Aviva Plc U/Adr

Good morning and thank you for standing by. Welcome to Aviva's Q3 2024 Trading Update Analyst Call. If you wish to ask a question, please press star 1 on your telephone keypad. You will hear a tone to confirm that you are in the queue. If you wish to withdraw your question, you may do so by pressing star 2 to cancel. I must advise you that this conference is being recorded. I would now like to hand the conference over to Aviva's Group CEO, Amanda Blanc.

OK, thank you. Good morning everyone and welcome to Aviva's third quarter update. As usual, I'll give a brief overview and then hand over to Charlotte, who will take it before we open for Q&A. It's been yet another strong quarter of performance for Aviva. Today's numbers show that our strategy is working, driving growth right across the business, particularly in capital light areas. In general insurance, we've delivered double digit growth across the UK, Canada and Ireland. And in UK Motor, we've delivered an impressive 13% growth in policies in force year to date. There's also been impressive double digit growth in wealth net flows and protection and health sales. And in retirement, we have had an excellent nine months, increasing our volumes at good margins. These excellent results are driven by our customer focus strategy, which we showcased at our recent customer in focus session. Clearly in Canada, we've had elevated claims from cats this quarter as seen across the sector. I couldn't be prouder of the team and how they've responded to our customers through these very difficult times. And of course our diversified model means that we have been there for our customers when they need us and still achieved strong results overall. We're also moving at pace on recent M&A integrations with AIG, Probitas and Optium all progressing in line with plans. So we are delivering on our promises and we have real growth momentum and confidence for the future. All of this is possible because we have the right strategy, a disciplined approach to capital allocation and a strong grip on performance management. And of course we have an outstanding team who are committed to delivering for our customers and our shareholders. With that, I'll hand over to Charlotte to take you through the numbers.

Thanks, Amanda, and good morning, everyone. It's good to speak to you today about the continued growth across our business and another quarter of strong delivery. I'll first cover the highlights from the businesses, starting with general insurance. We have achieved premium growth of 15% across UK, Ireland, and Canada. an undiscounted core of 96.8% was only half a point higher than the prior period. This was a good result given the impact of the catastrophe events in Canada, which I'll cover in more depth shortly. Importantly, we have seen improvement in the underlying core again this quarter, a trend we expect to continue in Q4 as pricing actions continue to earn through. For the UK general insurance business, our performance was very strong again, Premiums were up 18%. In personal lines, premiums were up 26%, once again due to both pricing actions and new business growth, primarily in Aviva Zero and on PCW. Motor policy count has grown 13% this year, leveraging our capabilities and the strength of our brand. As the team was quick to spot and take action on inflation, this has allowed Aviva to grow our market share at attractive return calls. Commercial lines premiums grew 11%, driven by strong retention in mid-market and growth in SME and global corporate specialty, or GCS. GCS also included the addition of Probitas for the first time. Through Probitas, we now have access to a global market with a dual platform more than doubling our distribution opportunity. Importantly, Probitas is already performing in lines with our plans for the business with a mid-80s core in Q3. The UK's undiscounted court was 95.2%, just less than a point lower than the prior period, supported by continued improvement in personal lines, partly offset by commercialised performance, which was impacted by large loss experience in the first half of the year. In Canada, premiums were up 11%. Personal lines premiums grew 13%, driven by growth in auto and property and pricing actions across the portfolio. In commercial lines, premiums grew 8%, driven by continued favourable pricing actions, strong retention, and new business growth in GCS. Undiscounted core was 100%, reflecting the cat events in Canada that have impacted Aviva and our peers this quarter. These included wildfires in Alberta, flooding in Ontario and Quebec, and hailstones in Calgary. Estimated insured loss means that 2024 is the largest lost year for severe weather in Canada on record, and our losses from these events are broadly in line with our market share in the affected provinces. The discrete Q3 core was 110%, with the impact of these events above our long-term average for weather, as you would expect. But despite the impact of these events this quarter, we expect Canada to have a positive underwriting result for the full year 2024, and the strength of the business is demonstrated through its underlying performance. Moving to IWR. In the insurance business, protection and health sales were up 22%, with the acquisition of AIG more than offsetting some market contraction in individual protection. Wealth flows were up of 7.7 billion pounds were up 21%, driven by strong performance in our advisor platform, where customers inflows have grown strongly, outstripping outflows, which have remained elevated across the industry. Our platform continues to outperform most of our peers with its value, functionality, and reliability, a key competitive advantage. Workplace net flows were £5.2 billion in the first nine months, and we have now won 358 schemes in 2024, which will contribute further growth in 2025 as these assets transition. Retirement volumes grew 67%, while VMB more than doubled, reflecting higher volumes and strong margins. We wrote £6.1 billion of BPA across 59 deals in the first nine months. And as of today, we have written 7.8 billion. We expect this will not materially change over the remaining weeks of the year. So I'm pleased to say we have met our ambition of 15 to 20 billion of BPA business across the period 22 to 24. Moving now to the balance sheet. Solvency to cover ratio of 195% reflects the completion of probitas, payment of the interim dividend and the impact of lower interest rates. while good underlying capital generation was able to absorb the impact of Canadian cats, as well as additional capital strain from the higher BPA volumes in the quarter. Solvency debt leverage and centre liquidity remain within appetite at 29.5% and 1.7 billion pounds respectively. So to summarise, Aviva continues to grow, is financially strong, and we have a firm grip on performance management. The consistent and positive momentum of another strong quarter gives us great confidence in our outlook. The clear benefits of our diversified businesses and our customer focused strategy underpin our confidence in meeting our group ambition. And we are committed to delivering for our shareholders, our customers and our people. And with that, I'll hand over to the operator to start the Q&A.

Thank you. As a reminder, if you wish to ask a question, please press star one on your telephone keypad. You will hear a tone to confirm that you are in the queue. If you wish to withdraw your question, you may do so by pressing star two to cancel. There will now be a brief pause while questions are being registered. Our first caller is Andrew Baker from Goldman Sachs. Your line is now unmuted. Please go ahead.

Great. Thank you for taking my questions. The first one, just on the retirement margin, it looks to be tracking ahead of the 3% guidance you highlighted in the half year. So just as we think about Q4, it looks like there'll be a lower contribution from BPAs and therefore, I guess, a higher contribution from individual annuities in ERM. Just curious what impact that will have on the Q4 standalone margin? And then secondly, are you able to just, I guess, give us an update on your latest views on new business and renewal trends and claims inflation by your key markets and products as well on the general insurance side? Thank you.

Thanks, Andrew.

So Charlie, do you want to pick up the first one? I'll pick up the second one. I mean, I think what I'd say is that the retirement margin that I've been guiding to for the full year has been 3%. And that, you know, ultimately, in the first half of the year, we saw a high volume of smaller deals. So first and second quarters. And what we've seen in Q3 is, you know, some more significantly big deals, the RAC deal, the Mitchell and Harrison. and the deal that we've announced that we've signed in Q4 is also of size. So you get variation in the margin depending on the deals. Obviously, we operate at different deal volume sizes, and we're always hunting for the ones that give us a good margin and the strong IRRs that we look for. So I would still say that even though we're slightly ahead, at this point, I would guide you towards three for the full year. And whilst you're saying there isn't that much in Q4, I mean, there is a big deal, the deal that we announced in October 1.7 billion is in Q4. So you're still going to get largely a BPA dominating on the margin in Q4 as well.

Thanks, Charlotte. So on the general insurance business, I think you were asking for inflation and rate trends. So what we're seeing So in the UK, we've seen inflation fall from the 10 percent experienced in three to mid to high single digits. We expect claims inflation to continue to track downwards. But obviously, there's a little bit of volatility and uncertainty in things like materials and labor markets in Canada. Inflation is at mid single digits and we expect similar levels for the rest of the year. So how is that translated in terms of rate? If we think about the UK in terms of UK motor, UK motor has continued to soften. I think you'll have seen the ABI stats this week throughout Q3. So for us, new business rates are down low single digits year to date. But I would stress that we have significant rate adequacy in the book. And what you're seeing is considerably higher renewal rates because obviously there was a lot of rate which was put through in 2023. In the home market, it's lagging motor and continues to harden about one point of rate per month. going through, showing some signs of slowing in Q3. So again, there you will have seen good new business rate and good renewal rates still, because there was significant rate put through in 2023 also. In terms of commercial lines in general insurance in the UK, in motor we're seeing rate increases quarter on quarter. Property rates have flattened a little, but the increases remain mid-single digit. casualties roughly flat, but rate coming off in some lines. So, you know, finance, the financial lines, SME typically seeing better rate conditions than, uh, than, than GCS. But, you know, I would also stress here where we are monitoring our technical price versus the street price. And we have very strong rating adequacy across, um, across our lines of business in Canada. Uh, we've put through about eight to nine points in personal lines this year. In commercial lines, we're seeing mid single digit rating increases. We expect about 11 percent rating increases in personalized by the end of the year. So hopefully that is that answers your question, Andrew.

Very clear. Thank you.

Our next caller is Farouk Hanif from J.P. Morgan. Your line is now muted. Please go ahead.

Hi, thank you. Congratulations and good morning, everybody. Can we just talk quickly about discounting effect in the combined ratio? It was a little bit better than I expected, but obviously given yield trends, how should we think about that going forward? Secondly, your wealth, your business margins were a bit lower. Is that because you're, I mean, you comment in the press release about investing in the business. Can you give some sort of idea of what might happen to that number in the next, you know, in the near term. And then your very, very strong net flows in wealth. I mean, they were very strong. Kind of what's going on there, is that just because you're investing in it, you're getting kind of ISAs on board and, you know, where do you expect that to go? Thank you.

Okay, shall I pick up the third part? Do you want to pick up the first two? Yeah, so look on discounting, you know, the way we do discounting and not all IFRS 17 policies are the same, but the way we do discounting is determined by the rates on the 1st of January each year. And so, you know, what you see this year is, you know, you might have expected, given that the rates at the beginning of 24 were lower than the rates at the beginning of 23, you might have expected the discount effect to be lower. But it's not just affected by changes in rates. It's also affected by changes in the levels of reserves. It's sensitive to yield curves, settlement patterns, mix of business, PPOs, et cetera. So it's difficult to give you much more in the way of guidance because it is driven by a number of factors. And then wealth margins, was your question on, can you just repeat the question, was it in relation to the Q3 discrete?

Yes, so the Q3 discrete I think was about 60 bits or something, more than 80 last quarter, so just in Q23.

Hold on, bear with me.

Yeah, so let's talk about the flows. So total flows are obviously very, very strong, 7.7 billion up 21%. The AUM now in that business is 192 billion. So I think, you know, we are incredibly pleased with how that's going. Excellent performance in the platform. I'll unpack that a little bit in a second, but up 76%. And obviously workplace, which is the workhorse in essence of that business is basically continues to grow net flows. And we're now at 5.2 billion. We are also seeing direct making good progress. So the direct numbers are up 226% off a small base, but I think with the launch of that platform. So if I just look at the two key areas around workplace, so AUM is up 23% versus 12 months ago, and net flows are now 6% of AUM. So the net flows of 5.2 billion is obviously substantial. So just to give you a few headlines there, we've added 130,000 members in 2024. We've continued to see upside from high levels of wage inflation. And we've seen greater than £2 billion worth of single premiums year to date, which has been increased by pension consolidation activity and benefiting from enhanced marketing and digitization of our customer journeys. So, you know, I think that's in workplace activity. If you look at the advised wealth platform, I think the performance there is really excellent. Net flows are up 60% versus last year, and assets have now surpassed 50 billion. So we're seeing strong inflows across the market. So why? Well, I think, first of all, we're the number one platform of choice by advisors, and that's the de facto view in 2024. We've got very strong relationships with the IFAs, and that includes some really key... partnerships. We're also starting to see the synergy benefits with Succession, who's now passed over a billion pounds onto the platform. We've got things like the ESG modules, and we've launched a new asset transition service. So I think what you're seeing here is the benefit of years of hard work of investing in the platform coming through, the strong brand, the strong relationships, you know, the market dynamic all coming together and seeing a really good performance. So yeah, we're really pleased. Charlotte, hand back to you.

Yeah, so I think what you're looking at is the Q3 VNB versus the PVNBP. So VNB was down 16%, so 41 from 48 million, whereas the PVNBP is up 15%. And what I would say is that the PVNBP is clearly reflecting... Strong growth and sales in the period, particularly on the advisor platform, as Amanda just referenced. But really the best way to assess the performance of this business is based on the net flows and the AUM. So the net flows are increasing by 21% and the AUM increasing by 21% as well to 192 billion. But coming back to the specifics, as you know, we've been investing in the business. And relating to that, in Q3, we've put through an expense assumption change, which impacts the VMB in the discrete quarter. Now, because we've done it in Q3, but it relates to the whole year, this is an element of catch-up because the effect has gone through in Q3. And when you look to the next page, and if you look at the nine months to date, you can see that they're moving more in line. But more broadly, I just really wouldn't encourage you to focus that much on the VNB for the wealth business. But we obviously put that in so that you can see the VNB for the whole of IWR. Thanks, Brooke.

Our next caller is Ria Shah from Deutsche Bank. Your line is now unmuted. Please go ahead.

Thanks. Good morning, Amanda, Charlotte. A couple of questions for me. So the first one is Probitas. How much was that within the commercial gross weighting premiums and what kind of growth do you expect going towards that? The second one is a bit wider. In terms of the UK budget, there wasn't much that came out that was directly linked to insurers, but could you just comment on how you're thinking about the implications from the budget around NIC and also potentially maybe upping the demand for individual annuities? And then the third one is in the UK, I mean, the combined ratio is improving and you've been talking about the pricing actions coming through, which we can see. Just wanted to see at what stage could we see that combined ratio getting closer to the 94% medium-term target? Thank you.

Okay, thanks, Shreya. Do you want to pick up one and three, Charlotte, and I'll pick up two? Yeah, so look, I think to give you a broad idea about how much Pogutas has contributed this quarter, it's just over 50 million, and it's very much in line with the plans. And that's, you know, if you think that they wrote about 280 in 23, it still requires all of the capital for it to be coming to us. But, you know, 54-ish was what was included in Q3. I would say, broadly, the integration is going well, and we're really confident in the plans and the strategy for Bobitas. very much in line with what we assumed when we did the transaction in the first place. You know, they've written at a low 80s core as well. So, you know, in general, very good. And, you know, we see in 24 that the focus is on the lines that they already write. So property, financial lines and casualty. But as we get into 25, we would extend it into incorporate wider Aviva product suite And only this week, or was it last week? This week, we announced some new classes for Probitas as well. So it's going well, and it gives us this huge access to the market, which is 200 billion globally. So over time, we really have high hopes for it.

On the budget, I think there were three parts to your question, the budget, individual annuities and NIC. So on the budget, obviously, we like the pro-growth focus. But in order to do that, we obviously need to see a bit of collective and relentless focus on unlocking investment. And I think the pension review, and we've seen some of the statements that the Chancellor will make at the Mansion House, this evening come through this morning, and maybe we'll talk a little bit more about that in a second. So overall, you know, there was no significant impact from the budget from an Aviva perspective. On NIC, of course, there's an impact, but it's not material for us. So, you know, we can manage that in our numbers. In terms of the opportunities then, so on individual annuities, yes, obviously, we would see the opportunity for more individual, and we're already seeing good growth on individual annuities. But I think in the first instance, what we would see is more in retirement planning coming through and therefore a benefit to succession and to the advisors in terms of helping individuals to think about how they plan for their retirement and then You know, one of the consequences of that will be, we believe high demand for individual annuities and clearly we're very well placed from that perspective, both in terms of providing the advice and then fulfilling that from individual annuities. The other opportunities though, obviously, are around the pension consolidation. And we are obviously the biggest workplace pension provider in the UK. Our workplace pension business is 124 billion. We have very big default schemes that sit within that 124 billion. So we are encouraged by the opportunity for more consolidation in that area, because obviously with scale, you get the benefit of the efficiency, which we're already providing. But you also get the benefit of greater investment and encouraging savers. I think it's really important to encourage those savers that will only ever contribute interest. they are going to need to invest more widely than perhaps they are doing today. And therefore, anything that encourages that more and provides a better outcome for savers, we would clearly encourage that. So I think that hopefully that's answered all of those questions. On the core, Sean?

On the UK core. So the UK core of 95.2 is bettered by 0.9 and very strong. And if you look at the discrete core, it was particularly strong. So it was 93.1. All of this is driven by the strength of the underlying core, which continues to benefit from all the actions that we've talked about before, the pricing actions being on top of inflation early. And that's allowed us to take growth as well as drive pricing through. I think in terms of outlook, I would still you know, bring you back to the overall point that the sub-94 core is the medium-term aiming point. And, you know, we can see routes to get to that. But it is a little bit dependent on the rate environment as well. And, you know, we optimize for operating profit. So, you know, that's it. But we keep our underwriters absolute feet to the fire to get us towards that. But different parts of the portfolio will take a different time to get there. but it is still the medium term outlook.

Our next caller is Larissa Van Deventer from Barclays. Your line is now unmuted. Please go ahead.

Thank you very much and good morning. Two questions from my side, please. The first one, you mentioned that you saw market contraction in individual protection. Can you elaborate on that and also if this is a short-term impact or whether you think there may be longer trend? And then the other one on – actually, I'm going to make it three questions. The second one, on the Canadian cat events, we've had two years of elevated catastrophes now. How does that change your thinking with respect to reinsurance? And then the last question, very strong balcony volumes coming through year to date. Do you have any insights as to the pipeline for next year, or is everybody scrambling to get this year's deals locked in? Thank you.

Okay. Thanks, Louisa. We knew there would have to be three questions ultimately. So I'll take one and three and Charlotte can take two. On what's driving the contraction in individual protection market. So I think there's an element of cost of living pressures there. Obviously, lower housing activity has definitely reduced demand across the market for retail protection products. I think the half-year ABI data showed that the market had contracted 6% versus the prior year. So we're also seeing some element of reduction in AP due to lower increments on escalating policies as a result of deflation. So if we take a look forward, we expect modest gradual level of market growth. We are seeing positive signs in market data with September intermediate applications significantly higher than last year. And it looks like October will also exceed last year. So obviously there's that. And then for us specifically, we've got AIG, which gives us the real opportunity too. So, you know, I think the combination of all of those things, we feel positive about it. Charlotte, on Canadian cats.

In Canada, look, we've indicated in the past that we have about four points of weather loading for the group. And it's similar in UK and Canada, but it's split differently. With Q3, obviously the main cat season for Canada is, the UK weather is more Q1 and Q4. But, you know, four points still seems to be a suitable amount for Canada. We clearly monitor it on a continuing basis. But, you know, we believe that 2024 has been exceptional. And as I say, you know, actually, we've been able to cushion the impact of that and still believe that, you know, Canada will be profitable from an underwriting profit before we get to investment income. I think, though, it's important to think of the other ways that we manage cat exposure. So we're very proactive using our voice as the number two player in Canada to ensure that there's more use of cat resilient construction materials, advocacy, that type of thing. So proactive management there. And we continue to build the sophistication of our cap modeling, supporting all the underwriting and pricing and, you know, being very clear on the pricing in particular cap zones and overall focus portfolio management. So, you know, at this point, you know, with the reinsurance that we have and obviously we're in the reinsurance round discussions at the moment, we're comfortable. But it's, you know, it's an ongoing focus for us, as you would imagine.

On BPA, I mean, I think firstly, you know, we should congratulate the team. I think they've done a brilliant job. And we definitely focused on optimizing the value, as I think you can also see from the numbers. In terms of, I think you were asking about what does the pipeline look like? Well, I mean, first of all, I would say that, you know, we set an ambition three years ago to write between 15, 20 billion. And, you know, it looks like we've achieved that little ambition. So we can take that off are off the list. But if we look at what we think about the market as we look forward, we would expect the market to remain buoyant. We do expect 2024 volumes to be ahead of the record volumes seen in 2023. Whilst obviously some schemes may decide against de-risking, we still expect the BPA, the market to be positive. And it's worth noting, I think, that there's been various market estimates around assumptions around some schemes may not go into buyouts. But we don't expect a big shift at this stage. And we would also say buy-ins and run-on is not mutually exclusive. Some schemes are likely to risk some parts of their scheme and keep some parts in run-on. So I think it's complex. We would still see it as being positive market. But I'd also stress what I always say, which is just one part of our business, that that's the benefit of a diversified model. And we don't just rely on this business for our growth.

Our next caller is William Hawkins from KBW. Your line is now unmuted. Please go ahead.

Hi, I'm Andrew and Charlotte. Thanks very much. I'll try and stick to two questions. Following on the BPA discussion, on the margin side, I've heard pension consultants say that this is the most competitively priced BPA market that they've ever seen. And yet at the same time, we're seeing providers reporting i'm not sure if they're all-time high margins but they're certainly very healthy margins um can you help me just sort of reconcile what sounds like a contradiction there in terms of pricing and margins please um and then secondly um yeah in the canada business you were saying that the first half that you had less favorable reserve development than normal i think the figure was 1.4 percent um can you just comment a little bit on what reserve development in canada looked like in the third quarter please thank you okay charlotte they feel like questions for you

Yeah, I mean, look, it's a functioning market with lots of players and lots of schemes coming to market. It's certainly competitive for every deal that we do. we will be in amongst a number of other players. And, you know, there will be situations where we walk away from a deal because it doesn't look like it's a sufficiently attractive margin and therefore use of capital. So, you know, I do think it's a fully functioning market. And it's also sort of one of those markets where the bigger deals seem to come to market in the second half of the year. The first half was very much characterized by the the smaller deals that we did through Viva Clarity. So I think you have to be good at what you do. You have to be able to source the assets. You have to have good reinsurance. And if you can do all of those things, then you can make healthy margins. And not everybody can. So I think it is you have to be good at what you're doing, have the scale and size and the sophistication. The Clarity model, for instance, the smaller deals, it all attaches straightforwardly to the reinsurance program. So it means pricing is very easy to do and is secured easily. So I just think it is a functioning market with decent number of players, but with our ability to source assets through Aviva Investors, it gives us a bit of an edge. But we only trade when we can do a decent margin because we have the choices across the group. And then in Canada, the... the i mean i'm not going to fully unpack the the developments because it's only a trading update but to give you some sense um you know we saw some positive pyd um from claims experience in ontario motor and property um coming through this quarter um so you know to some degree that's that's positive compared to where we were at the half year in terms of pyd development

Our next caller is Andrew Crean from Autonomous. Your line is now muted. Please go ahead.

Morning, both. A couple of questions. Could you actually give us some numbers about your gross net loss in terms of Canadian net caps? And secondly, could you say the combined ratio in the UK in the third quarter was better than for nine months? Can you say whether that was better weather or better underlying trading?

Okay. Just two questions then. Okay. Look, I'm not going to give you numbers on the Canadian cat for this quarter. It's just a trading update. But to give you some sense, you know, we've seen that positive PYD come through. We've seen the benefit of strong pricing action earning through. We've seen a bit better loss experience on theft and things like that. And so if I look at the underlying core, it's moved positively since the half year. So at the half year, it was 98.8. It's moved a little bit forward from that. Just to try and piece it together, you've got the cash events, which are very much in line with the industry estimates. Two of them are going into recoveries from the reinsurance, so they're hitting that 125 million retention, and the others are not. The discrete core for the quarter overall is 110, and the underlying is a little bit better than 98.8%. In terms of combined for the UK, as you say, the discrete of 93.1 was very strong. I would say it is very much driven by the strength of the underlying core from all the actions that we've taken. PYD is pretty consistent with the half year. It is generally seen as a benign weather quarter. So the weather loading of four points isn't equally distributed across the four quarters. So it's it's much lighter in our estimates, in our plans, in both Q2 and Q3. Q1 and Q4 are the heavier ones. What we saw was that basically the fit that we had allowed for in Q3 was largely met. So, you know, weather was... decent, but there was some floods in September. But it was very much in line with the loadings that we have. And then I would just bear in mind that Q4 would be expected to be the heavier weather. And so that level of discrete core wouldn't be expected to repeat. But the underlying, I'm still expecting to continue to improve from all the pricing actions that we're putting through.

I suppose, could you just give us what you think the industry Canadian loss was? You need to get some idea as to how big it is. I mean, this was a massive event in your third quarter.

And to not give us any sense of it is... Well, the industry estimates are around 7.7 billion Canadians, so 4.4 billion pounds. And our share is very much in line. Our losses are very much in line with our market share in each of the respective provinces with a little bit more concentration in Toronto.

Thank you.

Thanks, Andrew.

Our next caller is Stephen Hayward from HSBC. Your line is now unmuted. Please go ahead.

Thank you. Good morning, everybody. Three questions, please. So the BPA target has been achieved currently. I wonder whether you can give us indication of what you're looking to do going forwards, either on a three-year cumulative or one-year basis. That would be quite helpful. in providing us with a bit of guidance on where the BPA line will go going forwards. Second question, I think you've highlighted obviously that Provitas has launched quite a few new products or product lines, particularly I read in marine construction, renewables, event cancellation and M&A. Is that all the new product lines you're going to be launching with Provitas or is there more to come and what do you expect sort of the nominal increase in premiums to be next year versus the sort of base level of, you know, 270, 280 million per year for Probitas. And then on finally on the FCA investigations protection market, you know, can you give us any kind of indication of what the FCA is thinking about the products that are poor value here and whether or not any of Aviva's products that have been either being written now or in the past, where there is a potential for the total premiums being paid by the policyholder to actually far exceed the maximum payout level of the policy. Is there an issue here?

and you know what are the concerns also around the commission arrangements in the market thank you well that felt like four questions and it feels like they're all for me actually so i'll pick those up in terms of the bpa um target has been achieved uh so good try but we're not going to be setting any more new targets today uh i think that is a trick astrologer said it's a trading statement And our focus is obviously on making sure that we optimize the value generated from an allocated capital budget. I think we've talked about that before, that we try not to set the team a volume target, even though I know we, and by the way, it was an ambition, not a target back in 2022. But I think, you know, I would just go back to the half year where we said we're focused on growing our capital light businesses and And I think we've shown today that we've been successful in doing that and almost keeping flat their retirement businesses. So that's the way we grow the capital light business. So that's how I would think about that if I were you. In terms of probitass, so as Charlotte said, the integration is progressing really, really well. And part of the integration plan was always to launch into new asset classes. And you just named them, so I won't do that. So obviously Aviva underwrote those classes of business before. And what we've done is we've put Aviva underwriters into Probitas so that we can benefit from the dual classes. platform player. And that helps us to expand in the GCS space. And again, you know, good try on getting us to set a new target in terms of that. We're not going to give any new numbers on our aspirations, but clearly our aspirations are very strong in that area. And we see significant opportunity to be able to grow in that market. And, you know, I think that we've got even more excited about Probitas over the last few months than less excited. On the FCA protection market, so obviously we'll fully participate in the market study and our teams have met with the FCA in advance of that study commencing. I think the indicative timelines are end of Q4 2024 for the next engagement and Q1 2025 for the study to commence. So just to be incredibly clear here, we have just come through reviewing all of our products as part of consumer duty. We've been through governance. We have seen no issues. And therefore, whilst we will obviously engage with the FCA on this, we do not see that this will have an impact for Aviva. And we do not see that any changes that they're proposing or likely to propose, and obviously we've run various scenarios, will impact overall profitability. So, you know, we are a very customer-focused business, done reviews, doing new consumer duty, and therefore we don't see that as being an issue for us. Your fourth question was on what? Sorry, I can't remember.

Just on the commission arrangements that the SCA is concerned about.

On protection? Protection.

Thank you.

Do you mean on protection? Sorry, Stephen.

Yes, on the protection FCA investigation, what the commission arrangements that the FCA is concerned about.

Oh, right. Yeah. OK. I mean, again, I would say that clearly as part of consumer duty, we'll also have reviewed the commission arrangements and we don't see any issue from that. But I think they are concerned about whether or whether some of the loaded commissions and things like that. But we don't see that as being an issue for us. We've got very robust processes in place to look at the commissions that the brokers are charging. So, you know, we don't see that as being an issue for me.

Okay, thank you for all the colour, Amanda. Thank you.

Thank you.

Our next caller is Nazeeb Ahmed from UBS. Your line is now muted. Please go ahead.

Morning, thanks for taking my questions. If I can kind of add on to Stephen's question on commissions and ask about the motor finance Hopcroft case. Is there any kind of read across for the industry around that particularly? I think the court case is talking about consent on commissions and understanding of customers. Some insurance commissions can be complex, indemnity commissions, et cetera. Any kind of worries that you have around that court case? And then two questions of my own, small ones. The center liquidity is 1.7 billion. I don't see a lot of uses to the end of the year. And you target about 1 billion. Unless I'm missing anything, what else would you use the extra 700 million for until the end of the year? um and then final question on the india and china jv um india has had some some issues um what what is the strategy there are you still holding on to those joint ventures thank you okay so on on motor finance i'll pick that up and then charlotte maybe the question around the center center liquidity um so um our

We do not think, and I say that twice, we do not think that there is a read across to our business from the case on motor finance commissions. We have looked at the case and the case is about specific issues. So it was about car dealers and value for money and transparency and the way that we operate fundamentally different than that space. But yes, it focused on commissions, but in the motor finance case, The commissions paid were considered by the court to be high relative to the product that was being sold. That was a very important factor in the court finding the arrangements to be unfair. So at Aviva, and I repeat what I just said, we have a big focus on treating customers fairly and delivering good customer outcomes. And we've got extensive governance in place to ensure that this is the case across the business. And we've just been through consumer duty. And our governance includes reviewing all of our products from a value for money perspective. And that will include any commission element where we are selling via a third party. So we do have broker relationships across our business and commission is often how advisors are remunerated. But what's really important is whether those commissions are set at an appropriate level and meet that value for money criteria and good customer outcomes. And we also have a huge amount of retail, direct and PCW business, which doesn't attract commission. I think all of those things would say that we do not have any worries.

And on central liquidity, it's 1.7 billion, as you say, at the end of October. I mean, ultimately, it's a balancing act between when the timing of remittances come up from the operating companies and when we pay things like dividends. And so at any particular time, it could be more or less than, you know, a bit more above the billion or less above the billion. But I wouldn't read anything more specific into it than that.

Yeah. And in terms of India and China and the JVs there, I mean, obviously there's no there's no update because today is a trading update. And so nothing more to say really on that.

Perfect. Thank you.

Our next caller is Thomas Bateman from Mediabanker. Your line is now muted. Please go ahead.

Hi, morning all. Thanks for taking my questions. Sorry to go back to the commission thing. There's obviously just a little bit of uncertainty on the legal landscape at the moment. Just on the commissions, I know you said this, so feel free to answer very quickly, but are there any risks on the AIG protection book that you purchased and the commissions that were sold for any of those products? And similarly, when you sell through a PCW, are the commissions disclosed for a motor or home policy on those websites? And the second question is just on Aviva Clarity. Could you just give us a quick update there in terms of maybe the type of number or the level of volumes that are coming through this platform? Thanks very much.

Yeah, okay. So, I mean, on AIG, I think just read across from the statements I made on the wider Aviva book, that will fall part of all of our consumer duty work and all of our product governance work and you know, obviously that business is well into integration now and the team have looked at that. On PCW, I mean, there's no commission on PCW. I mean, so I guess there are fees. I actually don't know the answer to that question in terms of like what is disclosed and what is not. But there is not an intermediary in the middle. So I don't know what you're getting at there. So I don't think that at that. So I would basically have to... I have to have a look at that. I don't know the answer. The IRT will come back to you.

And then on Aviva Clarity, I'm not sure if I've got the most up-to-date numbers. We've certainly transacted 59. 39, I think. By the half year, though. Hang on. Yeah, 59. Yeah, 59. So it's 59 now. I was thinking it's 59 in the half year. Yeah, 59. So look, you know, and I think it was particularly obvious in the numbers in the first half, both in Q1 and Q2, where we saw good volume at good margins. You know, it worked very well. It's very streamlined. It gives customers access to, you know, viva name it gives them uh price certainty very easily they they they you know we're able to do it quickly they're able to update their assets um onto the system and then we're able to price quickly so it's it's it's working well thank you very much thank you there are no further questions on the line i will hand the call back to you amanda

OK, so thank you very much everyone for all of your questions. As usual, the IR team are available if there's any follow up on that. But, you know, we really appreciate your time this morning and we know that you've got a busy day and a lot of other people to go and see, but hopefully you appreciated the update. Thank you very much.

This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.