Aviva plc reported an operating profit from its key markets of 2.5 billion pounds sterling (£B) in 2020. It declined by 2.6 per cent or 66 billion pounds sterling (£M) versus 2019.
“Core markets were impacted by unfavourable trading conditions as a result of the COVID-19 pandemic partially offset by positive underlying performance,” the global insurer said.
However, one of Aviva plc's four key markets saw its operating profit grow: Aviva Canada.
Results of Canadian operations
Aviva Canada reported an operating profit of £287 million in 2020, or CAD$502 million, compared with £191 million in 2019, or CAD$334 million. This amounts to growth of 50.3 per cent or £96 million “due to positive pricing actions, lower Personal lines claims frequency and risk selection,” Aviva plc explains.
“Personal lines performance improved significantly compared to 2019, driven by a decrease in net claims incurred. In Commercial lines, while net written premiums improved through strong new business performance and policy retention, underlying performance was impacted by COVID-19 claims,” the insurer adds.
The improved 2020 operating profit was partially offset by “unfavorable prior year reserve development, higher weather costs and a 2% reduction in long-term investment return.”
Premiums in detail
In Canada, net written premiums reached £3.1 billion in 2020. They increased by 1.1 per cent or £35 million. More specifically:
- Net written premiums in commercial lines reached £1 billion in 2020, compared with £961 million in 2019. This increase of 6.2 per cent or £60 million occurred “as we benefit from a rate hardening environment reflecting reduced capacity and sustained historical under-pricing across the market,” Aviva plc explains.
- Conversely, net written premiums in personal lines declined by 1.2 per cent or £25 million, to reach £2.1 billion in 2020. This reflects “the impact of the pandemic on our distribution partners as well as customer relief measures,” Aviva plc adds.
Combined ratio improves in Canada
“Aviva Canada delivered solid results in 2020 with a Combined Operating Ratio of 94.7% from 97.8% (FY2019). It has been a difficult year for many and we are glad to have been able to offer drivers and businesses a range of temporary and longer-term relief measures to help them through the challenges created by COVID-19,” said Jason Storah, CEO of Aviva Canada, in conjunction with the release of these results.
“As we head into 2021, we’re focused on enhancing our customers’ experience, investing in our business and working to achieve our climate commitment,” Storah adds. He recently shared his strategy for 2021 with the Insurance Portal.
Other key markets are faltering
Aviva plc's other three key markets delivered the following performance:
- The operating profit in the UK and Ireland life insurance business declined by 3.4 per cent or £67 million to £1.9 billion.
- Property & Casualty operating profit in the UK and Ireland plunged by 28.3 per cent or £84 million in 2020 to £213 million.
- Aviva Investors' operating profit fell by 11.5 per cent or £11 million in 2020 to £85 million.
RSA Canada, Desjardins, Economical, Co-operators, Intact, iA, Empire Life, Equitable Life, Manulife, Sun Life and Great-West Lifeco also released their financial results for the year 2020.
