Aviva beats profit estimates as insurance premiums soar

Aviva's acquisition of Direct Line on track

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General insurance premiums rise, driven by UK & Ireland

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Remains committed to net zero by 2040

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Canada earnings hit by natural disasters

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Impact from U.S. tariffs on Canada manageable - CEO

Feb 27 (Reuters) - British insurer Aviva beat annual profit expectations on double-digit growth in its general insurance premiums in 2024, and said its planned 3.7 billion pound ($4.69 billion) acquisition of smaller rival Direct Line was on track.

The company, which offers car, home and life insurance in the UK, Ireland and Canada, reported operating profit of 1.77 billion pounds for the year ended December 31, 2024, above a company-compiled analysts' consensus of 1.67 billion pounds.

Shares in Aviva rose as much as 2% in early trade to their highest since May 2018. Flagging lower costs, JP Morgan analysts said the profit beat "appears to be sustainable" and they expect the market to upgrade forecasts.

Many insurers have enjoyed a profitable year by raising premiums for motor and home insurance in the face of inflation and natural disasters, including wildfires and storms.

Aviva's annual general insurance gross written premiums for the year rose 14% to 12.2 billion pounds, while growth at its UK and Ireland insurance, wealth and retirement business also exceeded expectations.

Chief Executive Amanda Blanc has been looking to accelerate Aviva's growth in less capital-intensive businesses such as motor and life insurance.

Her deal to buy AIG's UK life insurance business and acquisition of insurance platform Probitas was quickly followed by a swoop on Direct Line to become Britain's largest home and motor insurer.

Aviva gave no update on the potential cost savings from the Direct Line takeover, but analysts at Jefferies cited Aviva's goal for its dividend per share to grow in mid-single digits post-completion and a restart of its share buybacks in 2026 as positives.

"We've got quite a lot on our plate," Blanc told journalists in a conference call. "It's now going to be key that we see all of those transactions deliver for us."

GLOBAL CHALLENGES

Threats of U.S. trade tariffs and new policies to

change

net zero carbon emission targets proposed by President Donald Trump mean global insurers are facing risks of significant spikes in claims costs.

Blanc acknowledged the potential of a hit from tariffs on its Canada business, but said the impact would be "manageable".

Aviva's annual operating profit in Canada was slashed by a quarter over the year, following a spate of costly natural disasters such as wildfires in Jasper, a hailstorm in Calgary and flooding in major cities.

Insurers like Aviva have long since recognised the pressures climate change have imposed on sound underwriting and in 2021, Aviva became the world's first insurer to announce its ambition to become net zero by 2040.

It said on Thursday it remained committed to the task.

"While we are working towards our sustainability ambitions, we recognise that while we have control over Aviva's operations and influence over our supply chain, when it comes to decarbonising the economy in which we operate and invest, Aviva is one part of a far larger global system," it said in a statement.