Aviva Earnings: Strong Operating Profit and Capital Generation Drive Upgraded Guidance for Dividend

Aviva reported a strong set of results for 2023, with operating profit up by 9% to GBP 1.467 billion. This sound financial performance was driven by good growth of general insurance premiums combined with adequate underwriting performance, decent protection and health sales, and net flows within the wealth management business. Looking forward, the company has upgraded its objectives and guidance to an operating profit target by 2026 of GBP 2.0 billion. Further, there is a GBP 1.8 billion 2026 target for own funds generation. This stacks up well against the GBP 1.729 billion achieved over 2023, a double-digit rise, and the GBP 1.5 billion target for 2024. The total dividend for 2023 is GBX 33.4 per share, a GBX 22.3 per share final, with guidance upgraded to mid-single-digit cash cost growth. A new share buyback was announced of GBP 300 million, with guidance for further regular capital returns in the future. The Group’s solvency ratio stood at 207% at the end of the year, after the two acquisitions. The recent announcement of the acquisition of Probitas builds on Aviva’s interest in continuing to develop its general insurance proposition, particularly in commercial and specialty lines of business. We maintain our fair value estimate and our no-moat rating.