Aviva takes substantial hit from Covid-19 claims

Aviva has confirmed that it has taken a £165m hit from Covid-19 claims, it announced in its interim results published this morning.

The impact of the pandemic saw the insurer’s operating profit decline to £1.2bn and combined operating ratio (COR) deteriorate by three points to 99.8% during the first half of 2020.

Despite this, new chief executive Amanda Blanc said the company’s results had been “robust”.

The company said Covid-19 had affected new business across a range of products, which accelerated in the second quarter as lockdown conditions affected customer buying.

The £165m loss, which was in line with the company’s prediction earlier this year, includes both notified and anticipated future losses, including from the payment of business interruption and trvel claims, it said.

Aviva’s group COR of 99.8% was mainly due to the impact of Covid-19 claims, but adverse weather in the UK and Canada also affected underwriting performance, the company said.

For the UK specifically, COR was 106.3% in the first half, compared with 97.2% for the same period last year.

Commenting further, chief executive Amanda Blanc said it was ”imperative that Aviva focuses on unlocking value for our shareholders. For too long, this has proven elusive and meaningful change is required.”

“We will focus Aviva on our strongest businesses in the UK, Ireland and Canada and aim to be the UK’s leading insurer.

”We are going to focus on those businesses where we have the necessary size, capability and brilliant customer service to generate superior shareholder returns. This is where we will invest and grow.

“Where we cannot meet our strategic objectives, we will take decisive action and we will withdraw capital.

“We must transform our performance and improve our efficiency.

”This requires great customer service, stronger innovation and better use of our brand. Our transformation will be underpinned by continuing to manage our balance sheet prudently, reducing debt and increasing our financial resilience. 

“I am confident we have many of the ingredients to make Aviva a winner. From this moment on, we must deliver. Nothing else will do. My focus is making sure it happens at pace.”