Aviva Share Discussion Threads

[ftime] 21/5/2020 12:11

Every other insurer that has released a market update such as this has seen a move north of at least 5% on the day. Currently we're going backwards following todays announcement. Something isn't right.

[imagining] 21/5/2020 11:48

Another wasted opportunity to add value. They just had to over-emphasise possible economic challenges(that may or may not occur). Why on earth must they spoil some good trading figures with such negativity? Clearly this current Board are lacking in Corporate nous and integrity!

[edmundshaw] 21/5/2020 11:45

Me too paulof2.

[paulof2] 21/5/2020 10:16

As boring as Aviva is I was expecting at least a bit of a move north with those results

[eurofox] 21/5/2020 10:11

all excellent observations this morning. What today's announcement has done is taken all the fun out of trading - for today at least. What I would not do now on the basis of this announcement is sell any of my core holding on the hope of buying it back cheaper. It will only be adds if they are lower than my average, which is now boring because my holding is already in profit.

[paulof2] 21/5/2020 10:06

I reckon it’s a mix of both points 2 and 3 wba!

[wba1] 21/5/2020 10:01

ColonelA;
An update of this sort would usually relate to the impact on 2020. My view on benefits is specific to 2020 as the reduction in claims would occur during the lockdown period (with a tail as things get back to normal). There is no 'pattern' attached to these claims (as with earned premium) as the claims are wholly incurred at date of claim. So the £170m (a 10 point improvement) would relate purely to 2020 (as would any improvement or deterioration in other lines).

I can see several possible explanations;

* They have only included claims deterioration and improvements actually observed to date (say, end April). This would mean they would only be counting reductions in claims on motor to that date with no allowance for projecting forward for the remainder of lockdown and a gradual return. As any BI (and some other) claims would have been incurred from the start of lockdown this would increase the adverse loss ratio impact compared to benefits which would emerge over a longer period. I fail to see why they should have done this as other insurers have clearly taken a broader view (and even looking at claims to end April will require a big 'guesstimate' for IBNR, which seems no less speculative than looking forward to the rest of 2020).

* They are using some of the motor benefit to hide an underlying deterioration in motor performance (and possibly some in other lines) which would otherwise have resulted in them missing their COR targets. This is possible as the UK pricing environment had been poor for some time, but it cannot account for more than 2-3 points.

* They are dancing the 'CEO Waltz'. This is the dance where CEO's (especially those recently appointed) will seek to boost 'margins' in historic reserves. In other words they deliberately overreserve in order to hide profit which can be released in future years where performance is poor. Given the current market attitude to insurers 2020 seems like a good year to play this game as the market is assuming the worst. I suspect there is a significant element of this in the picture presented.

[igoe104] 21/5/2020 09:48

You'll just get an generic answer to that question ?

because of the covid 19 pandemic - we need to see how it plays out and see what kind of impact it has on the business, before we consider reintroducing the the dividend - I can understand shareholders frustration blah blah blah. that's the answer I expect you to get .

[colonel a] 21/5/2020 09:41

wba1
I think the issue here may be that Covid claims / losses are essentially a one off {albeit quite a large one } whereas the gains are ongoing.
So they may be gaining at £170m per annum for UK motor but how much can they claim so far ?

[mountpleasant] 21/5/2020 09:29

I sent in a 2 part question for the AGM.
They asked for consent to read out my name.
I am questioning the position on dividends, specifically is the recent dividend money ring fenced, and are there plans to pay out a special dividend sometime in the future?
I am part of the management team of a financial company, so they can see this in my email. Ar any time, we hold 25% of all financial assets globally.

[wba1] 21/5/2020 09:12

Something smells in the update. The estimate of impact in general insurance is £200m adverse in business interruption plus some adverse in other lines, reduced to £160m adverse by the positive effect on some lines (mainly motor). Aviva writes £1.7 bn of motor in the UK alone. My estimate based on discussions with ex-colleagues is that the positive impact on loss ratio may be up to 15 points. Even allowing for 10 points this would generate a positive of £170m. Then there is Canadian and some European motor, which will also have seen benefit. Even allowing for some erosion in the benefit due to the premium reductions they mention (which will mainly affect 2021 due to earnings pattern and will have been tied to mileage reductions and a return to normality) and some claims cost inflation, it is extremely difficult to see how Group benefit on motor can be less than £250m. So to get to their figures this would mean the net cost of lines other than business interruption is greater than the net cost on business interruption (£160m net cost = £200m BI + £210m Other - £250m motor benefit). And this allows no benefit on lines such as household where companies such as Direct Line have reported benefit.

The numbers only add up if Aviva have substantial exposure to Covid claims in other lines such as travel. Aviva should be providing more detail if this is the case.

[spud] 21/5/2020 08:44

Cracking update despite the C-19 caveat.spud

[chinese investor] 21/5/2020 08:08

Good Start !

[solarno lopez] 21/5/2020 08:06

Aviva joins string of insurers under attack in Covid-19 BI dispute

With thanks to Insurance Age

[linton5] 21/5/2020 07:58

Cjac 39 exactly what I thought they need to be bought out I don't like this management there to cozy upstairs

[harrida5050] 21/5/2020 07:55

Strong update given circumstances, value here

[p0pper] 21/5/2020 07:48

But it does keep warning of H2 downturn

[doc robinson] 21/5/2020 07:48

Update seems pretty good in the circumstances.

[laptop15] 21/5/2020 07:45

Blue or red today

[linton5] 21/5/2020 07:37

840m approx saved by taking divi away

[linton5] 21/5/2020 07:30

That's been well covered by the taking of shareholders dividend income ☹️

[dr biotech] 21/5/2020 07:27

£160m for covid claims. About 5% of last years profits - that’s well within the margins of acceptable to me. Seems current interruptions are manageable too.

[chinese investor] 21/5/2020 07:05

"...based on analysis as at 30 April, our estimate of COVID-19 related claims in our general insurance businesses, incorporating notified and projected claims, is £160 million net of reinsurance..."

[wba1] 20/5/2020 16:51

igoe104;
perhaps he can. I revisited a couple of the original reports. Smith suggested (and it seems never to have been rebutted) that the Irish hole arose from RSA Group stripping margin from Irish reserves to plug holes elsewhere (Italy in 2010 was specifically cited) meaning that no margin was available when Irish claims experience deteriorated. Smith was, of course, a partial witness and the Irish reserves should have been adequate anyway if properly set in the first place - but if what he said is true then Culmer was a prime mover in the events leading up to the meltdown of 2013. Smith's testimony (which was under oath) places events squarely within the Group finance area at the time Culmer was in charge.