Aviva backs outlook as interim operating profit beats consensus

Aviva PLC on Friday said it enjoyed a "strong" first half of 2026 as it backed its longer-term outlook.

The London-based insurer and wealth manager said operating profit was £1.33 billion in the six months that ended June 30, 24% from £1.07 billion a year before, as insurance revenue climbed 23% to £13.48 billion from £10.99 billion.

Operating profit topped Visible Alpha consensus of £1.25 billion. Operating earnings per share were up 10% to 31.8 pence from 29.0p.

Pretax profit declined 29% to £905 million in the recent half-year from £1.27 billion a year prior.

Aviva posted an insurance service result of £1.27 billion, up 20% from £1.05 billion a year before. Its undiscounted combined operating ratio improved to 93.3% from 94.6% a year before. A figure below 100% indicates a profit on insurance underwriting.

However, its net financial result fell to £186 million from £699 million.

Aviva's investment return jumped to £20.77 billion in the recent half-year from £8.51 billion a year before, but counterbalancing this was a £17.15 billion hit to profit from the movement in non-participating investment contract liabilities, compared to a £5.32 billion hit a year ago. Aviva said this related mostly to hedging on interest rate and equity exposures.

Additionally, investment expense attributable to unit holders increased to £872 million from £184 million.

IFRS profit fell 49% to £418 million from £819 million a year before. However, IFRS return on equity was 20.3% in the first half of 2026, up from 18.2% in the first half of 2025.

"Aviva's results in the first half of 2026 were very strong," Chief Executive Officer Amanda Blanc said.

Blanc said Aviva is making "very good progress" with the integration of Direct Line, an acquisition it sealed in July of last year.

"We are confident that we will meet our three-year financial targets in 2028 and expect 75% of our earnings to be capital-light by that point," she said.

"Beyond this, Aviva is in a great position to sustain strong earnings growth over the longer term, particularly in the high growth areas of Wealth, UK and Canada General Insurance, Global Corporate and Specialty, and Health & Protection."

For 2026, Aviva expects operating EPS growth in line with its 11% aim. Its three-year target, which it is also "on track to deliver", is for compound annual growth in operating EPS of 11% between 2025 and 2028.

"In Individual annuities, we expect continued growth, supported by strong demand and the launch of new propositions. While bulk purchase annuity market conditions remain competitive, we continue to trade actively and have written £1.9 billion year-to-date," Aviva said. "We will maintain pricing discipline and write business above our low-teens internal rate of return hurdle."

Aviva Investors recorded net inflows of £1.5 billion in the recent half-year, swung from £1.2 billion in outflows a year before. The Wealth business had positive £7.6 billion in net flows, up 32% from £5.8 billion a year before.

The firm raised its interim dividend by 6.9% to 14.0 pence from 13.1p.

Aviva shares were 0.7% higher at 718.80 pence each on Friday morning in London.

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