John Quinlan, Aviva Ireland Chief Executive Officer said:
“Today’s results show that Aviva Ireland continues to make progress in building profitable growth by providing our customers with the protection they need at a price that is sustainable. Profit across the businesses is up by 12% to €48m.
|IFRS operating profit||Aviva Ireland operating profit up by 12% at €48 million (HY16: €43m)|
|Combined operating ratio||Combined operating ratio (GI business) improved by 7 percentage points to 84.7%1 (HY16 91.9%)|
PVNBP (Present Value of New Business Premiums) up 35% to €574m (HY16: €434m)
NWP (Net written premium) up 12% to €256m
In our general insurance business, we grew our net written premium by 12%. Our combined operating ratio, our key measure for profitability in general insurance, is 84.7%, an improvement of 7 percentage points on last year. Profit at €41m is up from €25.5m at HY2016, driven by initiatives in our claims handling that have resulted in a lower claims ratio and benign weather in the year to date. Private Motor delivered a current year combined operating ratio of 95%: this segment of the market remains a challenging part of our business. Aviva continues to play a leading role in driving the reform of the motor market for the benefit of all of our customers. We are committed to working with the Government on the implementation of the recommendations of Cost of Motor Insurance Working Group Report.
We also continue to invest significantly in our fraud prevention and detection systems and are relentless in fighting all suspected cases of fraud, often at considerable cost. One recent, well publicised case, which we defended in the High Court and in the Court of Appeal, will cost us approximately €350,000. We will strenuously endeavour to recover these costs but in cases like this, it can prove very difficult. Aviva welcomes the judgement of the Supreme Court in the Setanta case on the appropriate mechanism for dealing with the liabilities of insolvent insurers. It removes considerable uncertainty for insurers, policy holders and claimants.
In our life insurance business, we have had significant growth in sales of retirement products and bulk purchase annuities. The Present Value of New Business Premiums is €574m up from €434m in 2016. Profit is €7m, down from €14.6 at HY2016 but underlying profit is in line with prior year on a like for like basis. Based on the strong performance of our business in 2015 and 2016, we are investing in our digital capability, products and distribution reach to build sustainable growth for the long term in this market. We expect this repositioning of our business to deliver accelerated profitable growth in the second half of the year in line with our plan.
Aviva welcomes the government’s plan to introduce universal retirement savings plan to address the pressing issue of poor pension coverage highlighted by our Mind the Gap analysis published last Autumn. While the details of the government plan have yet to be spelt out, we look forward to playing our role in significantly increasing the level of retirement savings among private sector employees in Ireland.
During his visit to Ireland last Autumn, our Global CEO, Mark Wilson announced our intention to seek authorisation to change our legal structure from a branch to a full subsidiary of Aviva Group. This decision removes the uncertainty caused by Brexit for both our business and our customers. This structural change, which underlines our commitment to Ireland, will result in our two businesses becoming fully capitalised legal entities to be regulated in this market. We are working closely with the Central Bank on the authorisation process, which is well underway.
There is significant opportunity for growth in both our life and general insurance businesses in this market. Today’s results show we are well placed to benefit from Ireland’s strengthening economic growth.
1. Aviva group now calculates COR as a percentage of earned premium.