Aviva shares rise on record profit but insurer takes £500,000 coronavirus hit
Insurance giant Aviva this morning reported a jump in profit but said it had taken a £500,000 hit from coronavirus claims.
Shares rose 3.42 per cent as the company announced record profit, but it also warned that the outbreak of coronavirus had exacerbated the “significant uncertainty” at the beginning of the year. So far Aviva has received around 500 travel insurance claims.
The figures
Aviva reported operating profit of £3.18bn, an increase of six per cent, with an eight per cent jump in operating earnings per share to 60.5p.
IFRS profit before tax was £3.37bn in 2019, up from £2.12bn in 2018.
Own funds generation increased from £2bn to £2.3bn and operating capital generation slumped from £3.2bn to £2.3bn.
General insurance sales were up two per cent and in the company’s major life businesses net assets grew nine per cent to £417bn. The company slashed corporate centre costs to £183m, down from £216m the previous year, as it “streamlined” its head office and reduced project spending.
The insurance giant announced a final dividend of 21.4p, up from 20.75p the previous year.
Why it is interesting
Aviva warned today that coronavirus had compounded the “significant uncertainty” felt at the beginning of the year. The company also cited the level of interest rates, investment market volatility and foreign exchange as adding to the uncertainty.
However, it said “we have a strong and resilient balance sheet that is designed to withstand volatility”.
“Our foundations are strong and we have the necessary ingredients to succeed,” it said.
“Our franchises are well regarded by customers and partners, our capital position and risk management capabilities provide a secure footing.”
What Aviva said
Chief executive Maurice Tulloch said: “My objective is to run Aviva better. We will improve business performance and enhance returns through disciplined action on expenses and underwriting. We will focus capital and resources where we can achieve competitive advantage and strong returns and we will take robust action across the portfolio where our performance falls short or where we can see a better way of delivering value to our shareholders.”