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Aviva boosted by low insurance claims and surge in people saving through Covid

·2-min read
Traffic on the M2 into Belfast near Belfast docks (Brian Lawless/PA) (PA Wire)
Traffic on the M2 into Belfast near Belfast docks (Brian Lawless/PA) (PA Wire)

Aviva today reported its strongest sales of general insurance for a decade as it won more business through price comparison websites and pushed through price rises for business customers.

The company being revamped under chief executive Amanda Blanc is in a sweet spot as Covid lockdowns have meant fewer motor insurance claims as drivers make less journeys and an increase of market prices for business customers across the industry following high levels of claims last year.

A move to begin selling Aviva-branded products on price comparison websites in addition to its online-only Quotemehappy and General Accident monikers also boosted sales.

The reduction in claims and increased premiums in some policies has meant its combined operating ratio - the difference between how much it pays out and how much it brings in through premiums plunged to a super-healthy 90.6% from 118.7% a year ago.

Meanwhile, the group is also benefiting from the Covid effect on people’s savings habits.

Quarterly figures today showed a big bounce back in the amount people are saving into their workplace pensions or through IFAs into ISAs and other products.

A record amount of new money went into its savings and retirement products during the quarter, with total flows up more than 25% to £1.5 billion and £1.4 billion respectively to its workplace and IFA platforms.

Net flows in savings and retirement increased by more than 31% although demand for bulk annuities was subdued.

Blanc, who has been selling its overseas operations to focus on the UK, Ireland and Canada, described the quarter as having seen “very good progress” but recognised “we still have much more to do, to deliver stronger returns for our shareholders.”

Disposals of non-core businesses around the world are expected to bring in £7.5 billion and Blanc repeated that shareholders would enjoy substantial returns of capital from that programme.

Hargreaves Lansdown analysts today said previous market hopes of a £3 billion return could prove “a touch conservative”, particularly with numbers today showing decent progress on reducing the company’s indebtedness.

Shares gained 5.8p to 405.25p

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