Aviva PLC

Okay good morning everyone and thank you for joining us today for our half-year results presentation. I'm going to start by sharing a few key highlights before Charlotte takes you through the results in more detail. Then we'll cover why we are so confident in Aviva's long-term potential and as always we will open for questions. So let me begin with the key messages. Aviva has delivered another excellent performance in our first half of 2026, once again extending our track record of strong profitable growth. We continue to accelerate towards 75% capital light, unlocking the potential of direct line and building further momentum in our number one wealth business. All of this underpins our confidence in delivering the ambitious three-year targets. and our diversified model is a key enabler for long term success, which is why I am equally confident in our ability to sustain strong earnings growth well beyond 2028. Now let's get to the results. As you can see, it's been a great first half. Operating profit is up 24% with strong double digit growth in operating earnings per share. and we are driving higher returns with IFRS return on equity above 20%. For shareholders we completed the latest share buyback last month and today we are announcing an interim dividend of 14 pence per share up 7%. We are also stepping up for our 25 million customers. We're serving more of their needs than ever and delivering a fantastic customer experience. These results reflect strong delivery right across our business and our excellent progress on direct line. Behind every number in these results is a colleague making a difference for customers. I've been really fortunate to work with many talented teams throughout my career. And I genuinely believe that Aviva has the best people in the industry. Because we are the leading player, we attract and retain some of the best talent and I'd like to thank the team for their commitment, skill and hard work and for everything that they do to deliver for our customers and shareholders every single day. Turning now to our track record, over the last few years we have transformed Aviva. Year after year we have delivered consistent growth, stronger profitability and higher returns. and we have exceeded two full sets of targets along the way. Today's results build on that track record and keep us firmly on course to deliver our three-year targets and create value well beyond them. So before I hand over to Charlotte, let me pause on why we are so confident about Aviva's potential. The answer is simple. It's the strength of our model. We have a diversified range of businesses with leading positions in attractive markets. That gives us earnings resilience and plenty of growth opportunities, which no other UK insurer can match. And as we continue to shift towards capital light, we are generating even stronger returns. We have a real customer advantage with a leading franchise in UK financial services, the number one trusted brand and a broad range of products that meet customer needs. That means we have a real opportunity to do more for our customers who already choose Aviva. We have scale with game changing amounts of proprietary data and strong technology and digital foundations. And this means we have a significant AI opportunity where we are already making progress. These are powerful strengths in their own right. But what really matters is how they come together. That's why we are so confident in Aviva's opportunity ahead. And I'll come back to share more on how we are thinking about that a bit later. But first, let me hand over to Charlotte to take you through the results in more detail.

Thanks, Amanda, and good morning, everyone. The first half of 2026 was strong for Aviva once again as we continue our growth momentum. Operating profit was up 24% to £1.3 billion which translates to an operating EPS growth of 10% and an IFRS return on equity of 20.3%. Cash remittances were up 47% to £1.5 billion. Our solvency ratio of 176% is towards the top end of our working range and we expect it to be in the high 180s by the end of the year. Underlying operating capital generation increased 14% to £812 million and within the businesses our general insurance combined ratio improved 1.3 points to 93.3% and wealth net flows were up 32% to £7.6 billion. I'll now unpack the results in a bit more detail business by business, starting with general insurance. In the UK and Ireland premiums grew 42% to £5.9 billion. Now a large component of this was the addition of direct line reported as part of UK personal lines where we saw premiums nearly double in size. And we've made great progress on the integration and performance turnaround of direct line. Written margins are improving and we have returned to policy growth in motor PCW. Commercial lines trading in Q2 was a clear improvement on Q1. We traded well in a tough environment with strong April renewals. Premiums were down just 1% in the discrete quarter. Now let me give you a little more colour. Mid-market is up 1% year to date benefiting from high retention which is close to 90% and strong new business. Digital improved on Q1 but is still a little lower than last year and we continue to take deliberate portfolio actions on certain MGAs. Probitas which we are rebranding to Aviva Syndicates continues to grow largely driven by the nine new classes that we have launched in Lloyds since the acquisition. and in GCS more broadly, Q3 trading was significantly improved, though as expected, year to date premiums are lower as conditions remain competitive. In terms of profitability, the UK and Ireland combined ratio is a strong 93.4%. This is a 1.1 point improvement, reflecting the earn through of pricing discipline, along with some favourable weather and prior year development. Overall, operating profit for the UK and Ireland grew 50% to £643 million. Premiums in Canada were up 3% in constant currency. Within this, personal lines were up 4% as we secured pricing increases across property and auto, despite lower volumes due to the impact of portfolio actions taken in Alberta during the second half of 2025. We also continue to make good progress with the partnership that we announced last year with President's Choice Insurance. Commercial lines grew 2% due to some scheme wins within GCS which more than offset the softer rating environment. and the Undiscounted Core was almost two points better, reflecting better weather experience compared with the elevated CAT activity in the previous year. So first half operating profit was up 22% to £262 million. And we continue to invest in our technology and our supply chain through a combination of insourcing and deepening partnerships to increase performance. Now, while first half weather experience was favourable, you'll have seen in the news since the end of June, there have been a number of weather events across Canada. And although it's still early days, we now expect to be above our weather budget for the quarter. That said, Q3 is typically the more active cat season, and so it's built into our expectations. Now looking at the group overall we've made fantastic progress improving our headline undiscounted core by more than two points over the last two years and we're on track for our full year 2026 guidance. Now I want to take a moment to unpack our core development and outlook for you. Structurally we expect favourable PYD going forward. Driven by the IFRS risk adjustment and maintaining balance sheet strength. So taking these in turn, firstly the risk adjustment increases the reserve amount through underlying core and subsequently unwinds through PYD. Now while these effects largely net off in the headline core, they contribute both to a favourable PYD and a structurally higher underlying core by around one to two points. Secondly, in terms of balance sheet strength, we reserve to best estimate, but that is still a range. So given ongoing uncertainty from inflationary dynamics to geopolitical tensions and of course the addition of direct line, we are reserving towards the upper end of this best estimate range. And we have maintained this strength over the period. But by maintaining balance sheet strength, favourable PYD is expected to come. On top of these recycling effects, in the first half of 2026 there has also been some favourable experience on prior year claims and weather, benefiting the headline core. And the underlying core was negatively impacted by some large losses and other one-off effects. Our strong pricing, growing operating leverage, significant direct line opportunities and robust balance sheet give us confidence in the outlook. Now moving to insurance, wealth and retirement, starting with wealth, where we are the largest player in the UK and have reached over £260 billion of assets. Net flows increased by an excellent 32% to £7.6 billion, representing 7% of opening AUM on an annual basis. This was driven by strong performance across the board. Workplace net flows up 36%, with continued regular contributions of more than £1 billion each month. We're also onboarding new schemes, including £1.5 billion from the first of the Mercer schemes. Our advisor platform performs strongly with net flows up 17% including high demand for the onshore bond that we launched last year. And in direct wealth, our customer base grew by almost a third to nearly 120,000 customers with strong growth coming from across Aviva's existing customer base. AUM in our direct business is up 14% to 5 billion and we continue to invest in developing this proposition to drive organic growth. Overall, wealth operating profit was up 34% with our operating margin improving by 0.7 basis points as the business grows. We have the benefit of a leading scale, sorry, leading scale, lifetime offerings and customer opportunities and we are fully on track to meet our ambition of £280 million of operating profit by 2027. Now moving to our insurance businesses, starting with health. Enforced premiums up 5% and we maintained a low 90s core. Operating profit was up 28% to 37 million pounds. Now the market has been affected by slowing growth driven by the SME and consumer challenge channels. Life's growth is down from about 6.5% back in 2023 to less than 2% in the first quarter of this year. And as a result of this, we now expect operating profit to be around £90 million for 2026. So despite continued double digit profit growth over the last three years, this will fall slightly short of our aim to reach £100 million this year. We continue to see health as a critical part of our customer proposition with long-term growth drivers. In protection, sales up 1% with stronger performance in group protection. Margins have also improved by 40 basis points as we focus on delivering value. Protection operating profit was 14% lower, driven by adverse experience variances and investment in the business. And lastly, we're making further investments across both these businesses. For example, we were pleased to launch our new wellbeing proposition, which is a combined health and protection solution for large corporates with SME to come later this year. In retirement, we wrote £1.1 billion of BPA in a less active and more competitive market. Trading has been positive since the end of June and year-to-date volumes are now £1.9 billion. In the half year, we achieved an IRR of 18%, well above our low-teens guidance, supported by our pricing discipline and mix of smaller schemes with higher returns. This business has also been written at relatively low capital strain and we have provided some colour on the IRR calculations in the appendix to the slides. Individual annuity sales up 11% to £865 million supported by the launch of our new guaranteed fixed income plan last year. Operating profit was up 2% as we benefited from higher CSM releases and asset optimisation. We remain active in retirement and will continue to be disciplined in the competitive environment. Now turning to costs and efficiency. The ratios have improved across the group due to acquisitions, growth in the business and our focus on efficiency. For example, our cost asset ratio in IWR has improved by more than four basis points over the last 12 months alone, demonstrating strong operating leverage. We are seeing benefits from the modernisation programmes as well as greater use of digital customer service. and we continue to invest in growth and productivity initiatives that will deliver real impact across the group including of course the use of AI and automation. We expect this investment to improve operating leverage and unlock significant long-term value from our existing customer base and extensive data assets. Now our consistent capital allocation framework is a critical part of what we do to optimise our diversified group. This slide I come back to at each result as it summarises how we think about our performance and financial strength and what that means for how we use capital. We are continuing to build sustainable growth in earnings and cash and maintain balance sheet strength. This is allowing us to grow the regular dividends and invest in the business for growth and efficiency. And we are returning capital to shareholders with our latest share buyback recently completed. Nothing's new here, but it's important that you can see we do this exceptionally well. Now one of the advantages of the model we have built is proactive balance sheet management. At full year 2025, our shareholder cover ratio was 180%. In the first half, operating capital generation added nine points, a little higher than normal because of the lower capital strain on BPA, some benign weather, and of course the benefits from direct line. It also includes about one point of management actions. Non-operating items reduced solvency by around three points, comprising one point from integration and restructuring, and two from market movements. After debt actions, the dividend and buyback, our half year cover ratio is 176%. Now looking forward, we're confident in reaching high 180s by the end of the year, subject of course to market movements. And this guidance includes the benefit of at least seven additional points or £350 million from the expected direct line capital synergies. Now Amanda will speak about AI again shortly, but I wanted to talk briefly about this in the context of investing in the business. Our business as usual change investment is £450 million each year across the group for growth, customer and efficiency. and we're allocating increasing amounts of this budget towards AI, taking a disciplined approach by applying strict return thresholds, monitoring costs and focusing on the opportunities that can be scaled across the group. We aim to unlock benefits quickly in key areas and deploy these savings by either reinvesting them in new opportunities, factoring them into trading decisions, or realizing them in the bottom line. There's significant potential here, which we are really well placed to unlock. So before I hand back to Amanda, let me close with the outlook. I've already shared some of the details, so let me just pick up on a few points here. The Direct Line integration is going really well and we expect cost synergies to reach £130 million this year which will flow through fully next year. Wealth's momentum continues with the next material transfer of Mercer Master Trust assets expected in Q4. Now group operating profit in the first half was strong and the second half will continue to benefit from many of the same drivers. But of course that needs to be balanced against some of the other effects including the CAT impacts in Canada. So as a result we expect full year operating EPS to be around 11% slightly above the 2026 guidance we gave you last year and broadly in line with current market estimates. So to conclude, This is a business that is performing strongly. Our people are engaged and focused, giving me great confidence in the trajectory towards our 2028 targets. And with the opportunities that Amanda will cover now, I am equally confident in our sustained longer-term growth. And with that, back to you, Amanda.

OK. Thanks, Charlotte. So these results are testament to everything that we have delivered over the last six years. Executing our clear strategy, delivering year on year and accelerating with targeted M&A. And that is why we are on such a strong trajectory and why I want to focus now on where we go from here. So we think about Aviva's future across two horizons. The first is our three year targets. We have real confidence in these as we unlock material benefits from direct line and drive strong organic growth across the group. The second horizon is over the longer term. Here we see clear upside from serving even more customer needs, Aviva's AI opportunity and our material growth platforms. So let me take you through each of these horizons in turn, starting with our three year targets. Realising the benefits from DirectLine is a critical part of our plans. For customers, we continue to deliver excellent service and we are pleased with the retention levels that we are seeing. On the people front, we officially welcomed 8,000 DirectLine employees as Aviva colleagues as we completed the TUPE process. And we continue to right-size and strengthen the combined business as the integration progresses. We have transferred almost £5 billion of assets to Aviva Investors, improving the investment returns and reducing external fees. And we have moved to a single claims function, realising the benefits of shared capabilities, data and scale. So we are well on track for all of our Synergy ambitions. We have already delivered £100 million of run rate cost synergies and £150 million of capital synergies and £40 million of annual claims cost savings. And there is more to come in the second half. Turning now to direct line motor performance. Beyond the integration, Owen and the team are doing a fantastic job here. We were not happy with margins on day one, so we took immediate action on rate. We also rolled out Aviva's pricing models and combined data sets, and the results are clear. Written combined ratios have improved by more than 10 points, and direct line is an important contributor to the strength of today's personal lines result. We have accelerated the rollout of DirectLine Motorbrand on all four major comparison websites. Policies here have increased almost tenfold over the last 12 months to around half a million without weakening the broader book. Overall PCW new business share is now at the highest ever level. Aviva already had first class capabilities across pricing, underwriting, distribution and claims. This turnaround is all about embedding that experience at scale. So DirectLine is supporting our capital light strategy, strengthening our position in a key market and delivering material shareholder value. It's a great example of how we are taking a disciplined approach to M&A. But it's not just about direct line. Organic growth is another driver of our current three year targets. And wealth is a great example here. Doug and the team have doubled the profits since 2019. And as you heard earlier from Charlotte, momentum is stronger than ever. We delivered £7.6 billion of net flows, which is up more than 30% driven by all parts of the business. To put that into perspective, it's almost as much as our full year net flows in 2023. And over the last 12 months, we have grown by almost 300,000 customers across workplace, advice and direct. All of this is down to our strategic progress and targeted investment across the board. Enhancing our master trust proposition in workplace is why we are now the exclusive partner for Mercer. This will bring £8 billion worth of assets. In Advisor Platform, our onshore bond has attracted £700 million of flows since its launch. Indirect Wealth, over 70% of sales are to our existing customers. and in succession wealth over £3 billion of advice assets are now on Aviva's platform and even more value coming through referrals. So we are well set to deliver continued strong profitable growth on track for our £280 million profit ambition in 2027 and we will tell you a lot more about our organic opportunity in wealth at our In Focus session in October. Now let's conclude the first horizon by looking at the progression of our portfolio. Four years ago our earnings mix was evenly split. Today we are 70% capital light and returns have doubled over the same period. By capturing the benefits of direct line and continuing to grow organically we are on track to reach 75% by the end of 2028. That means faster growth, less capital deployed and better returns. Now let me move to the second horizon, our longer-term growth beyond 2028. There is still so much more potential to unlock at Aviva. First, our customer advantage is unique and we can serve more of our customers' lifetime financial needs than any other insurer. Second, we are transforming with AI and with our scale and data we have a material opportunity. And third, our capital light focus is unchanged. We have attractive long-term growth platforms with significant headroom to go after. and with our scale and customer reach, range of growth options and disciplined capital allocation, the value of these three opportunities is amplified by our diversified model. Now, let me take you through each opportunity in more detail, starting with our customer advantage. We have more than 25 million customers with a leading franchise in UK financial services and products to meet needs across a lifetime. That enables us to deepen relationships and create more value over the longer term. We also have strong presence across corporate and SMEs. In fact, one in three large UK corporates already hold a policy with Aviva. So we have the customers, the products, the brand, and the experience. And together, that creates a customer opportunity that no one else can match. And we are already unlocking that opportunity. Back in 22, we had 4.7 million multi-product customers. Today we have over 7 million. Nearly half of all the new policies sold today are to existing customers. That is up 6 percentage points and well above the natural share that we would expect from scale alone. This is not cross-selling for the sake of it. It is about offering the right products to the right customers at the right time. And the benefits are clear. Multi-product customers have lower acquisition costs and higher retention and engagement so they are a powerful driver of future growth. Now let me touch on how we are serving even more customer needs. Customer expectations are rising so we are accelerating to stay ahead. We are meeting customers wherever they want across any channel. We already have a clear advantage as the leading PCW insurer and we believe that AI-led distribution will be an important channel in the future. And that is why we are an early mover here. We are enhancing our ability to target and predict our customer needs. With our single view of customer data and our AI capabilities, we can do this even more effectively than ever. And we are using Maya Viva as the front door to everything that we offer, leveraging AI to provide a seamless experience and more meaningful engagement with our customers. Getting this right means we can genuinely be a lifetime partner for our customers. Turning now to the second opportunity of transforming with artificial intelligence. Our opportunity here is greater than for most insurers and the reasons are clear. As you just heard, we have millions of customers, a trusted brand and a breadth of distribution. Our scale means that we can invest, innovate and redeploy across the group. We have huge volumes of proprietary data. which is the most critical asset to actually transform with AI. This is an advantage that cannot be replicated and one that will widen over time. We have also been investing in technology. So our IT and digital estates are in a good place and we have been using AI and machine learning to drive commercial impact for over a decade now. UK Personal Lines is a great example. We have used AI in our pricing models to deliver over £200 million of run rate benefits here. That is on top of £100 million of claims cost savings previously mentioned. And we can rapidly build on our expertise as we move into the next phase of AI, now with generative and agentic. So these are all important moats and competitive advantages when it comes to transforming with AI. And we have clear plans to capture the opportunity across the full value chain. We are building on years of investment. Now it is about embedding AI within our journeys, decision making and day to day activities. And this is the next step towards our vision for Aviva. As Charlotte said, we are taking a disciplined approach with four opportunities that catch across the whole group. and as you can see the transformation is already well underway aiming to drive material revenue and efficiency benefits and better customer outcomes. Every year we have over 15 million customer inquiries and most of them are handled by our people. So later this year we are launching our AI virtual assistant to help customers with many of their queries. In protection, we have halved the amount of time it takes to review each case in medical underwriting with near perfect accuracy. This is improving response time for customers, but helping also our teams to handle more cases. In claims, we are building a voice-enabled AI claims agent that will automatically route more than half of our protocols in personal lines. And it will always be on, serving customers 24 seven. And all colleagues have AI productivity tools. We are now rolling out Claude co-work to our most senior leaders because we know that we need to lead from the top. and in wealth, we're using a Gentic AI to automatically, sorry, to automate quality assurance. This will save 50% of time for our back office teams. Most importantly, it's a capability that we can reuse across IWR and beyond. And it's not just individual customers. We are using AI in commercial lines to reduce the time it takes to generate quotes from days to hours, which is driving higher conversion. So whilst it's still early days, our momentum is clear. These benefits are a strong indicator of the value that we will create for our customers, our colleagues and our shareholders. Now, before I talk through our long term growth platforms, which is the third opportunity, let me explain why we are so confident in the underlying growth of the UK market. I haven't been in business here for over 325 years. We do know the UK very well. Put simply, our markets are underpinned by clear structural growth drivers that give us real confidence in the longer term. Let me give you an example. Almost 1 million people will retire every year over the next decade, yet many are not financially prepared. That creates a huge need for retirement guidance, advice and income. And we are seeing supportive regulatory developments here too. Potential reforms to pensions and auto-enrolment would be a further set of tailwinds for workplace. These are just a couple of examples in wealth and retirement. It's the same story on the protection gap, healthcare needs and under insurance. These customer needs are significant and they are only set to grow. And when you look at the broader markets, the scale of what lies ahead is compelling. We have material growth platforms in our portfolio. Take wealth. Today the market profit pool is around 3 billion pounds, shown by the white line on the chart. That is already significant, but in 10 years time it will more than triple to 10 billion pounds, shown by the blue bar. That is exactly the kind of opportunity that we are going after. Across our five growth platforms, the profit pool will grow to more than £100 billion over the next decade. This is a huge opportunity to drive profitable growth for years to come and we are well positioned to capitalise. So let me bring this to life with a few examples across UK Wealth, UK General Insurance, GCS and Canada. Beyond 2028, wealth remains a highly attractive, fast growing market. There are nearly 3 trillion pounds worth of assets today, growing at double digits. We are already the number one player with 260 billion pounds in assets, almost 6 million customers and leading positions in workplace and advisor platform. and our competitive advantages of scale, corporate relationships, lifetime offerings and in-house investment solutions set us apart. Not to mention our mass affluent opportunity with over £1 trillion worth of investable assets held by Aviva customers. And there is plenty of growth headroom with opportunities such as master trust, targeted support and direct wealth. So our organic growth opportunity is substantial and that is exactly what we are going after. Turning to UK General Insurance where we are the clear market leader. With the addition of Direct Line, we now have standout positions in personal lines and we are a top commercial lines player. With our scale, diversified product and distribution mix and unique data advantage, we are well positioned to outperform through the cycle. Yet there are still clear opportunities across the portfolio. And we have the leadership and talent to capitalise on these. Take the new specialty businesses, PET, Rescue and SME Direct. Collectively, they are equivalent to the size of the home market. Yet our share is only mid single digits. Now, with Aviva's capabilities and the capacity to invest, we can take all three to the next level. At the same time, we are staying ahead of emerging trends with a strong innovation track record. We are a first mover on AI distribution. And as autonomous vehicles roll out over the longer term, our in-house repair network and leading commercial proposition will be key differentiators. So our strategy here is simple. Extend the leadership in our core positions while doubling down on the new growth avenues. Turning to global corporate and specialty. This market covers over 500 billion pounds of premiums globally. And we are a relatively small player today, which means our headroom is significant. What excites me most is not simply the market opportunity, it's the model that we have built. We combine strong businesses in the UK and Canada with our growing Lloyds platform. Together, they help us serve more clients, deepen the broker relationships and leverage Aviva's brand and shared capabilities. And this model is already in action. We are expanding in Lloyds under our new Aviva Syndicates brand and using our dual platform to create capabilities to share those one Aviva growth opportunities. More recently, we strengthened our access to the US commercial lines market with onshore presence. And we are doing this in a controlled manner, focused only on areas where we have strong underwriting expertise. For us, GCS is not just about participating in a growing market. It's about actively scaling our differentiated platform. and finally on our opportunity in Canada. The fundamentals of the economy are attractive and we are one of just two players with a truly national presence which gives us significant potential. In personal lines we already have partnerships with two top Canadian brands and our most recent partnership with President's Choice gives us direct access to over 20 million customers. In commercial lines, we are still underweight in small business, so we are now deploying first class digital trading capabilities from our UK business. We have also benefited from shared learnings and claims, saving almost $600 per repair across 50 auto centres. And we continue to expand our regional presence, particularly in attractive areas like Quebec. Canada is an essential part of the group, an attractive market, a fantastic business and it has an exciting future. So I hope that has given you a sense of just how much lies ahead. Let me conclude with Aviva's compelling investment case. We are unlocking the full potential of the Direct Line acquisition. We have unrivalled customer reach with our leading franchise. Our AI opportunity is significant given our scale and game-changing amounts of data. We have capital-like growth platforms in attractive markets with strong momentum and a clear right to win. and our diverse range of businesses delivers high quality and resilient earnings and it's for all these reasons that we have absolute confidence in our current targets and full conviction in sustaining strong earnings growth beyond them. Thank you for listening and let's move to your questions.