TIDMAV.
RNS Number : 2063J
Aviva PLC
09 December 2022
9 December 2022
Aviva plc releases IFRS 17 update
Aviva plc ("Aviva" or the "Group") has released presentation
slides and a video on its website, providing an update on the
implementation of IFRS 17 and how this will apply to the Group.
IFRS 17 is a new accounting standard for insurers which is due to
be implemented from 1 January 2023.
No impact to Solvency II metrics, cash generation, dividend
guidance, or anticipated capital returns
IFRS 17 is purely an accounting change and does not affect the
underlying economics of our business, our strategy or the way in
which we operate.
-- Cash remittances, capital generation and approach to capital
allocation are unchanged by IFRS 17.
-- Solvency II remains the key basis under which we manage our business and is unaffected.
-- There is no impact on our dividend guidance of c.GBP870m
(c.31.0p) for 2022 and c.GBP915m (c.32.5p) for 2023, with
low-to-mid single digit DPS growth thereafter.
-- Our intention to return further capital to shareholders in 2023 is unchanged.
We remain on track to meet our Group financial targets which
will be unchanged under IFRS 17
-- >GBP5.4 billion cash remittances over 2022-24.
-- GBP1.5 billion Solvency II operating own funds generation p.a. by 2024.
-- GBP750 million gross cost reduction over the period 2018-24.
Financial impacts on transition to IFRS 17
Under IFRS 17, total profits will remain unchanged. However, the
new standard will impact the timing of when profits emerge,
improving the predictability of profit over the long-term.
Aviva has market leading businesses across Insurance, Wealth and
Retirement in the UK, Ireland and Canada. Our diversified model is
one of our core strengths. IFRS 17 principally impacts Annuities
and Protection which contribute c.40% of IFRS 4 operating profit(1)
, with the remaining c.60% largely unaffected.
IFRS 17 introduces two new balance sheet concepts, the
contractural service margin (CSM) and the risk adjustment (RA),
both significant stocks of future value. These represent profits
from our life business, principally Annuities and Protection, that
will be released over time. We provide more detail on both of these
features in our presentation materials.
Key financial impacts:
-- Opening IFRS 17 adjusted shareholders' equity (including CSM
net of tax) at 1 January 2022 is expected to be around GBP21bn to
GBP22bn, compared with IFRS 4 shareholders' equity of GBP19bn.
-- Opening IFRS 17 shareholders' equity is expected to be around
GBP16bn to GBP17bn at 1 January 2022.
-- The contractural service margin (net of tax) is estimated to be GBP4bn to GBP5bn.
-- Indicative reduction to aggregate operating profit from business units of 15%(2) under IFRS17
Presentation slides and a recorded video are available here ,
where further information is provided on the new accounting
standard and how it applies to Aviva.
-ends-
Enquiries :
Analysts & investors:
Rupert Taylor Rea +44 (0)7385 494 440
Joel von Sternberg +44 (0)7384 231 238
Michael O'Hara +44 (0)7837 234 388
Media:
Andrew Reid +44 (0)7800 694 276
Sarah Swailes +44 (0)7800 694 859
Marion Fischer +44 (0)7800 693 219
Notes to editors :
-- We are the UK's leading Insurance, Wealth & Retirement
business and we operate in the UK, Ireland and Canada. We also have
international investments in Singapore, China and India.
-- We help our 18.5 million customers make the most out of life,
plan for the future, and have the confidence that if things go
wrong we'll be there to put it right.
-- We have been taking care of people for 325 years, in line
with our purpose of being 'with you today, for a better tomorrow'.
In 2021, we paid GBP30.2 billion in claims and benefits to our
customers.
-- Aviva is a market leader in sustainability. In 2021, we
announced our plan to become a Net Zero carbon emissions company by
2040, the first major insurance company in the world to do so. This
plan means Net Zero carbon emissions from our investments by 2040;
setting out a clear pathway to get there with a cut of 25% in the
carbon intensity of our investments by 2025 and of 60% by 2030; and
Net Zero carbon emissions from our own operations and supply chain
by 2030. Find out more about our climate goals at
www.aviva.com/climate-goals and our sustainability ambition and
action at www.aviva.com/sustainability
-- Aviva is a Living Wage and Living Hours employer and provides
market-leading benefits for our people, including flexible working,
paid carers leave and equal parental leave. Find out more at
https://www.aviva.com/about-us/our-people/
-- As at 30 June 2022, total Group assets under management at
Aviva Group were GBP353 billion and our Solvency II shareholder
capital surplus at 30 September 2022 was GBP8.8 billion. Our shares
are listed on the London Stock Exchange and we are a member of the
FTSE 100 index.
-- For more details on what we do, our business and how we help
our customers, visit www.aviva.com/about-us
-- The Aviva newsroom at www.aviva.com/newsroom includes links
to our spokespeople images, podcasts, research reports and our news
release archive. Sign up to get the latest news from Aviva by
email.
-- You can follow us on:
o Twitter: www.twitter.com/avivaplc/
o LinkedIn: www.linkedin.com/company/aviva-plc
o Instagram: www.instagram.com/avivaplc
-- For the latest corporate films from around our business, subscribe to our YouTube channel: www.youtube.com/user/aviva
Cautionary statements
This announcement should be read in conjunction with the
documents distributed by Aviva on Aviva.com.
This announcement contains, and we may make, other verbal or
written 'forward-looking statements' with respect to certain of
Aviva's plans and current goals and expectations relating to future
financial condition, performance, results, strategic initiatives
and objectives. Statements containing the words 'intends',
'expects', 'plans', 'will', 'could', 'likely', 'target', 'goal',
'guidance', 'future', 'estimates', and 'anticipates', and words of
similar meaning, are forward-looking. By their nature all
forward-looking statements involve risk and uncertainty and there
are important factors, including the general political, economic
environment, regulatory, social and technological change, climate,
financial, insurance and operational risks, that could cause actual
results and outcomes to differ materially from those indicated in
these statements. A more detailed description of these risks and
uncertainties is contained within Aviva's most recent annual report
available on its website at http://aviva.com/reports. In
particular, Aviva's expectations, assessments and illustrations
relating to the impact of IFRS17 are preliminary, are based on
Aviva's estimates as at today and are subject to change as the
Group and the industry adapt to the new accounting standard. We do
not undertake to update our forward-looking statements except as
required by applicable law and do not provide any representation,
assurance or guarantee that the occurrence of the events expressed
or implied in any forward-looking statements will actually occur.
Accordingly, persons reading this announcement should not place
undue reliance on forward-looking statements
As a reminder
In this press release we provide financial metrics to measure
our performance and financial strength. These metrics include
Alternative Performance Measures (APMs), which are non-GAAP
measures that are not bound by the requirements of IFRS and
Solvency II. A complete list and further guidance in respect of the
existing APMs used by the Group can be found in the 'Other
Information' section of the 2022 Half Year Report. All references
to 'operating profit' represent 'Group adjusted operating profit'.
Further details of IFRS 17 adjusted shareholders' equity is
provided in the presentation slides that accompany this press
release.
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