Market Enamoured With Aviva’s First-Half 2022 Results; Maintaining Our Fair Value Estimate

Aviva has delivered a strong set of results for first-half 2022 with operating profit of GBP 829 million, a rise of 14%. The business has announced a 40% increase in its interim dividend to GBX 10.3 per share, guidance of more capital returns to shareholders, and a 27 percentage point solvency improvement to 213% including GBP 1 billion debt reduction. Operationally, workplace added 150,000 new customers, general insurance grew gross written premiums by 11%, and Aviva Investors recovered net flows to end at a positive GBP 0.2 billion. With the combined ratio coming in at 94%, underwriting also looks good. While the market has reacted positively to these results, we maintain our GBP 4.40 per-share fair value estimate until, or unless, we get a better reading on the earnings profile of this business. We also retain our no moat rating.