through all of these changes, Aviva continues to deliver. bringing in fantastic people, launching innovative products like Aviva Zero, expanding distribution onto PCWs and through Lloyds, and so much more. And we have tripled profits over the last five years. The UK is the most competitive insurance market in the world, with high regulatory barriers to entry. And Aviva is the standout number one insurer here and the only player operating at scale across personal and commercial lines. We have always adapted and we will keep adapting. When we acquired DirectLine, we knew that market conditions would continue to evolve. And the same is true when we set our new group targets. But we also knew that Aviva has the scale, discipline, technical expertise, proprietary data, brand strength, and diversified group model to grow profitably. And there's plenty of room to grow. Unlocking value from direct line, expanding partnerships, scaling SME in Canada, building out our Lloyds presence, not to mention the opportunity with our 25 million customers. The market will keep changing. And that's exactly why we invest in innovation. We are ahead on EVs, telematics, automation and AI. And we'll stay ahead. So our portfolio is built to deliver performance for years and decades to come. Looking first at personal lines in the UK. Owen and the team have a track record of outperformance. delivering profitable growth through COVID, periods of high inflation and pricing practices, where many others struggled. And though the market is challenging today, we are still writing at target margins. It is not by chance that we have been able to do this. Our scale is unrivalled, with breadth of cost distribution and game-changing amounts of propriety data. We have the only wholly owned repair network in the UK, which saves us around £500 per repair. And we have huge potential with Berrett Line, not just with the cost synergies, but growth headroom with leading brands and new products such as PET, Green Flag Rescue and Micro SME. Turning now to commercial lines, where it's a similar story. We are successfully navigating tougher conditions. We have built up our pricing strengths and we are able to quote above the technical prices in our models. Putting margins first has always been our priority and that's why we have delivered consistent profits year after year. We have unique strengths to win in this market, so let me just highlight a few. We are a leader in SME and mid-market and these segments are more resilient. We have first class underwriting, with strength across motor fleet and liability, so we are very well positioned for any future shift with autonomous vehicles. And with access to Lloyds through Probitas, we can tap into a wide range of attractive lines, having launched eight since the acquisition. This now includes high net worth, which is complementary to our already leading proposition here. So across both commercial lines and personal lines, we are well set up for success today and in the future. Moving to wealth, which is a huge opportunity for us. There are £2.7 trillion worth of assets today growing at double digits and the market is set to surpass £4 trillion by 2030. This strong growth is underpinned by clear structural trends and regulatory tailwinds. At Aviva, we have leading workplace and advisor platform businesses. And we are leveraging advice capabilities in succession wealth and scaling fast in direct wealth. We have built a competitive edge that no one else can match. We have a leading customer franchise with a significant affluent opportunity. Our holistic offering and trusted brand means that we can support customers throughout their lifetime. We have always invested in our platform, which is ranked by de facto as the number one in the market. Our modern technology platform brings scale benefits. And of course, we have leading investment solutions with Aviva Investors. And the performance of our wealth business is testament to all of this. Since 2022, we have grown assets faster than the market. And we have improved margins at the same time. In workplace, our profit margin is up by almost two points over the last two years, which makes this business a key driver of growth and a major contributor to our profits. So, we are on track for our £218 million wealth profit ambition in 2027. And the importance of wealth within our portfolio is growing. It is fast approaching 10% of our group earnings. further increasing our share of attractive fee-based income. But the longer opportunity here is even more exciting. Take workplace. It is a highly attractive market, which has grown fourfold over the past decade. And with the constant flow of employer and employee contributions, it is expected to triple over the next decade. This growth is not only strong, but it is also very resilient. Aviva has an incredible track record here, and we're accelerating. The business is a genuine growth engine, with 1,500 scheme wins over the last three years and a near 100% retention. And we are very pleased to now be the sole administration partner for the Mercer Master Trust, expected to bring around £8 billion worth of assets over the next 12 to 18 months. The strength of our proposition is powered by leading Aviva investors' default funds. And we recently launched our My Future Vision Fund, which gives customers access to private markets and reinforces our commitment to the Mansion House Compact. So when you bring together our workplace direct wealth and advice businesses, you get a truly unique wealth offering. We're able to retain and serve customers from their very first job all the way through to their retirement. And we are tapping into four and a half million affluent customers who hold more than one trillion pounds worth of assets. We're also leveraging technology and innovation to deliver advice and guidance at scale. Targeted support is a huge opportunity for us. This is a new service that fits between guidance and full financial advice. and it will allow us to offer easy-to-access support to so many more people. Our first journey this year will focus on how people save for their pensions, launching around the middle of this year. And there's still so much more to share on the wealth business, so we will do a deeper dive at the next In Focus session, which will be in Q4 this year. Finally, turning to artificial intelligence. So we know that this is going to be transformation. And here at Aviva, we have a greater opportunity than most. For any opportunity that you have seen in the media, and there's been quite a few recently, there are key enablers that you actually need to drive the value. It is not enough to just have the technology. You need access to millions of customers. The ability to deploy and reuse at scale. Capacity to invest. And most importantly, proprietary customer and claims data. Aviva has all of these in spades. And our diversified model is more resilient for any disruption. This technology isn't new to us either. We have been using traditional AI capabilities for over a decade now. In fact, over 98% of retail business in UK personal lines is priced with machine learning. And we have been training over 150 machine learning models in claims with our own data for years. Generative AI and agentic are just the next steps on this journey. And because of our targeted investments in technology and talent, we already have many of the AI-ready foundations in place, so we are well positioned for this shift. We have built an in-house platform to deliver use cases at speed, and we are already seeing tangible benefits. We have halved the time taken to review each case in medical underwriting. And we have also reduced call wrap times by 20% for customer service agents in direct wealth, which we are now rolling out more broadly in IW&R. All of our colleagues have access to AI tools, and we continue to enhance and streamline all of our data. We are proud of what we've achieved so far, but we are aiming much higher and always balancing ambition, with pragmatism. Our focus now is on prioritising progressively bigger end-to-end opportunities where AI can transform areas like customer engagement and distribution, underwriting and claims, right through to back office operations. This is the kind of change that will shape Aviva's future. And some of this is closer than you think. So let me give you an example in UK general insurance claims. We have already saved nearly £100 million through our claims transformation, and Agentic has the potential to unlock much more. Over the next few months, we will be testing an AI-enabled claims agent, built in-house and launching later this year. This will enable us to handle simple claims from start to finish without human support. And the best part is that this is voice-enabled. Most claims begin on the phone, so this will be transformative for customers, delivering faster, clearer and more consistent outcomes. And finally, I'm delighted to announce our partnership with OpenAI, which is a really important step for us. Combining OpenAI's cutting-edge capabilities with our expertise and data will help us to deliver powerful AI solutions for our customers and our colleagues. So there's a lot more to come, and we'll share more with you at our half-year results in August. Now, I'll finish with what brings all of this together, Aviva's powerful, unique model. We have diversification and growth advantage, with market-leading positions and a majority capital-light portfolio. We have a customer advantage with almost 22 million UK customers and a leading brand. We have a scale, technology, and data advantage, including the opportunity that AI brings. All of this gives us real confidence for the future, over the next three years, and well beyond. And with that, I'm going to hand over to Charlotte, who's going to take you through the results in more detail.

Thanks, Amanda, and good morning, everyone. It's great to be here for another full year results presentation. 2025 was a strong year for Aviva, once again, as we continued our growth momentum. Operating profit was up 25% to £2.2 billion, which translated to an EPS of 56 pence and a return on equity of 17.5%. Cash remittances were up 4% to £2.1 billion, And this excludes the funding for direct line, which is supported separately. Solvency of 180% is at the top end of our working range, supported by £2.3 billion of Own Funds Generation, or OFG, the Solvency Measure of Operating Performance. In November, we said we were on track to meet our 2026 group targets a year early, and I'm pleased to confirm that we have achieved that. We exceeded our £2 billion operating profit target before the contribution from Direct Line. The group total of £2.2 billion is in line with November's guidance. And we comfortably achieved our OFG target a year early and are ahead of schedule on our cash remittance target. This demonstrates the grip we have on performance management. So given our excellent progress, we set new and ambitious three-year targets in November, reflecting the shape of our group today and our plans for the next three years. These targets allow better comparability with peers, align with our capital management framework and support our plans to grow in capital-like businesses. These targets are ambitious and achievable. They take into account the outlook for each business, including good visibility of where we are in the cycle. So we're targeting an 11% operating EPS CAGR from 2025 through to 2028. This reflects the operating earnings growth and share count reduction from regular and sustainable capital returns. So our 2025 EPS of 56 pence is ahead of the 55 pence baseline that we set in November, as the last few weeks of the year saw more benign weather than expected. Now we're not assuming this favourable weather repeats, so the 11% target is from the 55 pence baseline and builds to around 75 pence by 2028. really confident in our plans to drive progressive earnings across the group. And combined with shared buybacks, we're well placed to achieve this and our other group targets. So I'll now unpack the group results in a bit more detail, starting with general insurance, which was 56% of business unit operating profits. Top-line growth has been an impressive 14% over recent years, and margin has improved too, with the combined ratio better by 1.6 points. The investment return has grown in line with the portfolio, all of which together means operating profit has grown to almost £1.5 billion. In the UK and Ireland, premiums grew 27%. A large component of this was the addition of direct line, reported as part of UK personal lines where we saw 50% premium increase. Commercial lines premiums grew 7% as we build GCS, integrate Probitas and leverage the strength of our SME and mid-market propositions. The combined ratio in the UK for both commercial and personal lines is a strong 93.9%. This is a one-point improvement reflecting the earn-through of pricing and some favourable weather. In commercial lines, positive prior development was more than offset by elevated large losses in the current year. And including Ireland, core was 94.1%, reflecting the impact of Storm Owen back in Q1. Overall, operating profit for UK and Ireland grew 52% to over £1bn. In 2026, growth will benefit from a full year of premiums for a direct line. Now looking at the UK and Ireland business as a whole, we expect to deliver a 2026 combined ratio of better than 94%, subject of course to normal weather patterns. We come from a position of strength, with good rate adequacy and relative to the softer market, we have held rate. We leverage the strength of our brand, scale, pricing sophistication, proprietary data and diversification. And we have extensive experience in managing pricing cycles and disruption. So we're really well placed to navigate the current conditions. Premiums in Canada, up 2% in constant currency. The Canadian market is at a different stage in the pricing cycle compared to the UK. And so personal lines grew as we secured pricing increases across property and auto, maintaining strong retention. This was offset by some portfolio actions taking in commercial lines that I covered at the half year. And the undiscounted core was almost three points better. largely reflecting weather experience which was broadly in line with our budget compared with the elevated cat activity in 2024. There was improved large loss experience compared to 24 as well as pricing actions earning through. Investment income was marginally down but operating profit was up 49% to £408 million. And for 2026, we expect to deliver a combined ratio approaching 94% for Canada. The personal lines rating environment remains supportive, with further pricing increases expected. In commercial lines, though, the dynamics are similar to the UK, with softer conditions that vary line by line. So across the portfolio, we will navigate the cycle with discipline. Now moving to insurance, wealth and retirement and starting with the insurance businesses, health and protection. Demand for health has been affected by cost of living pressures for consumers and small businesses reprioritising spend to absorb the national insurance changes. Despite this, in-force premiums were up 12% and we maintained a low 90s core. Operating profit was up 9% as the business grows in line with our ambition. Now, as expected and in line with the first nine months, protection sales were lower following the consolidation of AIG and Aviva propositions back in August 2024. Margins have improved by 90 basis points as we repriced the business. And all of this is in line with our integration plans. Operating profit was up 97% as we had some adverse assumption changes back in 2024. And in 25, we recognised a one-time integration benefit following the legal transfer of business acquired from AIG. Now moving to wealth. Workplace net flows were up 6% as member contributions grew and we onboarded new schemes. The resilience of this business is demonstrated by the impressive £1 billion of regular monthly contributions. Our advisor platform performed strongly with flows up 11% despite elevated outflows around the time of the UK budget. And in our direct business, the customer base grew by almost a third to over 100,000. And we're continuing to invest in developing the proposition. Wealth operating profit was up 36%, with operating margin improving by 1.1 basis points as the business grows and leverages the cost base. Operating profit as a portion of revenue is 23%, up four points. And as Amanda mentioned, we are on track to meet our near-term ambitions. And beyond that, the opportunity is even more exciting for the group's long-term growth. We have a strong brand, proposition and scale from which to build. So we anticipate further improvements in operating margin and profit progression. In retirement, we wrote a more typical £4.6 billion of BPA following an elevated 2024. Importantly, Avriva Investors originated £3.5 billion of real assets to support the business. Now this is an increasingly competitive market and our team has continued to trade well and with discipline. We achieved a mid-teens IRR well above our low-teens guidance and the business has been written at relatively low strain. Individual annuity sales up 19% to £1.6 billion, our highest level since 2015 pension reforms, supported by a new product launch. Operating profit was 5% lower as higher releases from the contractual service margin were offset by a lower investment result. We expect to remain active this year in retirement and will be disciplined in the competitive environment. Now turning to cost and efficiency. The ratios are broadly stable despite the temporary uplift effects from acquisitions and new partnerships. Across the group, we continue to invest in exciting growth and productivity initiatives, including the use of AI and in automation. And we expect this investment to drive efficiencies in each of our businesses. It will improve operating leverage and unlock significant long-term value from our extensive customer base and proprietary data. Now, the application of our consistent capital allocation framework is a critical part of what we do to optimise our diversified group. And this slide summarises how we think about performance and financial strength and what that means for uses of capital. We continue to build sustainable growth in earnings and cash and work to maintain our balance sheet strength. We grow the regular dividends, we invest in the business for growth and efficiency, and we return capital to shareholders. Nothing here is new, but it's important that you see we do this really well. And as an example of the framework in action, I'll pause for a moment on solvency. One of the advantages of the model we have built is proactive balance sheet management. A year ago, our cover ratio was 203% as we prepared to complete the direct line transaction. This used 31 points of capital ahead of the realisation of the capital synergies. We've delivered elevated management actions of 11 points and accelerated 3 points of direct line synergies by temporarily moving the business to standard formula. This has supported building solvency back up to 180%. The underlying capital generation of 16 points includes a couple of points of favourable one-offs, including positive weather and reinsurance pricing impacts, which we can't assume will repeat. But we do expect to unlock the remainder of the direct line synergies. Specifically, we're on track to deliver at least £350 million or seven points of solvency around the end of this year. And looking forward, we expect a progressive build of operating capital generation of around 20 points in 2027. This assumes normal levels of management actions of around 200 points. And depending on whether these impact own funds or SCR or both, this translates to between two and four points of solvency. This level of capital generation will continue to grow and provides headroom in excess of the annual dividend and regular buyback. Now moving to a few words on DirectLine. The integration continues to progress well and at speed. We have successfully implemented our pricing models into DirectLine with an improvement in written cause in the fourth quarter. We've made excellent progress on the DirectLine branded PCW sales, doubling the number of policies in Q3 and almost doubling them again in Q4. We've transferred £2.9 billion of assets to Aviva Investors with more to come. And we've made good progress rationalising two office locations and three motor repair sites. We're progressing on removing duplicate roles and have an incredibly strong leadership team in place with a proven track record. All of this is enabling us to deliver material financial benefits. So in November, you'll remember, we uplifted our cost savings ambition to £225 million and confirmed Direct Line's own cost programme of £100 million had been achieved. We have delivered the first £50 million of cost savings in the second half of 2025. This will fully earn through in 26 and contributed around £10 million to operating profit in 2025. We expect to deliver the remaining £175 million of savings fairly evenly over the next three years. And we're also investing around £50 million to unlock claims cost benefits of at least £50 million each year. And all the work on the acquisition balance sheet has now been completed. Now I'll briefly cover the delivery of our commitments on dividends. Today we've announced the final dividend of 26.2 pence, giving a total dividend of 39.3 pence, a 10% increase on 2024. This includes the regular dividend growth plus the 5% uplift we promised following the acquisition of DirectLine. We've also resumed the buyback, launching a new £350 million programme, increased to reflect the higher share count. And as we go forward, our consistent dividend policy of mid-single-digit increases in the cash cost of the dividends builds from this higher point. And combined with the resumption of the regular buyback, this will deliver a higher progressive DPS development. So to summarise, 2025 was another great year for Aviva and the outlook for 26 and beyond is positive. Our diversified business model and the addition of DirectLine leaves us well placed to continue our track record of growth and earnings momentum. We will continue to invest in data, customer engagement and operating efficiency, ensuring we keep winning in an ever-changing world. And of course, we will maintain a firm grip on performance management across the group. All of this gives us great confidence in delivering the ambitious targets we have set and the future beyond that timeframe. And with that, I'll hand back to Amanda.

Okay, thanks, Charlotte. So before we move to Q&A, let me conclude with the key points. We have real momentum and we are building on it every single year. 2025 extends our track record of strong, profitable growth. We have already delivered another set of targets. And we are driving towards the raised ambitions that we have set for our next chapter. Aviva is in a stronger position than ever. And this isn't just a strong position for the next few years. Aviva is uniquely placed for longer-term success. Here is why. We are the UK's national champion and the only diversified insurer. We are accelerating capital life and unlocking higher returns. We have an outstanding customer franchise of more than 25 million customers globally. We are the UK's most trusted insurance brand. We have proprietary data at scale, driving better pricing, better risk selection, and better customer outcomes. And all of this fuels our superior returns for shareholders, with strong and sustainable earnings growth, an attractive dividend, and regular share buyback. So these strengths and many more give me deep confidence that we will unlock the full potential of Aviva in the years ahead. So thank you for listening. Let's move to your questions.