Aviva plc released its financial results for the first half of 2024 on August 14, revealing the significant impact of inflation on claims. The company's Canadian operations reported an operating profit of £216 million, down 10% from £240 million for the same period of 2023. When adjusted for constant currency, this decline is 7%.
The company stated this decrease was “driven by a lower underwriting result and unfavourable movement in unwind of the discounting on incurred claims, partly offset by improved investment returns. The underwriting results were driven by lower favourable prior year development and the impact of inflation on claims severity.”
Overall, Aviva’s general insurance operations reported a total operating profit of £503 million in H1 2024, up from £470 million in H1 2023.
Canadian highlights
One notable event for Aviva in Canada during the first half of 2024 was the completion of its acquisition of Optiom on January 5. Announced on November 27, 2023, this £100 million (CAD 172 million) acquisition “strengthens Aviva Canada’s specialty lines business and distribution capabilities,” stated the company.
Premium growth
Aviva reported a 7% increase in gross written premiums in Canada for the first half of 2024 compared to the same period in 2023. On a constant currency basis, the growth reached 10% over 12 months.
Gross written premiums in Canada totaled £2.2 billion in H1 2024, up from £2.1 billion in H1 2023, marking a £141 million year-over-year increase.
In commercial lines insurance, gross written premiums in Canada were £851 million in H1 2024, a 2% rise from £832 million in the same period in 2023. On a constant currency basis, this reflects a 6% year-over-year increase. The company attributed this growth to strong retention, a favorable rating environment, and new business in the global corporate and specialty (GCS) market. Major brokerage firms such as Marsh, Aon, WTW, Gallagher, and Howden contributed significantly to this segment.
In personal lines insurance, gross written premiums reached £1.3 billion in H1 2024, up from £1.2 billion a year earlier. This is a £122 million increase, or 10% year-over-year. On a constant currency basis, the increase is 14%. The company noted that this growth reflects “new business growth in auto and strong pricing actions on the existing book.”
Market conditions are excellent, said Amanda Blanc, Group Chief Executive Officer. "We have generated growth right across Aviva, thanks to our leading positions in attractive markets such as workplace pensions and general insurance in the UK and Canada.”
Combined ratio
Aviva Canada's undiscounted combined ratio (COR) stood at 94.7% in H1 2024, up from 92.8% in H1 2023, marking a 1.9 percentage point difference.
The group's overall undiscounted COR for general insurance was 95.4% in H1 2024, up from 94.8% a year earlier.
Aviva also reported its COR adjusted for IFRS 17. The adjusted combined ratio was 90.4% in H1 2024, compared to 89% in H1 2023.
In commercial insurance, the undiscounted combined ratio reached 95% in H1 2024, up from 83.5% in H1 2023, for an 11.5 percentage point increase.
For personal lines, the unadjusted combined ratio improved by 3.4 percentage points, dropping from 98% in H1 2023 to 94.6% in the first half of 2024.
Underwriting result
Aviva Canada’s underwriting result was £191 million in H1 2024, down from £209 million in the same period in 2023. This is an 8% decline year-over-year, or 5% when adjusted for constant currency.
The company attributed this result to less favorable development from prior years and the impact of inflation on claim severity, partially offset by favorable pricing conditions and a decrease in weather-related catastrophe claims.
Class actions
Regarding its Canadian operations and claims related to business interruption due to COVID-19 restrictions, Aviva noted, "We are party to a number of litigation proceedings, including class actions that challenge coverage under our commercial property policies, however, we believe we have a strong argument that there is no pandemic coverage under these policies. We anticipate the main class action trial to determine if any coverage exists will be heard in mid 2026," the company concluded.
