Aviva’s (AV.) chief executive Amanda Blanc has signalled that the insurer will change its focus in favour of the UK, Ireland, and Canada, as it revealed a 12 per cent dip in half-year operating profit to £1.23bn. However, despite wider economic disruption through the second quarter, the value of new business increased to £601m, from £535m at the 2019 interim - a positive sign.
The group has been subject to increased insurance claims because of Covid-19, in addition to reduced asset values, and additional costs to ensure that operations would run smoothly during the lockdown. The general insurance arm suffered the biggest year-on-year decline, although you can appreciate why we may see a greater domestic focus as UK life business, which includes savings and retirement, saw improved profitability and net inflows.
In common with industry peers, Aviva has struggled in the face of capital market movements, with lower gilt yields combined with widening credit spreads on corporate bonds. The solvency surplus was £12bn, though the solvency II net asset value per share contracted by 2 per cent to 416p.
Keefe, Bruyette & Woods gives EPS of 14.11p, rising to 38.37p in 2021.
| AVIVA (AV.) | ||||
| ORD PRICE: | 301p | MARKET VALUE: | £ 11.8bn | |
| TOUCH: | 301-302p | 12-MONTH HIGH: | 439p | LOW: 206p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 478p* | SOLVENCY II RATIO: | 194% | |
| Half-year to 30 June | Net Premiums (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 13.5 | 2.05 | 28.2 | 9.5 |
| 2020 | 13.0 | 0.80 | 20.0 | 6.0 |
| % change | -3 | -61 | -29 | -37 |
| Ex-div: | 13 Aug | |||
| Payment: | 24 Sep | |||
| *Includes intangible assets of £4.5bn, or 114p a share | ||||
