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Highlights

  • Group revenue up 9% to £2.9 billion, driven by retail annuity sales

  • General insurance stable with combined ratio at 96.6% despite weather-related claims

  • Capital position remains solid; Direct Line acquisition on track

Aviva PLC (LSE:AV..) released its first-quarter update on Thursday, reporting financial results broadly in line with market expectations. Despite its financial performance in key segments, the lack of major surprises led to a muted market reaction, with shares rising modestly by 1.6p to 573.6p.

Group revenue for the three months rose 9% year-on-year to £2.9 billion. The increase was primarily driven by growth in the insurer’s retirement division, with retail annuity sales up 32%. However, this was tempered by flat bulk annuity volumes, composed of more than 25 smaller transactions during the period.

General insurance results came in better than anticipated. The combined operating ratio—a key indicator of profitability in the insurance sector—stood at 96.6%. This was seen as a resilient outcome, particularly given significant weather-related claims in Canada and Ireland during the quarter.

Aviva also reported a significant capital position, with a Solvency II ratio of 201%. Management reaffirmed the group’s long-term financial goals, including 2026 earnings and cash flow targets.

Panmure Liberum described the update as “decent” and noted that the timeline for Aviva’s proposed acquisition of Direct Line remains unchanged. The deal has undergone a standard referral to the UK Competition and Markets Authority (CMA), but analysts do not expect this to cause major delays.

Shares continue to trade at a relatively low valuation of 10 times expected 2026 earnings, offering a dividend yield of 7%. Analysts and investors are now turning their attention to the proposed Direct Line acquisition as a potential catalyst for future re-rating.