Aviva ‘unlikely’ to buy more in Lloyd’s market following Probitas deal

Aviva group chief executive Amanda Blanc has confirmed that the insurer is “unlikely” to spend any more capital to expand its footprint in the Lloyd’s market after purchasing insurance platform Probitas earlier this week (4 March 2024).

Addressing journalists on a media call following the publication of Aviva’s 2023 full-year financial results on 7 March 2024, Blanc explained that the insurer had so far been “pretty smart” in its allocation of capital around M&A – Aviva’s strategy to date has been to use bolt-on M&A to build on its existing market position in particular lines of business, or to fill gaps in its portfolio.

The transaction with Probitas, therefore, ticks a number of boxes – not only does the company operate in geographies and lines of business that Aviva already knows well, but the deal also facilitates Aviva’s entry into the Lloyd’s market thanks to Probitas’ fully-integrated Lloyd’s platform and Syndicate 1492.

Probitas focuses on property, construction and casualty insurance and reinsurance.

Describing the purchase as a “fantastic acquisition”, Blanc explained that Aviva would use Probitas as its “base to grow”, rather than seeking to snap up more Lloyd’s-based businesses.

She said: “If you look at the syndicate itself from a geographic perspective, the geography is very aligned to Aviva’s geography and then if you look at the product lines, it’s incredibly well aligned to Aviva.

“So, in many respects, we’re able to grow even further in those areas [that] we already know, the geographies that we already understand.

“The syndicate has been growing very, very strongly over the over the last number of years. The combined operating ratio has been 82% over the last five years, with very strong growth each year. We would hope to continue to see that, but clearly maintaining underwriting discipline at the same time.

“We’re definitely not going to limit the scale of [Probitas’] ambition. We’re very keen to support [it] in [its] growth ambitions.

“In terms of would we buy more in the in the Lloyd’s market, I think that’s unlikely because we would basically use this as our base to grow in the areas that we want to grow in.”

Eyes open for opportunities

For Blanc, Aviva’s current stance on M&A is “opportunistic”, in line with “a very selective and disciplined approach” to capital allocation.

She explained: “The gaps that we had were advice and the Lloyd’s market – we [have] filled those gaps now. We don’t sit here today with a burning desire, saying we’ve got a real problem in this area that we need to fill the gap.

“We will be opportunistic if we see that there are opportunities to enhance our position. And clearly, we will take them.

“We will set a very, very high bar for M&A. It has to deliver either a strategic significance for us or it delivers capital or expense synergies. We would go for quality or quality businesses.”