Aviva boosts UK GI profits and revenue

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Combined operating ratio falls to 96% despite freeze claims

Aviva’s UK general insurance business made an operating profit of £476m for the full year of 2010, up 12% on the £424m it made in 2009.

The results, which exclude UK health business, the Aviva Re captive business and agencies in run-off, showed that Aviva's UK GI current year operating profitability (ie excluding prior-year reserve releases) increased £70m to £398m in 2010.

The division posted a combined ratio of 96% in 2010 - three percentage points better than 2009’s 99%.

The improvement comes despite a £40m increase in weather related losses for the year compared with the long-term average and a £11m reduction in investment return to £406m.

Aviva attributed the improvement to a £140m increase in underwriting result, which more than offset the negative elements. The company said the increase was thanks to its decision to exit unprofitable business and the sustainable profitability of the business now being written.

In addition to improved profitability, Aviva also saw a 5% increase in UK GI net written premiums to £4bn in 2010 from £3.9bn in 2009.

“This performance has been driven by a combination of factors including strong levels of retention across all lines of business; substantial growth in our direct channel, reflecting the impact of our marketing initiatives and the success of the RAC panel; rolling out our direct prices to brokers; good levels of commercial new business; and the launch of our corporate risks offering,” the company said in a statement.

Including the Aviva Re and agencies in run-off, Aviva's UK GI operating profit for 2010 was £567m, up 9% on 2009's £520m.

Aviva’s group-wide GI and health business posted a 9% increase in operating profit to £1.1bn in 2010 from £960m in 2009. The group-wide GI combined ratio improved by two points to 97%.

Aviva UK GI highlights for 2010 in £m (compared with 2009)