Coronavirus Update

Aviva PLC 2020 Preliminary Results Announcement

This content has been sourced from: https://www.investegate.co.uk/aviva-plc--av.-/rns/...

Resilient financial performance

· Operating profit 1,  # of £3,161m (2019: £3,184m) and IFRS profit for the year of £2,910m (2019: £2,663m)

· Core business unit operating profit1,  # of £2,492m (2019: £2,558m)

· Cash remittances‡# of £1,500m (2019: £2,597m)

· Core business cash remittances‡# of £1,359m (2019: £1,409m excluding UK Life special remittance)

 

Sales of Aviva France and Aviva Italy in 2021 - major progress in our strategic transformation

· On completion will significantly strengthen capital and liquidity: excess capital by c.£3.0bn and centre cash by c.£3.9bn

· Build on announced sales of Singapore, Vietnam, Hong Kong, Indonesia and Turkey

 

Robust financial strength

· Solvency II shareholder cover ratio‡# of 202% (2019: 206%) and centre liquidity of £4.1bn (2019: £2.4bn)

· Solvency II debt leverage ratio of 31% (2019: 31%)

 

Delivering against our capital framework

· Expect £1.7bn debt reduction in H1 2021 including £800m tender offer announced today

· Investing for cash generative growth in our Core markets

· Expect to return to shareholders excess capital above 180% Solvency II shareholder cover ratio‡#

· Total dividend of 21p (2019: 15.5p per share) with a final proposed dividend of 14p per share

 

Targeting sustainable growth across the UK, Ireland and Canada

· Momentum with record trading in Savings & Retirement, BPA and Group Protection

· New cumulative cash remittance‡# target of over £5bn between 2021-23 with guidance for £1.8bn in 2023

· First major insurer globally to target Net Zero greenhouse emission status by 2040

 

Amanda Blanc, Chief Executive Officer, said:

 

"Over the past year we have supported our customers in the most challenging of circumstances. Across the whole of Aviva our people have been outstanding and I cannot thank them enough for all they have achieved.

2020 was a year of significant change for Aviva. We have taken major steps forward in simplifying the business, most recently with the sale of Aviva France and today's announcement of the sale of the rest of our Italian operations. Our strategic focus is now on the UK, Ireland and Canada where we have leading positions. We are putting customers at the heart of everything we do and I am confident we will transform Aviva's financial performance and deliver greater value for our shareholders. I recognise we have much more to do and we are getting on with it.

Our performance in 2020 demonstrates the resilience of our Core businesses and our growth potential. We delivered record sales in group protection; record sales of bulk purchase annuities; and record net flows  in savings and retirement, where we are the largest provider of workplace pensions in the UK.  

Aviva is financially strong and following the completion of the major disposals, we will be in a position to make a substantial return of capital to our shareholders. We are also announcing today an £800m debt tender offer. This allows us to accelerate our debt reduction plans and lower debt by a total of £1.7bn in the first half of this year.

Aviva is proud to be the UK's leading insurer. We are the only insurer in the UK to meet the needs of customers at every stage of their lives. Our potential is clear and we are determined to realise it for the benefit of our customers, our people and our shareholders."

 

 

#  Symbol denotes key financial performance indicators used as a base to determine or modify remuneration.

‡ Denotes Alternative Performance Measures (APMs) and further information can be found in the 'Other information' section.

1  Operating profit represents Group adjusted operating profit which is a non-GAAP APM. Operating profit is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section.

 

 

Cash remittances‡#

 

2020 £m

2019 £m

Change

Core markets

1,359

1,909

(29)%

Manage-for-value markets

127

613

(79)%

Other

14

75

(81)%

Group cash remittances

1,500

2,597

(42)%

Profit

 

2020 £m

2019 £m

Sterling % change

Core markets

2,492

2,558

(3)%

Manage-for-value markets

 

 

 

Continuing operations1

999

899

11%

Discontinued operations2

312

251

25%

Market operating profit

3,803

3,708

3%

Corporate centre and Other Group operations

(272)

(204)

(33)%

Group debt costs and other interest

(370)

(320)

(16)%

Group adjusted operating profit3,‡#

3,161

3,184

(1)%

 

 

 

 

IFRS profit for the year4

2,910

2,663

9%

 

 

2020

2019

Sterling % change

Operating earnings per share5‡#

60.8p

60.5p

-

Basic earnings per share

70.2p

63.8p

10%

Controllable costs

 

2020 £m

Restated6  2019 £m

Sterling % change

Excluding cost reduction implementation and IFRS 17 costs

 

 

 

Core markets

2,735

2,821

(3)%

Corporate centre and Other Group operations

250

253

(1)%

Cost reduction implementation and IFRS 17 costs7

105

64

64%

Core markets, Corporate centre and Other Group operations

3,090

3,138

(2)%

Manage-for-value markets

845

884

(4)%

Controllable costs

3,935

4,022

(2)%

Solvency II operating capital generation (OCG)‡#

 

2020 £m

2019 £m

Sterling % change

Core markets8

1,948

1,850

5%

Manage-for-value markets

 

 

 

Continuing operations1

6

805

(99)%

Discontinued operations2

166

62

168%

Market operating capital generation

2,120

2,717

(22)%

Corporate centre costs and Other8

108

(174)

162%

Group external debt costs

(296)

(284)

(4)%

Group operating capital generation

1,932

2,259

(14)%

Solvency II operating own funds generation and Solvency II return on capital/equity‡#

 

Solvency II operating own funds generation

Solvency II return on capital/equity

 

2020 £m

2019 £m

Sterling % change

2020 %

2019 %

Change

Core markets

1,740

1,853

(6)%

9.3%

10.4%

(1.1)pp

Manage-for-value markets

497

850

(42)%

6.2%

11.4%

(5.2)pp

Group centre costs and Other

(250)

(162)

(54)%

N/A

N/A

N/A

Solvency II return on capital

1,987

2,541

(22)%

8.1%

10.8%

(2.7)pp

 

 

 

 

 

 

 

Group operating own funds generation and return on equity9

1,691

2,257

(25)%

9.8%

14.3%

(4.5)pp

Capital Position

 

31 December 2020

31 December 2019

Change

Estimated Solvency II shareholder cover ratio10,‡#

202%

206%

(4)pp

Estimated Solvency II surplus10

£13.0bn

£12.6bn

3%

Solvency II net asset value per share10,‡

442p

423p

4%

Solvency II debt leverage ratio

31%

31%

-

Dividend

 

2020

2019

Interim dividend per share

7.00p

9.50p

Second interim dividend per share

-

6.00p

Final dividend per share

14.00p

-

Total dividend per share

21.00p

15.50p