AM Best Affirms Credit Ratings of Aviva Insurance Limited

Barchart · 10/18 10:42

AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of Aviva Insurance Limited (AIL) (United Kingdom). AIL is a wholly owned subsidiary of Aviva plc (Aviva) (United Kingdom), the non-operating holding company of the Aviva group. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Aviva’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as the group’s strong operating performance, favourable business profile and appropriate enterprise risk management. The ratings also reflect AIL’s strategic importance to and deep integration within Aviva as a leading provider of non-life insurance in the United Kingdom. AIL is the group’s main UK-based non-life insurer and principal contributor of non-life insurance service revenue.

Aviva’s balance sheet strength is underpinned by its consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best’s assessment of the group’s risk-adjusted capitalisation includes a meaningful contribution from economic capital embedded in long-term business and equity credit for hybrid debt. The sensitivity of Aviva’s balance sheet to interest rate volatility is limited, having reduced after the disposal of the group’s French and Italian operations in 2021. The assessment considers Aviva’s consolidated financial leverage, which is expected to remain stable following actions taken to reduce the debt burden in recent years together with the group’s strong capital management capability and solid regulatory solvency position. Aviva reported a Solvency II coverage ratio of 205% as at the end of June 2024 (year-end 2023: 207%).

Aviva has a track record of strong operating performance through business cycles. For year-end 2023, the group reported profit after tax of GBP 1.1 billion, equivalent to a return on equity of 11.2%, benefiting from a well-diversified portfolio by product across life and non-life segments. Earnings have been supported by strong growth across protection, annuities and savings products, evidenced by growth in life new business inflows of 16% in 2023. Non-life underwriting performance remains a strong and stable contributor to group profitability, despite adverse UK retail market conditions and elevated weather-related events in Canada in recent years.

Aviva’s business is focused on its core markets of the UK, Ireland and Canada, where it maintains leading positions in several lines of business. The group’s business profile is well diversified by product, both in life and non-life insurance, and by distribution channel. The recent acquisitions of AIG Life Limited and Probitas Holdings (Bermuda) Limited have further enhanced Aviva's distribution platforms and product offering.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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