REG - Aviva PLC - Aviva 2022 comparative results IFRS 17 and IFRS 9

AvivaAnnouncement

19/07/2023 07:00

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RNS Number : 4354G  Aviva PLC  19 July 2023

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News Release

 

 

19 July 2023

 

Aviva plc releases 2022 comparative financial information restated for IFRS 17
and IFRS 9, together with 2023 outlook

 

Aviva plc ("Aviva" or the "Group") has released presentation slides and a
financial information pack on its website, providing initial unaudited
comparative information for the six months to 30 June 2022 and the year to 31
December 2022, restated for the adoption of IFRS 17 and IFRS 9.

 

Charlotte Jones, Group Chief Financial Officer, commented:

"The adoption of IFRS 17 is a significant milestone for the insurance
industry, and provides a comprehensive and more consistent approach to
accounting for insurance contracts. The operating profit and balance sheet
impacts we are announcing today are consistent with our previous guidance, and
there is no impact to the underlying economics of our business, our strategy
or dividend guidance."

 

No impact to strategy, capital generation, dividend guidance, or capital
return outlook

·    Cash remittances, capital generation and approach to capital
allocation are unchanged by IFRS 17.

·    Solvency II, an important basis under which the Group is managed, is
unaffected.

·    There is no impact on our dividend guidance for 2023 of c.£915m,
with low-to-mid single digit growth in the cash cost of the dividend
thereafter.

·    Our intention for regular and sustainable returns of capital to
shareholders is unchanged.

·    We remain confident in meeting or exceeding our Group financial
targets for cash remittances, own funds generation and cost reduction.  These
targets are unchanged under IFRS 17.

 

Financial impacts on transition to IFRS 17

Under IFRS 17, total profit remains unchanged over the lifetime of a contract,
however the timing of when profit emerges will be altered, resulting in
increased long-term predictability of profit.

FY22 restated business unit operating profit is £1.9bn(1), 15% lower than
under IFRS 4(2) and consistent with our previous guidance. This principally
reflects accounting changes to our Annuities and Protection businesses with
new business profit now being deferred over the lifetime of the contract. We
expect operating profit to grow from its restated base.

IFRS 17 introduces two new balance sheet concepts, the contractual service
margin (CSM) and the risk adjustment (RA), both significant stocks of future
profit. These represent profits, principally from our Annuities and Protection
businesses, that will be released over time. This stock of future profit was
£7.8bn at 31 December 2022, and we expect the CSM to grow over time.

IFRS 17 adjusted shareholders' equity(3) (including CSM net of tax) is
£14.3bn at 31 December 2022, compared with IFRS 4 shareholders' equity(3) of
£11.9bn. IFRS 17 shareholders' equity is £9.4bn at 31 December 2022.

 

Group operating profit outlook

To assist users of our financial information with the transition to IFRS 17,
we are exceptionally providing Group operating profit guidance. We expect HY23
Group operating profit of c.£700m (HY22: £661m), and we expect FY23 Group
operating profit to grow 5-7%(4) from £1,350m in FY22.

 

Presentation slides and a financial information pack are available here
(https://www.aviva.com/investors/ifrs-17-transition-update/) , where further
detailed restated information is provided.

 

1.         Excluding corporate centre costs, other operations and
Group debt costs and other interest

2.         FY22 IFRS 4 results have been re-presented, refer to
section 1.iii of the Aviva plc 2022 comparative results under IFRS 17 and IFRS
9 document, which is available on
www.aviva.com/investors/ifrs-17-transition-update/
(http://www.aviva.com/investors/ifrs-17-transition-update/)

3.         IFRS Shareholders' equity is equity attributable to
shareholders of Aviva plc, less preference capital

4.         Subject to normal weather and large claims experience in
our General Insurance businesses in the second half of the year

 

 

-ends-

 

 

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 Enquiries:

 Analysts & investors:

 Rupert Taylor Rea          +44 (0)7385 494 440
 Joel von Sternberg         +44 (0)7384 231 238
 Michael O'Hara             +44 (0)7837 234 388

 Media:

 Andrew Reid                +44 (0)7800 694 276
 Sarah Swailes              +44 (0)7800 694 859
 Marion Fischer             +44 (0)7800 693 219

 

 

Notes to editors

•   We are one of the UK's leading Insurance, Wealth & Retirement
businesses and we operate in the UK, Ireland and Canada. We also have
international investments in India, China and Singapore.

•   We help our 18.7 million customers make the most out of life, plan for
the future, and have the confidence that if things go wrong we'll be there to
put it right.

•   We have been taking care of people for 325 years, in line with our
purpose of being 'with you today, for a better tomorrow'. In 2022, we paid
£23.2 billion in claims and benefits to our customers.

•   Aviva is a market leader in sustainability. In 2021, we announced our
plan to become Net Zero by 2040, the first major insurance company in the
world to do so. This plan means Net Zero carbon emissions from our investments
by 2040; setting out a clear pathway to get there with a cut of 25% in the
carbon intensity of our investments by 2025 and of 60% by 2030; and Net Zero
carbon emissions from our own operations and supply chain by 2030. Find out
more about our climate goals at www.aviva.com/climate-goals and our
sustainability ambition and action at www.aviva.com/sustainability
(http://www.aviva.com/sustainability)

•   Aviva is a Living Wage and Living Hours employer and provides
market-leading benefits for our people, including flexible working, paid
carers leave and equal parental leave. Find out more at
www.aviva.com/about-us/our-people (http://www.aviva.com/about-us/our-people)

•   As at 31 December 2022, total Group assets under management at Aviva
Group were £352 billion and our Estimated Solvency II shareholder capital
surplus as at 31 March 2023 was £7.7 billion. Our shares are listed on the
London Stock Exchange and we are a member of the FTSE 100 index.

•   All figures have been translated at average exchange rates applying
for the period. The average rates employed in this announcement for 12 months
to 31 December 2022 are 1 euro = £0.85 and CAD$1 = £0.62.

•   For more details on what we do, our business and how we help our
customers, visit www.aviva.com/about-us

 

 

Page 3

 

Cautionary statement

This document should be read in conjunction with the documents distributed by
Aviva plc (the 'Company' or 'Aviva') through The Regulatory News Service
(RNS). This announcement contains, and we may make other verbal or written
'forward-looking statements' with respect to certain of Aviva's plans and
current goals and expectations relating to future financial condition,
performance, results, strategic initiatives and objectives (including, without
limitation, climate-related plans and goals). Statements containing the words
'believes', 'intends', 'expects', 'projects', 'plans', 'will', 'seeks',
'aims', 'may', 'could', 'outlook', 'likely', 'target', 'goal', 'guidance',
'trends', 'future', 'estimates', 'potential', 'objective', 'predicts',
'ambition' and 'anticipates', and words of similar meaning, are
forward-looking. By their nature, all forward-looking statements involve risk
and uncertainty. Accordingly, there are or will be important factors that
could cause actual results to differ materially from those indicated in these
statements. Aviva believes factors that could cause actual results to differ
materially from those indicated in forward-looking statements in the
announcement include, but are not limited to: the impact of ongoing uncertain
conditions in the global financial markets and the national and international
political and economic situation generally (including those arising from the
Russia-Ukraine conflict and uncertainty over the US Debt Ceiling); market
developments and government actions; the effect of credit spread volatility on
the net unrealised value of the investment portfolio; the effect of losses due
to defaults by counterparties, including potential sovereign debt defaults or
restructurings, on the value of our investments; reduce the value or yield of
our investment portfolio and impact our asset and liability matching; the
impact of changes in short or long-term interest rates and inflation; the
impact of changes in equity or property prices on our investment portfolio;
fluctuations in currency exchange rates; the effect of market fluctuations on
the value of options and guarantees embedded in some of our life insurance
products and the value of the assets backing their reserves; the amount of
allowances and impairments taken on our investments; the effect of adverse
capital and credit market conditions on our ability to meet liquidity needs
and our access to capital; changes in, or restrictions on, our ability to
initiate capital management initiatives; changes in or inaccuracy of
assumptions in pricing and reserving for insurance business (particularly with
regard to mortality and morbidity trends, lapse rates and policy renewal
rates), longevity and endowments; a cyclical downturn of the insurance
industry; the impact of natural and man-made catastrophic events (including
the longer-term impact of COVID-19) on our business activities and results of
operations; the transitional, litigation and physical risks associated with
climate change; failure to understand and respond effectively to the risks
associated with environmental, social or governance ('ESG') factors; our
reliance on information and technology and third-party service providers for
our operations and systems; the impact of the Group's risk mitigation
strategies proving less effective than anticipated, including the inability of
reinsurers to meet obligations or unavailability of reinsurance coverage; poor
investment performance of the Group's asset management business; the
withdrawal by customers at short notice of assets under the Group's
management; failure to manage risks in operating securities lending of Group
and third-party client assets; failure to continually attract and retain
talented, quality financial advisers; increased competition in the UK and in
other countries where we have significant operations; regulatory approval of
changes to the Group's internal model for calculation of regulatory capital
under the UK's version of Solvency II rules; the impact of recognising an
impairment of our goodwill or intangibles with indefinite lives; changes in
valuation methodologies, estimates and assumptions used in the valuation of
investment securities; the effect of legal proceedings and regulatory
investigations; the impact of operational risks, including inadequate or
failed internal and external processes, systems and human error or from
external events and malicious acts (including cyber attack and theft, loss or
misuse of customer data); risks associated with arrangements with third
parties, including joint ventures; our reliance on third-party distribution
channels to deliver our products; funding risks associated with our
participation in defined benefit staff pension schemes; the failure to attract
or retain the necessary key personnel; the effect of systems errors or
regulatory changes on the calculation of unit prices or deduction of charges
for our unit-linked products that may require retrospective compensation to
our customers; the effect of simplifying our operating structure and
activities; the effect of a decline in any of our ratings by rating agencies
on our standing among customers, broker-dealers, agents, wholesalers and other
distributors of our products and services; changes to our brand and
reputation; changes in tax laws and interpretation of existing tax laws in
jurisdictions where we conduct business; changes to International Financial
Reporting Standards relevant to insurance companies and their interpretation;
the inability to protect our intellectual property; the effect of undisclosed
liabilities, separation issues and other risks associated with our business
disposals; and other uncertainties, such as diversion of management attention
and other resources, relating to future acquisitions, combinations or
disposals within relevant industries; the policies, decisions and actions of
government or regulatory authorities in the UK, the EU, the US, Canada or
elsewhere, including changes to and the implementation of key legislation and
regulation (for example, FCA Consumer Duty and Solvency II). Please see
Aviva's most recent Annual Report and Accounts for further details of risks,
uncertainties and other factors relevant to the business and its securities.

The information is this document is not audited.

Aviva undertakes no obligation to update the forward looking statements in
this announcement or any other forward-looking statements we may make.
Forward-looking statements in this report are current only as of the date on
which such statements are made.

This report has been prepared for, and only for, the members of the Company,
as a body, and no other persons. The Company, its directors, employees, agents
or advisers do not accept or assume responsibility to any other person to who
this document is shown or into whose hands it may come, and any such
responsibility or liability is expressly disclaimed.

Aviva plc is a company registered in England No. 2468686.

Registered office

St Helen's

1 Undershaft

London

EC3P 3DQ

 

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