FTSE 100 insurer Aviva has promised a share buyback funded by higher than anticipated money technology relatively than disposals, months after returning £4.75bn to its shareholders.
At its first-half outcomes on Wednesday, Aviva stated its Solvency II ratio — the proportion of capital it holds as a proportion of the minimal required — had reached 213 per cent, when adjusted for one-off objects, above the 206 per cent common estimated by analysts.
Chief govt Amanda Blanc wouldn’t be drawn on the scale of the provide, as a result of be launched on the full-year outcomes, however stated the corporate wished to indicate traders that it was “more than aware of our commitment to return capital” above a 180 per cent solvency ratio.
Analysts at Citi estimated that the corporate might purchase again £250mn-£300mn of shares, and stated the announcement had come sooner than it had anticipated.
Together with the latest return of capital — by buybacks and a share consolidation — it might take Aviva to the £5bn pushed for by activist investor Cevian, which launched a marketing campaign for better shareholder returns on the group final yr.
Aviva’s share worth rose 8.5 per cent in early buying and selling in London.
The solvency ratio was helped by rising rates of interest and £800mn of money Aviva generated in the course of the interval, with gross sales up throughout its common insurance coverage and life companies.
The skill of insurers to resist rampant inflation is proving essential to their latest efficiency, with diversified teams that provide life insurance coverage merchandise in addition to private cowl proving higher shielded from price actions.
Blanc stated claims inflation in numerous common insurance coverage strains was working at between 8 and 12 per cent.
Interim earnings at UK motor insurer Admiral nearly halved in “turbulent” buying and selling as inflation started to chew and the variety of automotive accidents continued to rise after a coronavirus pandemic lull.
Admiral posted pre-tax earnings of £251mn for the primary half of 2022, down from £482mn in the identical interval final yr, however broadly according to analysts’ expectations. Claims inflation was working at 11 per cent within the first half, Admiral stated.
To counter the inflation menace, the group pushed up costs by about 16 per cent between March and the top of July, which it stated was larger than the market common. “We did increase prices a lot, the market probably will follow,” stated Admiral’s chief govt Milena Mondini de Focatiis.
Earnings within the motor enterprise additionally acquired a lift from reserve releases — money that was held in opposition to anticipated claims from prior years. Ignoring these releases, the reported loss ratio for the interval, a measure of claims as a proportion of premiums, was 91.3 per cent, a pointy deterioration from the 72.9 per cent degree in the identical interval final yr.
Barclays analysts stated Admiral had “weathered” the difficult first half of the yr effectively, and specifically highlighted stronger than anticipated buyer development. UK insurance coverage buyer numbers rose by 12 per cent.
Shares in Admiral climbed 5 per cent in morning buying and selling, however stay down a 3rd this yr.