Aviva increases Brexit backstop by £100m in new results
PUBLISHED: 10:57 07 March 2019 | UPDATED: 11:15 07 March 2019
Norwich's Aviva has published its latest set of results, revealing an £100m investment in Brexit reserves as the company battens down the hatches ahead of March 29.
Aviva’s chief financial officer Tom Stoddard revealed that Brexit reserves have been increased to £400m, in an attempt to “remain resilient” against any scenario.
The company’s report reads: “The prolonged and fraught process of negotiating Britain’s exit from the European Union has weighed down on the growth in the economy.
“But Aviva is well placed to deal with this, and have prepared to minimise the potential operational impact.”
The company is indeed in a strong domestic position, having grown operating profits by 2% to £3.2bn, up from £2.6bn in 2017.
Returns to shareholders have also increased 7%, up to 58.4p per share – higher than competitors such as Direct Line at around 32p.
The business is further consolidating its position by paying of debts and instead increasing investment into government loans.
The report says: “Our plan is to prioritise debt reduction for the foreseeable future. We plan to reduce debt by at least £1.5bn by the end of 2022, saving approximately £90m a year in interest expenses.”
However, the company has been set back by headwinds overseas – particularly in the Canadian market.
The report attributes “adverse large losses and weather-related claims” as an issue offsetting increased operating profits in France.
The report says that in Canada, the 2018 focus was to “set the business on the path to recovery, following the challenges experienced in 2017, where results were adversely affected by heightened claims inflation in motor insurance.”
Aviva’s smallest market having contributed £28m to the company, Canada is set to see an increase in operating profits as a result of rate increases of around 10% from the first quarter of 2019.
Maurice Tulloch, the recently appoint chief executive of Aviva, said: “We have strong foundations but we are only scratching the service of our full potential. There’s a huge opportunity here. I am determined to re-energise Aviva and deliver long term growth for our shareholders.”