Aviva Plc U/Adr

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

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

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

Thank you, Amanda. And if you would like to ask a question, please raise your hand and we'll get a microphone to you. Drew Baker.

Lots of Andrews.

No, it's Andrew Baker, I think. Oh, sorry. Oh, he's back here. Sorry.

Great, thank you so much. Thank you for taking my questions and thank you for letting me be the first Andrew of the day. So I guess on general insurance, are you just able to give an overview of pricing versus claims inflation trends that you're seeing in personal and commercial lines split by UK and Canada? And then on the management actions, so these were clearly sort of above the run rate in the first half. You've signalled sort of still expect some in the second half. appreciate their lumpy but was there any thought in upgrading the sort of 200 million guidance i'm thinking more next year and beyond and then finally i guess in november and the update to group targets are we should we be expecting sort of current targets but just overlaying direct line on top of that or should we be expecting new metrics thank you

okay thank you shall i pick up one and three charlotte and you pick up two so on the gi pricing so what what we're seeing is that inflation is sort of mid single digits um across motor and slightly slightly more a little bit more on home and you'll have seen the most recent pearson ham data which just to remind you so you know that is that is just the price comparison website um data And I think that was showing us 7.5% motor rate reduction to the half year. If we look at Aviva's experience comparably on PCW, it's actually minus 3%. So I think what you see is that we're applying real discipline there. And I think if we think about where that was, because I think sometimes we forget what was happening in 2023, you know, the PCW rating increases there were around our new business was 47%. So the way that we look at this is that there is really strong pricing adequacy within the book that we're writing at good written cause. We are looking at our own pricing action to make sure that we maintain discipline in this market. If you remember when we reported at Q1, we said that our new business rates were minus 4. They're now minus 3. So you've seen that happening. And I think the important thing here is when we look across motor, we've obviously got other distribution channels as well. It's not just the price comparison websites. It's our pure direct channel, our intermediated channel. And we've been able to, therefore, balance that discipline across. Did you ask about home as well, Andrew? Just on home, so there the Pearson HAM data is showing new business rates down by 7%. For us, that's flat. So, you know, I think what you're seeing here is that we are able to be very disciplined and that is obviously putting us in a more confident position.

Charlotte, on management actions. As you say, we typically guide to management actions of around 200 million and that's in the solvency to OFG metric predominantly. And historically, they've been more sort of clustered in the second half. But we have sometimes seen management actions arise at other times of the year. And that's the case this half and I think probably going forward a little bit more likely. I think as we go forward in the second half, I would expect us to continue to work the balance sheet and see some more management actions. But guidance is 200 per year, recognising that they can be lumpy. So sometimes they'll be a bit higher. Sometimes they'll be a bit lower. I think they were a bit lower last year. So probably this year they'll be a bit higher. But it's too early to quantify. And I really wouldn't change your guidance up from 200 million going forward.

on the target. So obviously, we're very focused on delivering our existing targets, which we only set last year. And we do remain on track. And you can see we're making really good progress against that. So the business obviously now being majority capital light. We've spoken about this before. We definitely do see ourselves more in line with the European multiliners. And so we are going to consider what the right targets are for Aviva as we move forward. And I'm not going to front run what those are today. And as Charlotte said, we'll come back in November with more detail on that.

Thanks. It's Andy Sinclair from BA. Three, please. First on DirectLine, I know you won't be able to see too much, but just on reserves, if you can say any comments on what you've seen in terms of reserve adequacy at DirectLine since you've taken the keys. The second was just on the reserve releases. Very, very nice coming through today. But I know you said maybe less in H2, but just any kind of updated comments on PYD going forward, strength of reserves, kind of anything you can comment there. And third was just on retirement, actually. competitive backdrop today, anything that you can talk about there. And I know you said it's a nice area to write margins at times, but it's probably not as core, sorry, Dave, if he's in the room, not as core for you guys, perhaps as some other peers who are very focused on BPA. What do you need to still be excited about this area? Is it an area you still want to be pushing for new business with the competition landscape perhaps changing?

Thanks, Andy.

Do you want to pick up the first two, Charlotte? I'll pick up the second one.

I'm not really going to comment, as you'd expect, on DirectLine. We've reported a NIM number and we've had the case since the beginning of July. And so, you know, we've had an opportunity to reflect. But, you know, the opening balance sheet is still to come where all of the policies will be aligned and we'll kind of bring things on to an Aviva basis. So, yeah, probably nothing more to say on that. And then in terms of the prior year development, you know, yes, it was favourable, you know, 2.6 points favourable. And it's favourable both in the UK and in Canada. In the UK, it's kind of some positive commercial lines, property experience, development in large claims, both in GCS and in SME. And in Canada, some beneficial development in Ontario, both in personal auto and commercial property. So it's kind of just items that are developing more positively than the reserves. So, you know, I would say, as I always say, you know, we reserve to best estimate. So there's no expectation of PYD being positive or negative. Hence, you know, I'd be cautious about assuming that this positive trend continues because it is just at a point in time. You know, so that's all I can say.

And I think there was two parts to your target question. So I think it was around confidence in the targets and in relation specifically to what we're seeing in the Belk's market. So I think, first of all, we've shown how confident we are, I think, in the targets. And you see in today's numbers that we have real confidence in those targets. And the reason why we are confident in that is, well, we've always said, boringly, that this is a very diversified business. And what you're seeing here is really strong growth in the capital-like businesses. And by growth, I mean profit growth. I think it's brilliant to do the volume growth, and I think we've done that too. But I think it is all about how you deliver that profitably. And we've seen the wealth business grow profitably, the health business grow profitably, protection is growing profitably, and also the general insurance business. So, bulks for us is one part of the business. Clearly, we have already got a scaled position in bulks and an important book of business there and you saw very strong growth in individual annuities, 29%, so a big performance. But on the new competitors and the trading environment, We will continue to be disciplined. I don't think this is any different to what I've said for the last three years when we've been asked about BULX. It is one part of our portfolio. I think Doug and the team have done a brilliant job in terms of the deals that we've written so far. The IRRs that we've written those deals at and the margins are strong. We've got a strong pipeline. We're in a good position today, 3.1 billion as we stand up here. Mark and the team have been able to source assets as well, 1.3 billion so far this year. But we will remain disciplined. We still remain on track for our 15 to 20 billion across 2025 to 2027, which is an ambition, not a target. that we talked about last year.

Thanks. Naseeb Ahmed from UBS. A quick follow-up on Andy's question there on PYD. If I take that out from your 1H numbers, you're at about 500 million for general insurance combined. Then you talk about softening pricing as well. Trying to get some guidance on second half earnings for general insurance. Should we think about lower than 500 million? Second question on workplace. Can you give an update on kind of what is the earning power of the 1 billion per month that you're getting in? I remember from the InFocus day you had 10 basis points of margin on admin. How much are you earning on Aviva Investor as well? So kind of the all-in revenue margin that you're earning on the 1 billion that you're getting every year. And then finally, on India and China, we don't talk about that at all. Again, what does that business give you? Chinese and Indian markets are up quite a lot. What do you think about disposing those businesses off? Thanks.

Okay, Charlotte, do you want to pick up one and three?

Yes. So, look, I think the way I think about the general insurance business and the profitability, you know, to be at the point where it's half the operating profit for the group is amazing. I think, yes, we saw some PYD and weather, but across the group, they're largely offset. So the group core was 94.6, the underlying core 95.9, And that's, you know, 0.9 better than the first half. I think, you know, what I showed on my early slide was that improvement in the underlying core by about two points over the last few years. And, you know, we saw real improvement in Canada this time, you know, four points improvement there. You know, the UK core was relatively low. stable, so it was about 0.7% adverse, but very much in the same. I think it's important to think of the power of the business, maintaining that strong rate adequacy we've built, prioritising the underwriting discipline and trading well. And so we look to optimise that operating profit. and do so at high quality cause. So if I think of the outlook for the rest of the year, yes, it is a softer market environment, but we've got that really good pricing adequacy trading through. We've got a really solid investment portfolio. So, you know, I still see good profitability in the second half of the year. I'm not going to give you a specific number, but, you know, I think all signs positive on the way we trade and the discipline across the portfolio.

On the workplace, so if you remember when Doug stood up and talked about this a couple of years ago, he talked about effectively the driver of the workplace profitability, the 280 million pound operating profit coming from, sorry, the wealth ambition coming from workplace and the advisor platform. And we already have the scale, so I think we're very confident about the ability to grow. And we unpacked it, and you're right about the revenue margin was 30 bps and the operating margin was 10 bps. So I think the operating margin has seen a small improvement since then, and that relates to the administration fees that we recognise through the IWR business, which is the most material component of the profit from the workplace business. You also call out that a significant proportion of the flows go into Aviva Investors solutions from which we earn the fund management fees. So there is additional revenue and profit there. I mean, we don't break that down. So the business is performing really well, the overall wealth business. And I just remind you all that It is from the advisor platform and the workplace business that we deliver the 280 million. The investment that we're making in the direct wealth business, the benefits of that come later. And I think that they're important benefits and they will come particularly with the opportunity that exists in the market. But I think we said this last time, We are retaining over 90% of the workplace business. We are winning about 76% of the schemes that we write on workplace. And the proposition just keeps getting stronger and stronger. And if you add into that the tailwinds that potentially come from the pension reviews, The government pension reviews and things like targeted support, because obviously the targeted support will come out of the workplace customers. So we've got the potential to earn from that too. We are super excited about the wealth business. So I guess there'll be more to come on that in the future, but we feel okay about that. We don't talk about India and China. I think there's really nothing more. There is nothing more to say.

Let me give you a little bit on the sort of profitability and developments this half. I mean, we don't talk about them because they're not part of what we describe as the core markets. But they are two joint ventures that we manage effectively for value. And the Chinese business in particular is sizable and a successful business over there. If I look at the numbers for the half, the sales are up sort of 12%, it's largely driven by China, where we've seen sales volumes a little higher, India a bit lower, but that's largely due to shifting in product mix. And if I look at the margin, it's improved a little as we've focused on expenses and efficiency. And if I look at the OFG, that's actually increased this half. We did do a management action in China, which was refining modeling within the way we reflect the solvency numbers, which was part of that increase, but there was underlying capital generation as well. So they are two parts of the group that, you know, they're not part of the growth strategy. They're both capital intense, so they don't feature on the, you know, where do we want to grow chart. But, you know, we manage them effectively. And, you know, that's all there is to say. Thank you.

Morning, it's Andrew Crean at Autonomous. If I could ask three questions. Can we talk a bit about customers or direct line customers, if possible, about the NPS scores there in comparison to yours and whether you've done any analysis to look at when you take them on board, whether they've already got Aviva? policies and therefore there'll be multiple policy owners. Secondly, I noticed and it's been an issue for some time, your operating free surplus generations or own funds generation is below your cash remittances, which means that you're bringing capital up from the divisions to the center. Is that something that you will continue to do? And then thirdly, on the UK motor business, if you say rates are down 3% and burn cost is up about 5% mid-single digits, that would argue broad structure for about an eight-point deterioration in the combined in 26 as that earns through. What other factors am I missing for that not to be the case?

Okay, Charlotte, I'll pick up one and three and you can pick up two. So on the direct line customers, so yes, obviously on the NPS scores, I think the customer experience is good. So we've sort of not got anything much more to say on that, but we will have more to say in November. But certainly when I went in, I was in Leeds on the first day with the customer service teams. I think honestly it was like walking into an Aviva office in terms of people were thinking about customers. It was just part of the DNA and I felt very good about that. Clearly what we can bring to that particular benefit is just that relentless focus on improving the customer journeys, whether that's in the digital experiences, in the claims space. So I think that there is plenty more that we can do to improve that. On the multi-product holdings, we'll come back with more data in November, Andrew. But I do think that we feel there is a real appetite and opportunity to be able to effectively offer the Aviva proposition to the direct line customers where they don't already have that. And obviously, with our single view of customer, we would clearly like to replicate that. I mean, I'm definitely, I'm not saying we'll be able to do that quickly, to be able to replicate that for all the direct line customers as well. So we feel like we're in a very good space on that. And I think genuinely that, We are ever so excited about the opportunity here because that's an area where we've got a proven track record, we've got the technology, we've got the app, we've shown what we can do, and it will be a sort of lift and shift across to that business. Of course, the tech team will say to me that I'm being way too simplistic about that, but you know what I mean. I mean, you know, we've been able to do it here, so I'm excited about it.

Charlotte, do you want to... Yeah, so look, I think on the remittances up from the entities, you know, we have a sort of strict process in terms of, you know, the solvency buffers that each entity... Each of the major entities are regulated, there's boards, there's absolutely clear appetites and buffers above that. So when we remit from an entity, it goes through a strict process. And if that is on top of what I would call flow, then there's a very hard look at that excess capital being remitted up. I think when we look at it across the group, we're happy that we've got the OCG that we can... used to cover dividends. And I think if you think about what we were able to do to fund the direct line transaction, that's a sign of strength of the cash generation and the power and how we can work across the group. So I'm very comfortable.

And then finally on your last question on pricing, Andrew. So I totally understand where you're coming from on that question. It's probably not as simple as that, and I don't mean that in any sort of disparaging way. So I've already clarified that when we're talking about new business rate in UK Motor, we're typically referring to the PCW channel and how we compare to PCW market indices. So last year, when we talked about the 10% rate reduction in motor rate, that was PCW only. If we look at our whole motor book across PCW, direct, partnerships, broker, the rate reduction last year was only 5%. So that breadth and diversification is a real advantage for us. Also, remember that this has come off the back of a very favourable period on market prices. And I referred to that earlier in terms of the overall increases of around 50% in 2023. On top of that, there are other things that are at play with the dynamic. First of all, we're continually monitoring and flexing the business. So the person sat to your left. is constantly reviewing that and looking on the sort of profitability and the dependency on that to make sure that we are maximising that opportunity. And whilst new business rates are reduced in motor, the impact on renewal pricing remains more stable. So we see good levels of retention around 70% in PCW motor and 90% in our partnerships business. And then finally, on top of that, claims frequency is lower. So, I think that it's just too simplistic to read through that position. So, we're in a really good position today. The reserves are strong, the written cause is still attractive, and we'll continue to demonstrate discipline.

Welcome to Dom and then the rest of us.

A couple of questions on GI margins, if that's all right. The first is just on discounting. I realize it's a tricky one to get an outlook for, but it's well ahead of where you're guided at full year. I wonder if you could just explain what surprised you positively there, what the drivers of that were. The second one was just a real clarification, Charlotte. I think you said that the distribution ratio uplift in GI was temporary. I don't want to split hairs, but do you mean that the step up is temporary and you expect a normal path from here, or do you mean that there was a one-off within that number, which we should unwind when we think about the forward look? And then the third question, Aviva investors, very good capture of the workplace flows. Could you just share some thoughts on the implications of the Mansion House review flows into private assets? How much of that are you capturing? Could this be quite an interesting opportunity given the emphasis on the real assets? Thank you.

Yeah, McKay, do you want to pick up the first two, Charlotte, or pick up the third? Yeah, so I think, as you say, that the level of discounting overall is higher at the half year. I think it's about 4.2. So that's higher than the guidance that we gave of sort of 3.5 at the beginning of the year. And it had lifted, I think, by the first quarter, but it's sort of relatively consistent. So last year it was 4.1, so it's similar to last year. I mean, I think it's, as we've said before, we set the curve at the beginning of the year. So that kind of drives the shape. So when you're looking just the development in the year, it's not a function of interest rates. What it is though, is that the level of the reserves, the change to the settlement patterns and really the mix of business being written. So whether it's long tail versus short tail. So you're getting a number of things that as the business and the portfolio changes, that's just changing the amount of discounting and therefore it's those sort of volatile changes that drive what the outlook would be from here. So whilst I will say it's not, for the rest of the year, it's not gonna be driven by interest rates, but it could be driven by some of those patterns. And therefore it's kind of difficult to give you much guidance, but I think it's sort of a relatively high level compared to the three and a half at the beginning of the year. So I'd be surprised if it goes up further, but it could. And I suppose it's for all of those reasons that we tend to use the undiscounted core as the key metric when we're assessing performance because of the volatility that's introduced. So I suppose that a couple of things to call out in particular is Probitas were kind of earning through or getting used to them being on board. And there's a little bit of a lag between when we get full revenues and when we get full costs. And so some of that cost effect of Probitas is coming ahead of revenue. So that's kind of just creating a little bit of an uplift there. When we bring things on like the nationwide travel program and we've got the nationwide home coming later, when you first bring that on you sort of, you bring all the infrastructure that comes with that and then over time you sort of, smoothing through to use a better phrase to not use a better phrase and so we would expect over time once those things are kind of managed the Aviva way that you're then coming back down in cost but some of it is also then just the shift when we see the shift to more retail you know there's less distribution cost when we see the shift to more of these type of partnerships you see a shift in the other direction so you know as long as each part of the portfolio is working And it makes sense as a whole, you know, it can have some minor consequences. But I wouldn't think of it, I would think overall as the trend still being coming down as we focus on efficiency and actually with the red line, you know, more retail comes on board than anything that's just a temporary blip.

On the view of investors and the opportunity, we do really see that there is a big opportunity here. So if we think about the main default pension fund as of today already has about 5% invested in UK assets, which include property, private debt. And clearly, we would like to invest more to fulfil the accord commitment, which gets to 10% by 2030. We see plenty of opportunity to do that. I mean, we've just launched the venture capital LTAF in this first half. That is focused on FinTech, on health tech, on climate tech. So those are the sort of areas where we are building and already have some expertise. And if we think about just the opportunity within that workplace market, you know, it's going to grow to about 1.3 trillion by 2032. And we are, you know, we have roughly a quarter of that market. We're growing and therefore the private assets will grow in proportion. We just think that it does play very much into the strengths of the Aviva investors team and their capability and to Aviva as a whole. So, yeah, we're very excited about that.

to Larissa, and then Mario had the last question.

Larissa van Deventer from Barclays. Good morning. Three relatively quick ones. The first one, on your 94% core ambition that has always been medium to longer term, you seem to be knocking quite closely on that. Could you give us an indication of what needs to happen? Or do you believe that you could get there in the nearer term if current market situations play out? Secondly, on catastrophe events, if you can comment on the impact of storm Flores that we saw in the beginning of August. And then sticking with GI, pricing in Canada softened in the commercial side. Can you tell us what you expect, how you expect the Canadian market to play out going forward from a pricing and a frequency perspective, given current trends?

Okay, thank you. Do you want to pick up the first one, Charlotte? Pick up the second two?

Yeah, look, I think the sub-94 core is the right medium-term aiming point and always needs to be taken in the context of economic value. That said, UK core this half year of sub-94 at 93.7 is indeed fantastic. obviously recognising that there was some prior development and it was relatively benign for weather. So I think what I would say is it's all the time we focus on the right opportunity to maximise the economic value. So our group target is about operating profit and we want to be doing it at leading cause so you know we are still very focused on getting to sub 94 and I think it's getting a lot closer I'm not going to give you a day on it but I think you know it is it is there as that medium to an aiming point and you can see us making that progress but it is always the right decision to potentially allow a slightly higher core if that's going to drive economic value and in a higher rate environment that still remains. As rates drop, some of that formula might change a bit. I sound a bit like a broken record, but we are definitely making progress and all the work that we do on the claim side, on the cost side, on making sure that we're having that good pricing that's earning through is pushing us in the right direction. And I absolutely hold all the businesses to when are you getting to sub 94 and what are the aberrations. But we do have to look at the whole economic value equation. You're quite terrifying, really, aren't you? And the storm, I mean, look, we have weather loadings. That storm is well within weather loadings.

On Canada GI, so GWB is 3% lower on a constant currency. That has mostly been driven by some deliberate portfolio actions. There is one specific portfolio where we have exited, which was unprofitable. So that's primarily driving that. The core improved 2.3 points to 92.7. There was some favorable PYD. There's lower claim severity, reduced commissions, partly offset by Canada did have some weather, some cat losses in the, I think in the first quarter. So if we think about the outlook on GWP, we expect it to be marginally down on 2024, and that is really reflecting those underwriting actions that we've taken.

But four points improvement in the underlying core in Canada is really strong and does reflect the hard work. Better loss experiences, obviously this half, but because of that pricing action you'd expect, and that underwriting action, you expect that to continue.

I mean, one thing we didn't say was Canada rate increases on home and motor are about 11%. So there's good rate increases in Canada.

And we have got about half a point in that core for US tariffs as well. So this is a very solid business that's continuing to trade well.

Thank you. Hello, it's Barry Corns from Pamier Liberum. First of all, congratulations on a good set of figures. I've just got two questions. First of all, I think, Charlotte, you mentioned that in the medium term you're looking to lower the level of debt. Just wondered how you intend to do that, whether that would mean any disposals? And secondly, I just wondered if you could comment on the UK commercial lines competitive environment and also within that, the ex-Probatas business, how that's been performing and if it's been in line with your expectations. Thank you.

I'll start with the debt and the leverage. So leverage is currently just over 32%, which is slightly above the preferred appetite. And we expected, when we announced the direct line deal, we said that we expected it to remain elevated for a period, but to get back to 30 over the medium term or below. So I think the reasons it's elevated now are, we did the Euro tier two issuance in May, which is 600 million euros, which was a really good deal to get away. And in addition, since then, obviously, we've acquired Direct Line and that's brought 600 million pounds worth of debt as well. If you look forward, and there's the chart in the back with the debt stack and the different call dates, Whilst I'm obviously not saying anything categoric, you know, we have, if you look at those call dates, there's euro 900 million reaching a call date later this year. So, you know, you can see, therefore, there's sort of a mechanism relatively quickly to be, you know, with even after consuming direct line to be back in that sort of 31 to 32 percentile. percent guidance and then beyond that um you know if i look at those call dates we've about just under a billion pounds worth of debt that reaches call dates um or maturities in the next two to three years and so therefore there's there's a really clear route um you know so we look at the options and we look at you know what makes sense to do at the at the right time

On commercial lines, UK and Probitas. So we've seen continued premium growth. GWT was up 15%. That was supported by 180 million, as Charlotte said, in Probitas. The undiscounted quarter of 93.5%. So that improved 2.6, benefiting from strong performance in our SME business and improved profitability in GCS. If we talk about the rating environment, it's actually really hard to do that more generally because there is variation across the different product lines. So there's still good rating SME. There's some softening in parts of the GCS portfolio, particularly the larger cases. But obviously we are benefiting from greater access to markets. We've launched the seven new lines of business through Probitas, expanded the regional presence through our branch network. So we do think that we're in a good position because of the number of products that we underwrite and therefore we can allocate the capital between them. And Probitas is performing as we would have expected it to. We're very pleased with it and very excited again about the opportunities to go forward. So with that, I think we've come to the end. Thank you very much for all of your questions. Really, we appreciate them. Obviously, the IR team are around for any follow-up. And we very much look forward to seeing you on November the 13th, where I'm sure we'll be able to answer all those questions that we didn't today on DirectLine. Thank you very much.