LONDON (ShareCast) - (Sharecast News) - UK insurer Aviva said new life business premiums were flat year on year in the first quarter with growth in savings & retirement as it pledged to return cash to shareholders from asset sales.


New business premiums came in at £8.3bn with growth in savings & retirement and lower volumes of annuities & equity release in a subdued market compared to a strong start in 2020, the company said on Thursday.

General Insurance gross written premiums were up 4% to £2.0bn, reflecting strong new business wins and a favourable rate environment in commercial lines as well as a boost from Aviva's move to start selling products via price comparison websites.

A record of new money went into savings and retirement products during the quarter, with total flows up more than 25% to £1.5bn and £1.4 billion respectively to its workplace and IFA platforms. Net flows in savings and retirement increased by more than 31%.

Aviva's combined operating ratio (COR), which measures underwriting profitability where a level below 100% indicates a profit, strengthened to 90.6% compared with 118.7% a year ago, due to better underwriting performance, benign weather, a reduction in Covid-19 related claims and fewer claims from motorists who drove less during lockdowns.

"While the significant decline in motor rates seen over the last 12 months combined with increasing claims frequency as lockdown restrictions are lifted will have an impact on COR going forward we still expect our full year COR to be below 95%," the company said.

Aviva has sold eight businesses totalling £7.5bn in the past year to focus on its key markets of Britain, Ireland and Canada. It added that there would be a "substantial" return to shareholders with details to be released later in the year.

Richard Hunter, head of markets at interactive investor, said: "As the group has continued to pursue its defined strategy, the shares have had a strong run, having risen 61% over the last year, as compared to a hike of 14% for the wider FTSE100."

"There remains work to be done, however, as exemplified by the share price performance over the last three years, which remains down by 25%. Even so, progress is evident and the market consensus of the shares as a strong buy is reflective of strong confidence in Aviva's prospects."

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