John Quinlan, Aviva Ireland Chief Executive Officer said:
“For the third year in succession, Aviva Ireland is today reporting double digit, sustainable growth. Operating profit across our two businesses is up by 13% to €93m.
| IFRS operating profit | Aviva Ireland operating profit up by 13% at €93million1 (FY16: €82m)2 |
| Combined operating ratio | Combined operating ratio (GI business) improved by 1 percentage point to 91.4%3 (FY16 92.4%) |
| Growth | PVNBP (Present Value of New Business Premiums) up 38% to €1,197m (FY16: €866m) NWP (Net written premium) up 8% to €498m (FY16: €461m) |
In our general insurance business, net written premium increased by 8% to €498m. Our combined operating ratio, a key measure of profitability in general insurance, improved by one percentage point to 91.4% (FY 2016: 92.4%). Operating profit increased by 10% to €55m (FY 2016: €50m), driven by growth in net written premium, innovations in claims handling and continued success in combatting fraud.
In our life insurance business, the present value of new business premiums increased by 38% to €1,197m (FY 2016: €866m) with significant growth in sales of individual pensions and bulk purchase annuities. Operating profit increased by 19% to €38m (FY 2016: €32m). We welcome the Government’s recently published Roadmap for Pension Reform and we look forward to making a contribution through the public consultation process to the design of an auto-enrolment system that will ensure future generations of workers are financially secure in retirement.
In November 2017, Aviva announced it had reached an agreement to acquire Friends First, subject to regulatory approval. The transaction is in line with Aviva Group’s strategy to grow in markets where we can win. It is also a strong statement of support for our ambition to grow our life business and to become the leading composite insurer in the Irish market.
The Competition and Consumer Protection Commission (CCPC) recently gave its clearance for the acquisition and we are working through the approval process with the Central Bank of Ireland. If approved, the transaction will increase our customer base by circa 250,000 and will strengthen and broaden our range of products, greatly enhancing our ability to serve the multiple needs of our brokers and customers.
Through our investment in digital, we have simplified the experience of the growing number of customers and brokers who do business with us online. Our composite proposition, which rewards our loyal customers, has resulted in a 46% increase in the numbers who choose to hold more than one Aviva product. We intend to use our market-leading brand, reaffirmed by the renewal of our stadium sponsorship, to maximise the capacity of our composite model to deliver further growth.
Aviva Ireland continues to work with the Government on the programme of reform set out in its Cost of Motor Insurance Working Group Report. In particular, we support the work of Judge Nicholas Kearns in the Personal Injuries Commission which will be crucial to the reform of the personal injury compensation system. But time is of the essence: we believe all parties, including the industry, must act speedily to create a stable and sustainable trading environment in which prudent, well regulated insurers can serve the best interests of their customers.
Today’s results confirm Aviva’s leadership position in the general insurance market. Our acquisition of Friends First will enable us to become the leading insurer for brokers and the largest composite insurer in the market.
1. After a deduction of €6m in respect of staff pension charges and expenses (2016: €7m).
2. These numbers exclude Aviva Health which transferred to new ownership on 1st August 2016.
3. Aviva group now calculates COR as a percentage of earned premiums.