Aviva Plc U/Adr

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

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

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

Thank you, Jason. And good morning, everyone. As you've heard, the acquisition of DirectLine will significantly expand the opportunity we have in UK personal lines. The market accounts for over £35 billion in premium. That's a big opportunity, and it's a highly profitable one for players who are consistent and disciplined through the cycle. And year on year, we've proven that we can do that. Now, the shape of our combined business is a key strength. We're the number one player in motor and home, and importantly, we're not over-reliant on any specific product. From a distribution lens, we're more weighted towards retail, which is attractive because we directly own the customer relationship and it's more profitable. And as Jason said, And we also have the new direct line products across pet, rescue and micro SME. We have real growth headroom here, which I'll cover later. The intermediated side of the business plays an equally important role. We are historically strong in this space with leading broker and distribution relationships, both within GI and across the group. Aviva Private Clients is our leading high net worth proposition for mid through to ultra high net worth clients. Our broker business further expands our customer reach, often serving customers who need advice for their insurance requirements. Finally, partnerships serve customers of leading UK banks as well as other key partners, harnessing their brand and reach. So each segment plays an important role. And we have leading market positions across the board, giving us the right to win today and in the future. So, when it comes to our retail channels, our brands are crucial to enabling both customer choice and unlocking commercial success. Aviva already operates a multi-brand strategy on PCWs, so we know exactly how to manage this. And we've done so with great success, nearly tripling policies over the last five years and maintaining a strong retention rate throughout. Aviva Zero is a great example of this in action. We launched the brand in early 2022 and since then we've grown to almost 1 million policies in force. Over the same period, we've added a similar number of policies to Aviva Online as well. And we've seen very low levels of switching between the two. In other words, any overlap is significantly outweighed by the benefits of choice for customers and incremental profitable growth to us. And with DirectLine, we now have an even broader set of brands which grows our advantage. Not only are we extending customer reach, but we're also increasing presence on PCWs, both of which drive stronger commercial outcomes. And we're providing customers more choice and flexibility as their needs change, from lower-cost cover through quote-me-happy and Churchill, right through to more affluent customers with Aviva Signature, our premium direct proposition, and everything in between. Of course, deploying these brands in the right way is critical. We're clear on our target customer segments for each, differentiated across important factors like affluence and age, right through to lifestyle. And we also know how each brand resonates differently. This allows us to minimise overlap while giving customers freedom of choice. So, collectively, all our brands form a powerful customer engine which is unique to Aviva. One area I'd like to cover in more detail is the DirectLine brand on PCWs. This is a huge growth opportunity and we're accelerating progress. After more than 12 months, DirectLine was still on just one PCW. And in the last 90 days, we've helped the teams get live on all four major names. As Jason said earlier, we're also transforming direct line PCW performance with Aviva's technical capabilities. There's a long list, so I'll just pick out a few highlights. We've rolled out more sophisticated risk models, including bodily injury, and we've increased the frequency of pricing changes by more than 50% since June. We've streamlined processes to accelerate the pace and quality of decision making across trading and performance management. We've increased quotability through an expansion to underwriting footprint. We've shared data sets across the two businesses and put efficient feedback loops in place. And we now have more claims data than anyone else in the market. And finally, we're following Aviva's pricing and underwriting led approach to embed margin discipline across the book. This is our DNA and has served us well through many different market conditions. Our primary focus has been on margins and we're already starting to improve loss ratios. We're also seeing the earliest green shoots of momentum on volume with the policy count for direct line PCW more than double where it was at the half year. but our focus will always be on margin first. And we've done this before with a clear track record of building and rapidly scaling on PCWs with Aviva Online and Aviva Zero. So I know that we're bringing all the right capabilities to deliver the same success to DirectLine. As well as enhancing existing lines, we also have attractive opportunities with new products. As you can see, market shares are low relative to the rest of our portfolio, so we're confident that with targeted and careful investment, we have real potential to unlock more growth. In Rescue, we want to accelerate by capitalising on opportunities across our value chain, including our own distribution, partnership capabilities and claims. In PET, we're intending to build a new Aviva branded product to capitalise on the PCW opportunity and tap into Aviva's existing customer base, including through MyAviva. MicroSME primarily covers vans and small-scale residential landlords, which already form part of our personalised business. This has always been complementary to our commercialised business, which serves SMEs and corporate customers via brokers. And we can use our expertise to accelerate here. Finally, on Motability, where we provide fleet cover for the scheme that leases vehicles to people with disabilities or long-term health conditions. We are already bringing strong capabilities to deliver on our joint partnership priorities. And while others have struggled to succeed in partnerships, This has not been the case for us. In fact, we've consistently written at attractive combined ratios in our partnerships business. To wrap up, together with DirectLine, we now have even stronger competitive advantages, setting us well apart and enabling us to be the standout number one player in the UK. We have leading positions, a strong track record, well-known brands, a full suite of products and first-class technical capabilities in pricing, underwriting and claims. These strengths will set us up to win both now and for the longer term. And with our unparalleled scale, we'll keep investing to unlock even more potential. So I'm excited for the future of our personalised business and what we can achieve. And with that, I'll hand back to you, Amanda.

Okay, thanks, Irene, Jason, and Charlotte. So before we move on to Q&A, let me share some final reflections on what you've heard today. So as you can see, Aviva is in a stronger position than ever. Our performance trajectory continues with another set of targets achieved. We are well on track to unlock the huge potential with DirectLine. And our new three-year targets reflect our big growth ambitions. and we know there's still much more to come from Aviva. In fact, we believe the investment case is now even more compelling. We are the UK's leading diversified insurer, with market-leading positions across the board. We are majority capital like today, and we are set to surpass 75% by the end of 2028. We are executing a clear customer-first strategy now for even more customers. And we've got momentum. We're building on it quarter after quarter. We're delivering for our shareholders with enhanced distributions. And as a management team, we are confident about Aviva's future. So thank you, everyone, particularly to Owen and Jason. Now Charlotte and I will move on to do the Q&A. Thank you very much.

Thank you. And just as a reminder, if you want to ask a question, just raise a hand and give us a moment to get a microphone to you. We'll start with Andy Sinclair in the third row.

Thank you very much. And nice targets. Thank you. So first, on the 50 million of claims cost savings within direct line, can you just tell us a little bit more about what's included in that? What scope there is to go further on effectively improving the loss ratio and claims management within DLG? Second, just on DirectLine's reserves, when they came in, just any colour you can give us in terms of any adjustments made to the DirectLine reserves when they were brought into Aviva, effectively is DirectLine's old business now reserved to the same standards, same levels as the Aviva business? And just finally on the capital synergies, just how much of that is from just diversification versus how much, effectively, assumption changes from the cost saves coming through, releasing any excess capital in direct line or anything along those lines? Just some detail on where that comes from.

Thanks. So on the claims, as Owen and Jason outlined, there's a huge opportunity there. We've got a combined indemnity spend of £4 billion. And if you think about the garage network as well, you know, and the savings that Jason was articulating there of £500 when we use the Solus garage. so so where what that 50 million will be and we've we've demonstrated it in the core of eva book we've taken out the sort of 85 million remember that's the sort of recurring 85 million once we've done the investment so what we're doing is investing 50 million to deliver a 50 million recurring savings which you'll see coming through in the loss ratio so it can be you know better fraud models it can be better efficiency improvements it can be all the sort of things you would expect you know, the process of handling the claim so that we're not losing any money in the way that the claim is paid. I mean, you know, I think it's a really good number. And you see that on top of all the other benefits that Owen talked about in terms of the pricing and underwriting. And that loop. of claims to underwriting. You know, if I think back to the inflation challenge that we had, it was the process that we had in place that we'd invested in which created the loop of information. You know, I think that's what you're going to see here in direct line. So hopefully that's a little bit more flavour. Charlotte?

So on reserves, as we mentioned, it's a half year. We didn't observe any issues with direct lines reserving. And obviously we paid the first uplift on the dividend at that point, which should have given you also some comfort in that. Of course, one of the integration activities is to bring alignment with Aviva's accounting and reserving policies. And that's part of determining the acquisition balance sheet. I would say on that the work is still ongoing but we're well progressed across the material components and in particular on reserving. So all of that work on reserving policy alignment is substantially complete. And to the extent that we have made any adjustments, they are reflected in the Q3 solvency ratio of 177. And you'll see the details on the full acquisition balance sheet when we publish it at the full year end. And on capital synergies, I mean, essentially the 500 million is all coming from diversification.

Andrew Baker, just behind you.

Great. It's Andrew Baker, Goldman Sachs. Thank you for taking my question. So first one, slide 17, so the 7% sort of growth in the underlying business. If we strip out direct line from that, I'm guessing the underlying growth sort of of the remaining businesses are probably in the mid single digit range. Are you able to give us a sense of which businesses you're expecting to sort of outgrow that number, which businesses are a drag on that number, just sort of trying to get a sense of the pluses and minuses around that mid-single digit number. And then secondly, just in terms of the plan, are you able to give us a sense of the PNC top line and combined ratio assumptions that are within your planning assumptions? Again, just trying to get a sense of the conservatism or not within your plan, especially given your track record of beating targets historically. Thank you.

Do you want to pick up the first and I'll pick up the second?

Yeah, so I think what I would say is, you know, we're very pleased with the EPS development that we can see here, so the 11%. And as I unpacked before, it's two coming from the share count improvement, share count movement from the buybacks to from the... the cost synergies. I think when we look at the rest, it is a strong track record across all of the business and it's our opportunity to manage the group as a whole. Some of it is more top line driven, so health and wealth. Some of it is more margin improvement, which we would point to Direct Line and some of the other general insurance businesses. I'm not going to unpack it because part of the beauty of the diversified business is being able to take advantage of tailwinds and not bang our head against headwinds. But I think what you see is us is driving really high quality growth and across those businesses and it's already coming off a very strong track record of improvement in profitability as well. So I think we always take the right decisions on the portfolio to really keep within the risk parameters that we've set.

Yeah, and on the assumptions, so to just reiterate what Charlotte said, you know, we think the targets are ambitious and we also think that the 11% category is very attractive and hopefully people agree with that. In terms of the assumptions, we've been realistic here. So we've taken into account the soft market in parts of general insurance. We've also the difference between the UK and Canadian markets. So you've got a hard personal lines market in Canada where rates are going up in motor and home by around 11%. And also the fact that we've got a leading position in the SME market in the UK and where we're seeing good rate and increase still coming through on that business. So we've taken all of that into account. Also, we've set the trajectory based on the spreads and the yield scales as we see them today. And obviously, we've also got some real positives. If you think about the tailwinds that there are in workplace and wealth and health, then that, I think, is also important to remember. If we think about just a little bit on workplace, One billion pounds of regular contributions in flows coming through every month. You know, it is a train that sort of keeps on growing. Doug and the team have got a fantastic proposition. They're winning over 75% of deals. So, there you're seeing a sort of volume and the sort of margin improvement. So, I think we feel that the assumptions are realistic, but ambitious.

Is there three people in the front?

Hi there, from JP Morgan. The first question, you know, adding to that, you know, a lot of your peers have talked about the scale opportunity in workplace and wealth, you know, the operating leverage. So, I mean, obviously, you're seeing that in your 280 million target. But can we assume that if that accelerates, like your peers, you expect operating leverage to continue, so you add a lot of assets without much cost, basically, in that business going forward. Because obviously your target's for 26 and you've got another two years, it'll be interesting to know about the momentum in that business. Second question is on the customer opportunity. I mean, you talked about it, I think, very convincingly. You've obviously delivered it in the past, but just in terms of the direct line customer base, can you throw out some numbers again in the context of what you said before about what the opportunity is there? And the last question is, please don't laugh, but M&A again.

Okay, sorry, not laughing.

So, I mean, by my calculations, you've got pretty good build-up of cash again. The 10 points of synergies are very, very helpful. It feels that by 2028, you're back to where you were before you did the DLG deal. Has anything changed in terms of M&A? Is it still something that you will look at if you see something appropriate? Or do you think it's kind of done? Thank you.

Okay, so I'll get Charlotte to talk about the operating leverage because she's got some numbers. But just a little bit on the scale in wealth. I mean, we have scale in wealth. We are the biggest platform in wealth to over $220 billion. And, you know, what's really important, I think, is if you look at the component parts of that, the workplace business and the platform business are profitable businesses today. And so we get good margins on those businesses. And obviously scale allows us to benefit from that. And it also allows us to invest in both of those things. And there'll be a new My Workplace app, which will be launched, you know, I think, I'm looking at the team, this week. Soon, soon, soon. So which will enhance the proposition sort of even further. So very, very excited about that. Charlotte, in terms of the margins.

Yeah. I mean, look, the margins that we've thrown out before, and I think all the way back to the In Focus session, we talked about a revenue margin of around 30 bits and an operating margin of around 10. I think where we were at the half year, we were still around that 30 points, but there's always pressure on that revenue margin. And, you know, therefore, it's really important to be driving the operating leverage. So I think by the half year, actually, we were showing something more like 12 points. So, you know, that is everything that we recognize in the IWR business. And it's kind of a material driver of that profit in wealth. And as we continue to build the scale and focus on the costs and how we deliver, then we will kind of keep ahead on the operating margin. And then, of course, on top of all of that, you've got then a lot of the flows, now a really high proportion of the flows going into Aviva Investors. And then there's a small fund management fee that appears on the Aviva Investors side as well.

Now, on the customer, there's a lot of customer data. So, I mean, I could go on for most of the session on this, but I'll just maybe give you some of the headlines. So, 22 million customers in the UK alone. So, one of the largest franchises. We've talked about that. So, four in ten adults in the UK have got a policy with us. If we exclude the acquisition of DirectLine, we have grown our customer base by 2 million over the last five years. And our multi-product holdings are up from 4.7 million to 5.48 million, to be precise, since 2022. Some of the key things here, 43% of our new sales come from existing customers over the last year alone. And we've grown the market to our customers by 5%. Now, then add on the opportunity with DirectLine that comes with that. Obviously, you know, Jason referred to it, 4 million new customers, and then the opportunity to overlay the opportunity to sell more Aviva products. I mean, I think that's incredibly exciting. But we've also been able to drive a huge improvement in customer experience. So our TNPS is now consistently over 50, and our online experience score is over 70%. And, you know, we spoke about the digitization and automation within Direct Line. If we compare Aviva and Direct Line in terms of that customer experience, a lot of the Direct Line demand is still over the phone. It's not digital. It's not automated. So, you know, that's cost heavy, if you like. We have made a real big success of automating and digitizing our customer journeys over the last number of years. So you imagine bringing that, that delivers better customer experience. So I think the opportunities are really high, and we're very excited about getting on and delivering that. Really key to that, though, without wishing to labor it too much, is having the strategic customer marketing base where we've got all a single view of customers. So for many years, insurers have talked about, or banks, everybody talks about having a single view of the customer. We obviously have that. And that is incredibly important for being able to deliver this growth. And that is right across Aviva, not just in general insurance. On M&A, yes, we do build back up the cash. And what we've always said about the capital allocation is, you know, we either return it to shareholders or we invest it well in the business. And when we think about the business, we've got big integration to do. We've made great progress, yes, but we're four months in. We've got to deliver the capital synergies all of next year. We've got to deliver all of the other cost synergies. But, you know, please be reassured, we're very ambitious for this business. But we do believe there's plenty of organic growth opportunities that we've already talked about, just some of them today. Remember, this is only like a Q3 trading update, but I know it feels like a lot more than that. But there's going to be plenty of opportunities. Thanks, Greg.

Come to Dom in the second row.

Dom O'Mahony, BNP Paribas. Thanks very much. Can I start with, Charlie, on capital generation, you very helpfully said we should continue to think about about a point a month. But then you said for now, and I wanted to ask you to unpack that for now. My guess is that number has to go up given the ROE uplift and given that you're integrating direct line and you have the synergies to come. What do you think the run rate capital generation is in percentage points? Second question is, if you think about the synergies all in, you've got 275 on the slide now, given the cost and the claims. How much of that do you anticipate reinvesting into growth, into pricing, into making sure you're as competitive as possible? And then the third question is just on the assumptions embedded in the plan, I realise you want to keep a bit of the flexibility, but just two specifics within that. Reinsurance. So are you assuming that the quota share under outline lapses? Are you assuming any change to excess of loss? And in particular, what are you thinking about the intangibles? Are those being written off? What does that mean for the amortization going through the operating lines? Sorry, I've probably taken more questions than three there.

It's about five, I think.

Gosh, I've got a lot of time on my list.

Yeah, so I suppose a couple of things to think about. So on the capital synergies, 500 million, that equates to 10 points of solvency. So that's kind of a stock build, if you like, and that sort of takes the 177 to 187 if we were to do it all now. There's obviously quite a few moving parts, so that's why we were trying to also get you to the full year end and thinking through that with the higher level of management actions. If I do go further forward, there will be other bits and pieces that will move before all of that kind of realisation of the synergies. But from the end of 26, we should have brought the stock of solvency above the working range again. And kind of once that's done, we would expect, and therefore the SCR is reduced, we would expect about 20 percentage points of OCG per year, kind of going up from there. So if you go back to 24, that was more like 15 points. So that's taking into account the regular and then a sort of monthly and then a sort of usual amount of management actions around the 200 million points. So I think we would expect that the capital that we generate will more than cover the uses of capital for dividends and buybacks, etc., Obviously, there's market movements and other things to factor in, and we will give you more up-to-date sensitivities when we publish at the year end. So hopefully that answers that. On the synergies, so 225 is the cost synergies, and the claims are not included in that. So the 225 is... is the operating cost number so that you can kind of measure against the 24 baseline. It also doesn't include any accounting-y stuff. So to the extent that we have, and that was sort of one of your other questions, we've written off about 80% of their intangibles. as part of the acquisition balance sheet. That clearly reduces the amortization coming through. However, part of the policy alignment is then look at the level of capitalization of change spend. And they were capitalizing a lot. We will capitalize a lot less. So we've kind of given a number of about 50 million on a full year basis for those kind of netting effects. That is not in the 225, though. That's obviously in the EPS build. but it's not in the 225, which is just an operating cost view. So there's that. To the extent that we're then looking to reinvest that and build that, that I think is kind of part of the normal business planning process. On assumptions, the reinsurance quota share that they had, we don't intend to renew. So that's already, because of the forward-looking view of the way solvency works, that's already factored into the 177. So that's kind of that sort of driving a little bit of the SCR development. Is that it? Is that all six?

Thank you. If we go to Larissa.

Thank you very much. You had a very interesting slide about the peripheral, so basically non-home and motor opportunities that you see in the UK. Could you give us a sense of which ones you believe have the most growth potential near term and how fast we can expect that ramp up to be? While we're on peripheral product lines, Canada had a very good third quarter with no NATCATs, but are there any gaps in the product lines that you see there that you would consider filling, either, and also geographic lines to diversify the exposure there, and would you have a preference for organic or acquisitive? And then the last one, following up on Dom's question about the one percentage point, which was the first question I was going to ask, but you mentioned as previously guided on the 160 to 180 on the Solvency 2 target. How should we think about that potentially changing when the Part 7 comes through and also when all of the synergies roll through to management actions by the time that we hit 2028? Thank you.

Okay, thanks. I'll pick up the first two. So I think we see we're not going to choose a favourite child. We think that there are gross opportunities in all three areas of Green Flag, the PET and the micro-SME. The team will know that I've always been a big fan of micro SME, and it's not something that we really had in our jewel kit. And DirectLine have that and a really good proposition on landlord and on van. And so we believe that with the really big, you know, our customer base, the opportunity that we have, MyRiva, et cetera, that there's a really big opportunity there as people choose to self-serve more, particularly in that micro SME range. And there's a lot of, you know, small entrepreneurs in the UK that have to buy things like DNO, financial lines to do, you know, contracts in councils and things like that. So, you know, we think that there's a good opportunity there and we can bring some real technical expertise to that. I mean, in Green Flag, there's 7% market share and with leading market sentiment. You know, I think there's a Trustpilot score of 4.6 on the Green Flag. So we think that there's a real opportunity, again, here for us to leverage our digital capabilities, but also the integration of that into our claims line and also into SOLUS. so we think that you know there um it's a great it's a great business so we think uh there's a there's a good opportunity and then on pet um so the pet market um is 1.9 billion uh as in 2024 set to grow by 2.3 billion by 2030 so these are all the animals that people bought during covers and things like that you know so there's a big opportunity there um and and a direct line have been offering pets for 30 years and the business has actually performed well So strong foundations upon which to build. And I think, again, you know, we talked about launching an Aviva product. With the Aviva brand, you know, our 22 million customers, and, again, the digital capabilities on things like MyAviva, we think that there's a real opportunity. So really, really good opportunities there. Yeah, so Canada have had a really good performance improvement from last year. Obviously, there were a lot of cat events last year. But they've also seen a really strong turnaround in terms of their personal lines business, you know, carrying good rate. They've dealt with the sort of theft issues that there were a number of years ago. And I think they've done that well. Obviously, we do have more business in Ontario than the sort of some of our competitors. So, you know, looking to expand in areas like Quebec, that's certainly something that we're thinking about. In terms of product lines, it's not so much a product lines point, but we've got two really big partnerships, one with RBC and a new partnership with President's Choice. So President's Choice have got about 17 million customers in Canada, and we've got that sort of sole tie arrangement with them. So there is a real opportunity for Nav and the team to grow that. And there is an existing book of business as well, which is transferring over, and we're already sort of well into doing that. The Canadian team are really, really excited about that. So, yes, there's opportunity for geographic diversification, but we've also invested in things like our models on exposure management, CAT, and that sort of thing. So I think the underlying performance should also improve. So, you know, yeah, we're excited about what Canada is going to do.

So the short answer on the 160 to 180 range is we're still perfectly happy with it and expect to be when all the capital changes are realised as well. I mean, I think... In your question, maybe it's just worth going through some of those things that I answered to Dom earlier again. We do expect, until those capital synergies come through, you've got a higher SCR, so the one point a month, three points a quarter for regular is about right, and then you've got the effect of the management actions, which this year are a bit more elevated, but we would always guide to around the 200s. So once that's complete, it's going to lift in terms of the regular to more like four a quarter, so bringing it to 20 in the round for the year. But in practice, it's obviously lumpy quarter to quarter, depending on things like the amount of BPA we write, what the strain is, the assets we've originated, and obviously seasonality in GI. So, you know, we will, as I say, the 161.80 has been the range for a long time and we're perfectly happy with it and we'll be on the other side too.

We'll go to Andrew, then Mandip, then Tom.

Good morning, it's Andrew Queen at Autonomous. A couple of questions. Firstly, When you first announced the direct line deal, I think you talked about 10% underlying EPS uplift. Could you give your sense of what that is now with the bigger cost savings? Because if I took a look at your 11% compound growth in EPS, just if I was to take direct line out what would that be and then the second thing is I noticed you said that the ROE on your general insurance business is 31% which is higher than the 20% given market conditions and you sort of flagged soft market conditions in both UK retail and in commercial. What are you expecting the combined ratio to do across your books over the period to 2028?

On the first one, we're really focused on integration and development of the direct line business within personal lines and therefore part of the UK GI business. We're building all of the benefits from integrating direct line into the plans that drive towards these new ambitious targets. And that's really the best way of assessing our performance alongside checking on the capital and expense synergies. The 10% accretion when we announced it back on the 23rd of December had three components to it. So it had the profits from DirectLine coming into the group. it had the performance improvement that we then expected to realise, and it had the benefits of the synergies. Additionally, of course, it was measured at that point in time, so it was incremental to Aviva's outlook and its business plans then, kind of at that point in time. So all of that means it's a little bit complicated. But if I do unpick the components, we're very comfortable that the accretion on the deal is better than the original 10% that we originally communicated. But our focus is always going to be on hitting the group targets and the synergy realisation that we've talked about.

On the soft market conditions and the combined operation ratio across the books, I mean, I think that maybe Charlotte will have a little bit more to add, but we've still got the ambition for the undiscounted core at less than 94%. And I think what you see in the general insurance UK business today is that we're hitting, we're sort of below that. And all of our assumptions are on the market. We can see the market stabilizing in personal lines, I think, at the moment. But our assumptions are basically on the current market conditions and I think are realistic in terms of what the outlook on that is. You also have to remember that when we are looking at the mix of business now, we now have a different distribution mix because we've got all of the direct line business coming in as retail business and therefore no commission and various other things coming through on that. So, you know, you will see that benefiting the combined operating ratio. I don't know whether you've got more to add.

No, I mean, all the same points. And then just the caveat that at the end of the day, though, we optimise for operating profits because that aligns to the EPS and the ROE. So depending on market conditions, we would always potentially accept slightly higher core. But as Amanda says, the distribution mix that's coming from direct line is helpful.

Good morning, Manip Jaipal, RBC Capital Markets, three from me as well. Firstly, a follow-up question on capital allocation. You spoke about M&A, but given the high cash remittance target, would you consider an escalating share buyback or doing a higher than mid-single-digit dividend growth if the cash and balance sheet positions allow? Then on workplace, I've spoken about this a bit already, but speculation around tax breaks for contributions being reduced in the upcoming budget. To what extent do your expectations for this business reflect what seem to be, at least in recent years, annually recurring disincentives to save into DC pensions? And then finally, appreciate, it might be a bit soon for this one, but given that you've been busy on DLG, but could you talk about the role of the light businesses in Aviva going forward? It has lower returns on capital and annuities in particular look to be quite competitive given all the new capital coming in. Would you consider further accelerating the move to capital light by doing something where insurance or disposal, something similar to your European peers, for example?

Okay, should I pick up two and three and you pick up one, Charlotte?

Yeah, I mean, I suppose just on, I think if I understand your question, the cash remittances that we've got come from the capital generation and our effectiveness of turning that capital generation into cash, which support the dividends and the buybacks. All of that together is part of the capital allocation framework, which is about investing in the business. We never, you know, we never look to hold on to capital that we don't need. So that can consider, you know, share buybacks. But, you know, what we're doing this year or planning to do is re-establish the regular and sustainable buyback at the kind of affected for the increased share count. So it'll be, you know... the 300 that we used to have plus the effect of the 40% share count increase, so around 350. As we progress, though, we're always looking at the capital allocation framework in exactly the same way. So everything that we've got is entirely consistent with that. So you should pencil in the regular and sustainable capital returns, and you should pencil in the mid-single-digit cash cost of the dividend, and that's it.

which we only set the dividend policy at like 18 million. So on workplace, so if you think about what's happened in the market over the last five years, you've seen COVID, you've seen the Ukraine war, you've seen a cost of living crisis, and yet contributions have completely held up on workplace. I mean, it is just like a train that has fully left the station, not going to stop. The budget speculation is clearly unhelpful, but I think if we think about auto-enrolment and if we think about the workplace business, people will still be saving into pensions, and that regular contribution that we're seeing today will carry on. And so I think that's all to the good. Where we would, I think, say that the government really needs to think carefully is on things like salary sacrifice. Not because it will necessarily affect contributions, but it could cost employers more, and obviously it could make employees think about how much they may salary sacrifice. And, you know, it's not just your mid-income earners that salary sacrifice. It is also some of the lower-income earners as well. So we would very much encourage that that is thought through. And even if you use the government's own research, it suggests that 15 million people in the U.K. will not have enough money to retire well. And the ABI have issued, I think, some data this morning, a research which basically says that people will really – you know, if there are changes to salary sacrifice, how much they salary sacrifice or whether they salary sacrifice at all. So I don't think it significantly changes Aviva, but I mean, I think for the UK, I don't think that would be, I don't think that changing things like that on long-term pensions is a very good thing at all. On the points around the retirement and the sort of interplay between the sort of capital light and capital heavy, You know, I think that we should not underestimate the role that the retirement business plays in Aviva in terms of the capital and cash generation. And I think that the business has done incredibly well. We're seeing really good growth in individual annuities. Clearly, as interest rates reduce, we'll see, I'm pretty sure because of the amount of money tied up in property, an opportunity for equity release will reemerge. But also, you know, on bulks. Yes, the market is more competitive, but we have written 4.5 billion this year. I think I'm incredibly proud of what the team have done, because what they have not done is sacrifice margins for volume, because that would be really stupid. So effectively what they're writing is that mid-teens IRR and obviously the added benefit to that is you're using less capital to write those deals. So I think the team have been very disciplined. They've done a really, really good job. It plays a really important role in terms of that balance of the, you know, if we get to 28, 75% capital light, 25% capital heavy. I think that's about right. And that's really how we think about it as we look forward. But we shouldn't underestimate the competition. You never should. But I think it's all about the discipline. And I look at Doug and I know that he and Dave have got that firmly in hand.

Tom?

Hi, good morning. Congratulations, guys. Wow. 11% EPS, I think that's fantastic. And on top of that, it seems there are quite conservative assumptions in there. Can I just ask again on the personal and commercial assumptions? How do you see the outlet there for UK motor pricing and for UK commercial pricing? Because I guess the headline data is a little bit negative at the moment. The second question is just on SOLUS and DLG's repair network. I couldn't help but think I wouldn't want to be a competitor against you in that UK personal lines market. You put a really convincing case there as why you're number one. How much of that repair capacity do you think you own in the UK at the moment? Very, very quickly. I haven't done the numbers. What was the cash conversion from IFRS earnings to cash before and what is it now? Because it feels like it's gone up to me.

Okay, so on the market data, so let's just sort of break it down. If we think about the UKGI personal lines motor, so external data is suggesting that the PCW new business pricing is down 10% in the first nine months of this year. Aviva and DirectLine combined is flat. Year to date. Okay. So we have been less impacted than the market. Also importantly, we have good rate adequacy across the book, remembering where we've come from over the last number of years. And so when we talk about this business, the motor business, you know, you've heard from Owen this morning, we've got deep technical expertise and we are basically writing to make sure that we deliver the right return. And we will bring the direct line business up to that standard in terms of the underwriting return. In terms of the way that it's looking in the go forward, I think we would see some sort of stabilization at the moment. And obviously, we know what the inflation rate is. So it's math at the end of the day. And so we will be maintaining our discipline there. The external data suggests that the PCW new business pricing is down 12%. If we look at the Aviva and DirectLine combined PCW new business rates, we're up 1%. So, again, less impacted than the market. Again, I think, you know, we are benefiting there from the discipline and we're also benefiting in home from the distribution. So if you remember in home, we've got a wide distribution across partnerships, across intermediaries, and also across the direct business. So what that does is it protects our position somewhat there. And, you know, just remember when you're thinking about volumes going forward, obviously we've got the direct line business coming in. We've also won the nationwide home deal. And that will start to enter into the numbers, I guess, in the first quarter of next year. So, you know, that is a sizable deal. What you're seeing, I think, is the benefit of scale because it really does matter. And when you're investing, if you think about your investment in pricing models, in fraud models, in all of those things, for Aviva, we are spreading that cost across many products. If you are a monoline player and you're just able to invest that, if we think about generative AI, that investment that we've made in the claims summarization, we are able to now roll that into travel, into health, into all of the other areas. If you're just investing it, then the cost has to be borne by just that one product. So, you know, I think that is a real advantage of the scale model. So it's about sophisticated pricing, you know, technical – expertise and scale. And then if you see, I like the comment on the SOLUS and the DLG network, that is significant. I mean, we recognise the real importance of that owned network, not just in terms of the cost, which is £500 per claim, as Jason said, but also in terms of the turnaround, in terms of you getting your vehicle back more quickly. and therefore the customer experience is better, therefore, therefore, you know, you make customers happier with Aviva. We have started to take up some of the slack in the repair capacity of the direct line garages that weren't utilised as highly as the Aviva garages. In terms of what the actual share, though, I don't know that in terms of what the share of the garage network, but we know that nobody has replicated, and it's very, very difficult to replicate that. what we have. And if you walk into some of these solar scarages, I mean, you literally could eat your food from the floor. I mean, it's like so sophisticated in terms of like the equipment and everything else. And by the way, we're rolling out that model in Canada as well. Charlotte on the cash conversion.

Yeah, so cash conversion. I am actually going to have to ask the team to come back with a precise number for you or even a more specific number for you. But, you know, the general capital light pivot will drive greater alignment between earnings and cash more generally. and I would expect the proportion of payout to reduce over the planned period. But the team can come back to you with some more specifics.

We'll go to William and then Jane.

Thank you. Hi, William Hawkins from KBW. I hope these three are brief. Are there any important changes in strategic asset allocation that you've thought about over the life of these projections? Secondly, what do you think non-operating investment variances should be below the operating line in this projection period? Zero or hopefully positive, I don't know, or maybe negative? And then lastly, sorry, you have had a lot of questions on solvency already, but I'm still not quite clear. The assumption about organic growth in the SCR over time, it had been running at 200 to 300 million before this year and then went very low in the first half. I'm just not quite clear what you're thinking about change in SCR, leaving aside synergies, the organic change.

Thank you. I mean, no significant changes in the asset allocation. I mean, obviously, as time, you know, the book moves over time, you know, the team will, you know, as part of the overall asset liability management strategy, kind of, shift accordingly and look for different opportunities, but no big changes in the assumptions here. I think the one point to mention, and I think Amanda mentioned it in her opening remarks, is that we are in the process of moving the direct line assets across to Aviva Investors. About half of those will be, some are already done, about half will be moved by the end of the year. And kind of over time, because they were standalone, they had a slightly different way of looking at the asset portfolio than we will on a group basis. So we would look to move that, but it doesn't have material consequences as a result, but that's important. And actually that act of moving to Aviva Investors removes some of the external cost of that and adds to the AUMs in Aviva Investors. In terms of... What was your second question? I mean, we don't make, we build the whole plan on the sort of current market dynamics and the shape of the curve, you know, so as the forward curve has interest rates expected to come down. But that's kind of how we build the plan. And then we do sensitivities around that. But there's nothing – we don't take a view on rates as we – or other market assumptions as we build out the plan. So therefore, I don't have a sort of non-operating – variance number to build in, it's assumed to be neutral. And then what was the last question? Solvency, organic growth and the FCR. Oh, so, yeah, and I suppose thinking about the strain. So, you know, I suppose the OCG has been, as you say, about 200 to 300 less than the OFG over the last few years. And that's kind of the difference between the business growth and how that drives SCR. The SCR increase this year we'd expect to be a little bit lower. It reflects the lower volumes of BPAs as well as the fact that the business we've written has been at lower strains than it has historically been. But I think the important thing to remember is that, and I've tried to articulate a couple of times, as synergies are recognised, you know, we expect this 20 points of OCG, which is including the normal level of management actions to come through, which is, you know, and to build from there. So that's growing from what was 15 percentage points back in 24.

James?

Thank you. It's James Shuck from Citi. Just three quick ones left from me, please. Firstly, I think you previously kind of had a kind of target level for central liquidity around the $1 billion level. It's obviously a bigger group now. Is the $1 billion still the number to be looking at? Was that perhaps a bit higher? Secondly, perhaps I can ask the SCR question in a slightly other way. What's the capital release, the annual capital release from the Heritage Book that's running off, because presumably there's some benefit that's reducing the strain within that? And then finally, just interested in the 4.4 million new customers from DirectLine that you'll get. How much of that is coming up to renewal and what kind of renewal rate are you expecting on the 4.4 million? Thank you.

So on the liquidity, I mean, we're comfortable with the billion number even post-retline. It is elevated at the moment, partly because we've got the €900 million redemption to pay for over the coming months. So, you know, hence October, it's a bit higher in preparation for that. But no real change on the guidance. Yeah. On the SCR, I mean, we don't break that out for heritage. Again, maybe it's something we can take up with a team afterwards. I don't have that. And we don't break it out usually.

So on the retention rates, we're not going to give you out all the retention rates because then we start breaking down all of it for the individual product lines, so we're not going to do that. What we would say is that we would expect the retention rates to be so broadly in line with the Aviva retention rates, and we'll very much be driven by the competitiveness in the market, obviously. But we have seen retention... fairly steady and, in fact, improving, I think, a little bit, a little bit, Owen, since the deal completed. And, you know, we don't see that there's going to be any issue with the retention. It would all be about the price and the product, you know, that we offer to the customers. And we've actually written to all of the customers already to say that we've done the deal. There's been no disruption at all from that.

We're running over slightly, but perhaps we can just finish with Abi and then see if

Hi, morning. It's Abed Hussain from Panama Libre, and thanks for taking my question. Just two questions, I'll be really quick. The first one is on motor insurance pricing over the longer term, so perhaps a more philosophical question. Do you think the consolidation across the motor insurance market helps price rationality across the market, or will the underwriting cycle always And Joel, I know you've already pointed to your pricing being more different, moving differently year to date than the market. So any sort of views that you can share, that would be helpful. That's the first question. And then the second one is on PCWs versus direct distribution. Being now the number one player by far, does that change the dynamic for you in terms of direct distribution versus PCWs versus brokers? To me, it feels like you should be able to eke out more margin from PCWs, brokers, partners, if you're putting more volume through their pipes now. Does it change the dynamical preferences at all for you?

So I think on motor insurance prices, I've said what I think where we are now, and we know what the inflation is. In terms of price rationality and consolidation helping, I think consolidation obviously does help with that, and visibility around reporting definitely does help with that. But I think also you have to look at the different dynamics. and of scale, and as I spoke about earlier, your price is a factor of what your expenses are. And if you've got lower expenses and if you've got better pricing models, you're going to be able to deliver a better price. And some of that you'll keep for margin yourself, and some of it you'll play back into the market. I mean, that's just trading, and that's what Owen does probably about like 15 times a day. And he's constantly looking at the different dynamics that are going on in the market there. But I think customers will ultimately benefit. because they will get a better proposition, the service will be better, the claims will be better, the pricing will be better, because we are achieving the benefits of scale. On the distribution dynamic, look, I think that it's fairly evenly balanced at the moment and I think we do a really good job of managing that direct versus PCW versus broker versus partner. I don't see that changing significantly over time. What you will obviously see is the dynamic within the direct line book changing to more PCW as now we have launched on all four PCWs within a very short space of time. And as Owen said, we're seeing some really positive momentum from that in the early days. Because you've got to be present in order to have the opportunity to win the business, right? If you're present, then you've got a better chance of doing that. So I think that's where you'll see the change.

Last one.

Thanks. Amanda, you gave us some good context around pricing versus the market. Can you tell us what's happened to volume as well, policy in force? Second question on capital synergies, $500 million by 2026. I know that's not fungible, but if you reinsure 50% of that like you do for the GI book, that's $250 million. Does that go into the $350 million buyback, or should we expect a special return in 2026? And then final question on slide 17. If I take the $225 million cost savings divided by the $2.2 billion, I get 10%. You're putting 2% per year over the next three, that's six. So what's the delta?

Okay. So on the PIFs. I think I'll probably repeat myself. Our absolute priority is to get the performance of the direct line brands to the same level as the Aviva retail brands. So that's our performance. We're not motivated by the number of policies enforced. We're motivated by the profit that we're going to make. And that is the way that we think about it. On saying that, we have seen, as Owen said, some green shoots in terms of the policies enforced, you know, following the, going on to the price comparison website. So, you know, I think that's, you know, that's early signs of positivity there. But I will never be managing this business. And I can tell you that it's for every line of business. It's not just for motor. We do not manage on policy count. We will manage on profit. And you've seen that whether it's in bulks or in home or in motor. That's the way that we think about it. On your second point around the more capital and special returns and all of that, do you want to pick that?

Yeah, so look, realising the capital synergies is really important and it helps us get the solvency ratio to be above the top end of the working range. Then essentially the uses of capital will be determined in the usual way on the capital allocation framework. So we have three main uses of capital. to make sure that we are able to meet the dividends, which is essentially supported by the cash remittances, investing in the business and returning to capital to shareholders. So we'll have optionality, but we'll deal with it. in that normal way and what was the other question the 225 so earnings are growing each year and we're talking about a compounded growth rate but the 225 is kind of driving the two points and the cost synergies the share count the two points and so everything else is coming from building the earnings which is growing each year But it's a compounded. It's compounded.

It's compounded over time.

Let's take it offline at the end.

Okay. I think that's it. Okay, so there was a lot of questions there. A lot of people in the audience as well. So a huge amount to unpack. We know we've delivered a lot of detail today. The team are around to answer any follow-up questions like the last one. Thank you very much.