Highlights

  • Operating profit rose 22% in H1 2025, supported by strong insurance and wealth growth.
  • GBP 1 billion annual capital return program continues through dividends and buybacks.
  • “Aviva 2026” strategy targets GBP2 billion in operating profit and GBP750 million in savings by 2026.

Aviva plc (LSE:AV), a leading FTSE 100 insurer and asset manager, operates across life insurance, general insurance, retirement solutions, and wealth management in the UK, Ireland, Canada, and Europe. With a market capitalization of approximately GBP18.5 billion and shares trading near 671p, Aviva maintains a forward dividend yield of about 5.5%, underpinned by strong capital generation and a progressive payout policy.

Under CEO Amanda Blanc, the company’s “Aviva 2026” plan continues to guide operational priorities, centered on core market focus, cost efficiency, and disciplined capital allocation. As interest rates stabilize and pension demand remains firm, Aviva’s near-term outlook remains constructive, with analysts forecasting 8–10% total returns in 2026.

Recent Performance: Consistent Delivery Across Core Segments

Aviva’s first half of 2025 reflected continued operational progress following record 2024 results. The company reported a 22% year-over-year increase in operating profit to GBP1.0 billion, driven by higher insurance premiums and robust health and protection business growth.

General insurance premiums increased 10% during H1, while protection and health lines grew 15%. The contractual service margin (CSM) in life insurance rose 12% to GBP12.5 billion, highlighting ongoing policy retention and new business gains.

The Solvency II coverage ratio stood at 199%, up from 192% a year earlier, and operating own funds generation reached GBP900 million—well on track toward the GBP1.9 billion full-year target. The company’s Q1 update in May noted an “encouraging start” with 8% premium growth and GBP1.2 billion in net wealth inflows.

Although full Q3 figures are due in November, indicators such as UK motor insurance price increases and stable Canadian performance point to sustained momentum. Year-to-date, shares have advanced 12%, outperforming the FTSE 100 index’s 8% gain.

An interim dividend of 13.1p per share, paid on October 16, marked a 5% increase, continuing Aviva’s consistent payout trajectory since 2013. Total 2025 shareholder returns reached GBP500 million by late October, aligning with the GBP1 billion annual target through 2026.

Strategic Initiatives: Streamlining Operations and Targeting Growth

Launched in 2021, the “Aviva 2026” strategy aims to simplify operations and deliver GBP2 billion in annual operating profit by 2026. The plan emphasizes cost reduction, customer engagement, and reinvestment in core businesses.

General Insurance and Health:
Accounting for about 40% of group profits, this division achieved 11% premium growth in H1. UK personal lines rose 7%, while commercial lines increased 9%. New automation and AI initiatives are expected to reduce claims processing costs by 20% by 2026.

Retirement and Wealth:
This segment reported 18% new business growth in UK pensions and GBP25 billion in assets under management and administration. Defined contribution schemes and bulk annuity sales remain major contributors, alongside expanding operations in Canada, where retirement product sales reached CAD 2 billion in H1, up 25%.

Asset Management:
Joint ventures and platforms like Vitality Invest collectively manage about GBP200 billion, with 6% net inflows in H1. The business continues to expand in alternatives and ESG-related assets, targeting moderate fee income growth.

“These pillars position Aviva for 7–9% compound profit growth through 2028,” management noted, citing cost synergies and efficiency improvements as key enablers.

Financial Outlook: Targeting GBP2 Billion Operating Profit

Consensus estimates for 2025 point to operating profit of around GBP1.85 billion, up 12% from 2024, and earnings per share near 42p. Forecasts for 2026 suggest operating profit reaching GBP2.0 billion, supported by steady premium expansion and margin enhancement.

The projected 2025 dividend stands at 36.9p (yield 5.5%), expected to rise to 38.7p in 2026 (5.8%). The payout ratio remains around 60%, maintaining balance between distributions and growth investment.

The GBP1 billion capital return framework—split between GBP600 million dividends and GBP400 million in share buybacks—remains on schedule, potentially enhancing earnings per share by 3–4% annually as Aviva advances toward its 2026 milestones.