ii view: Aviva rewarded for robust start to 2026

First-quarter update to 31 March

• General insurance premiums up 19% to £3.4 billion
• Wealth net flows are up 49% to £3.3 billion
• Asset Under Management up 18% to £233 billion
• Capital cushion, or Solvency II ratio of 171% is down from 180% in late December

Guidance:

• Continues to target compound earnings per share growth of 11%

Chief executive Amanda Blanc said:

“We have delivered another quarter of strong trading, building momentum in 2026. We delivered profitable growth across Aviva despite global market volatility, demonstrating yet again the advantages of our market-leading positions and diverse business model.”

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ii round-up:

Aviva's diverse portfolio of businesses continued to show its strengths with broad progress made in the first quarter.

Wealth net flows rose 49% to £3.3 billion, driven by continued momentum at its Workplace savings platform. That helped aid a near one-fifth increase in group AUM to £233 billion.

Shares in the FTSE 100 insurer rose 1% in mid-morning trading having come into this latest news down by 10% so far in 2026. Rival Legal & General Group has fallen 5% over that time. The FTSE 100 index is up around 4% year-to-date.

Aviva provides savings, retirement pension products and general insurance, with the latter boosted in 2025 by its acquisition of Direct Line.

General insurance premiums rose 19% to £3.4 billion, UK and Irish general premiums climbed 26% to £2.5 billion, while Canadian premiums on a constant currency basis increased 3% to £0.9 billion.

Retirement sales benefited from a 10% rise in demand for individual annuities, with sales for equity release products up 8%.

A fall in the capital cushion, or solvency II ratio to 171% from 180% in late December followed the £800 million outlay of the final 2025 dividend payment.

Aviva reiterated growth ambitions through to 2028, including compound earnings per share growth of 11%, taking its return on equity employed to above 20% from 17.5% in 2025.

First-half results are scheduled for 14 August.  

ii view:

Aviva highlights itself as the UK’s only diversified insurer, with market-leading positions across the UK, Canada & Ireland. The Wealth & Retirement (IWR) division offers protection insurance such as life and health cover as well as savings. General Insurance, which now includes Direct Line, provides motoring and home insurance. Aviva Investors encompasses its asset management ops, while International Investments houses its business partnerships in both China and India.

For investors, Bulk Purchase Annuities (BPA) sales within the IWR division remain volatile. Health sales during this latest quarter were hindered by reduced consumer demand. Exposure to general insurance leaves Aviva calculating risks in relation to unknown events such as increased flooding under global climate change and wildfires in Canada. Previous business sales have also reduced geographical diversity.

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On the upside, three-year growth targets for earnings and Return on Equity (RoE) continue to be pursued. The employment of more than 500 data scientists should help, with management pushing to increase efficiency via AI. The acquisition of Direct Line has left Aviva more focused on capital light growth opportunities in general insurance, while product and geographical diversity exist including exposure to investments in China and India.

For now, with Direct Line aiding growth momentum and the shares offering a dividend yield in excess of 6%, grounds for longer-term optimism appear to remain.

Positives:

• Targeting costs
• Attractive dividend yield (not guaranteed)

Negatives:

• Reduced geographical diversity
• General insurance is subject to events outside of management’s control

The average rating of stock market analysts:

Cautious buy