Aviva Expects Increased Operating Profit for First Half and Full Year

by Warren Seah

Aviva Expects Increased Operating Profit for First Half and Full Year

Aviva PLC announced on Wednesday that it anticipates higher operating profit for both the first half and full year, as it adjusts its 2022 results in accordance with accounting changes.

The FTSE 100-listed insurer and asset manager projects a first-half operating profit of approximately £700 million ($912.5 million), up from £661 million the previous year. It also forecasts a 5%-7% growth in full-year operating profit from £1.35 billion in 2022.

The implementation of the new International Financial Reporting Standards (IFRS 17) has resulted in unchanged total profit over the duration of a contract, but with a shift in when profit is recognized, improving long-term predictability.

As a result of the accounting changes, Aviva has restated its 2022 business unit operating profit as £1.9 billion, reflecting a 15% decrease compared to the previous IFRS 4 regulations. These changes primarily impact the Annuities and Protection units, where new business profit is now spread out over the contract’s lifetime.

Aviva’s shareholder equity for 2022 has also been adjusted to £9.4 billion, down from £11.9 billion under IFRS 4.

The company assures that it remains confident in achieving or surpassing its financial targets for cash remittances, own funds generation, and cost reduction. These targets remain unchanged under IFRS 17.

Aviva emphasizes that there are no modifications to its underlying economics, strategy, or dividend guidance.

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