Aviva Shares Edge Lower Despite 24% Jump in Half-Year Operating Profit

Aviva plc (LON: AV.) shares have edged lower on Friday morning despite the insurer posting a robust set of half-year results, as investors focused on a modest decline in the Solvency II cover ratio rather than the headline profit surge.

The FTSE 100 insurer reported operating profit up 24% to £1,326m for the first half of 2026, extending what CEO Amanda Blanc called “six consecutive years of excellent financial performance.” Operating earnings per share rose 10% to 31.8p, while IFRS return on equity climbed to 20.3% from 18.2% a year earlier. Cash remittances jumped 47% to £1,498m.

The interim dividend was raised 7% to 14.0p per share, reinforcing Aviva’s progressive payout policy.

Growth was driven largely by General Insurance, where premiums rose 29% to £8,093m, boosted by the integration of Direct Line, which Aviva said is progressing well with £100m of run-rate cost synergies already delivered towards a £225m target. UK personal lines premiums nearly doubled following the acquisition.

However, the Solvency II shareholder cover ratio slipped to 176% from 180% at the end of 2025, reflecting the impact of dividend payments and share buybacks, which appears to have tempered market enthusiasm despite management guiding towards a “high-180s” ratio by year-end.

IFRS profit for the period fell sharply to £418m from £819m, due to negative investment variances tied to interest rate and equity hedging, alongside integration costs.

Blanc reiterated confidence in Aviva’s three-year targets through 2028, highlighting Wealth, UK and Canada General Insurance, and AI-driven efficiency as key growth levers. Despite the softer share reaction, analysts broadly view the results as consistent with Aviva’s multi-year growth trajectory.