Aviva Accelerates Target Achievement, Unveils New Growth Plans

Aviva plc is on track to deliver its 2026 Group targets a year ahead of schedule, driven by strong operational performance across the board.

The company has also announced its raised ambitions with new three-year Group targets, demonstrating confidence in its future growth potential.

The insurance and wealth management giant now anticipates achieving its £2 billion operating profit and £1.8 billion SII Operating Own Funds Generation targets in 2025, a year earlier than initially projected.

This excludes any contribution from the recent Direct Line acquisition, highlighting Aviva’s organic strength. Full-year 2025 Group operating profit is expected to reach approximately £2.2 billion, including around £0.15 billion from Direct Line.

Aviva is upgrading its cost synergy targets and quantifying capital synergies from the Direct Line acquisition. The original £100 million cost reduction program for Direct Line has been completed three months ahead of schedule. The company is now raising its cost synergy ambition to £225 million, incremental to the completed Direct Line cost program, with total costs to achieve estimated at approximately £350 million.

The company anticipates unlocking over £0.5 billion of capital synergies, which would improve the current solvency ratio by more than 10 percentage points, subject to regulatory approval expected around the end of 2026.

Implementation costs are projected to be around £50 million. Aviva also expects to deliver over £50 million in run-rate reduction in the cost of claims, with an investment cost of approximately £50 million.

Aviva is setting new three-year Group targets, reflecting its current position and future trajectory. These include an operating earnings per share (EPS) compound annual growth rate (CAGR) of 11% from 2025 to 2028, an IFRS Return on Equity (RoE) targeting greater than 20% by 2028, and cash remittances exceeding £7 billion cumulatively between 2026 and 2028.

Headline Numbers:

• General Insurance Premiums: Up 12% to £10.0 billion.
• Wealth Net Flows: £8.3 billion, representing 6% of opening Assets Under Management (AUM).
• Solvency II Shareholder Cover Ratio: Estimated at 177%.

The company's strong performance is underpinned by robust growth in General Insurance premiums, particularly in the UK & Ireland, where premiums rose by 17%.

Wealth net flows also demonstrated impressive growth, driven by strong performance in Platform and Workplace segments. The Group undiscounted combined operating ratio (COR) improved to 94.4%, benefiting from strong price adequacy and improved weather-related losses.

Aviva's solid cash generation and balance sheet strength support its commitment to shareholder returns. The company is on track to comfortably exceed its existing >£5.8 billion cumulative cash remittances three-year target (2024-26), having already delivered £3.0 billion within the first 18 months.

Furthermore, Aviva expects to resume share buybacks next year, at a higher level in response to the increased share count following the Direct Line acquisition.

Driver Breakdown:

• General Insurance Growth: Driven by strong performance in UK & Ireland and Canada, with a focus on maintaining pricing discipline.
• Wealth Management Momentum: Underpinned by strong Workplace business inflows and growth in Platform net flows.
• Direct Line Synergies: Cost and capital synergies from the acquisition are expected to contribute significantly to future growth and shareholder returns.

Amanda Blanc, Group Chief Executive Officer, stated, “Over the last five years we have transformed Aviva, delivering again and again for our customers and shareholders.”

“We now expect to achieve £225 million in cost synergies, nearly twice our original estimate; unlock at least £500 million of capital synergies, and we expect to resume share buybacks next year, at a higher level in response to the increased share count,” reinforcing the company’s focus on enhanced shareholder value.

The accelerated achievement of targets and upgraded ambitions are likely to be viewed positively by the markets. The increased cost synergies and capital synergies from the Direct Line acquisition, combined with the resumption of share buybacks, could act as catalysts for further share price appreciation.

However, investors should also monitor potential risks, such as rate softening in the General Insurance market and the successful integration of Direct Line.