Aviva to broaden attack in commercial lines, secure 9% premium growth through 2024

Aviva will step up its game in UK commercial lines, cementing a position as the home-town small corporate insurance leader but also pushing afresh into more global corporate and specialty in the London market as it targets new premium growth through 2024.

Aviva's era of disposals and downsizing is over "and our focus is now entirely on transforming the performance of Aviva so we can capitalise fully on the growth opportunities through our three markets," chief executive officer Amanda Blanc (pictured) told investors in a lead-off comment to a conference on the UK commercial business.

For UK commercial, the goal is £200 million in operating profit by 2024 on 9% compound annual growth in gross written premiums 2020 to 2024.

The rough plan: to power further into the Aviva core of small-caps and some mid-market on the back of digital, beat rivals in mid-market and beyond - thanks to superior relationships in a fast-consolidating brokerage segment and nibble away at the London market with a targeted "multi-niche" and opportunistic approach.

"The UK large corporate market is attractive," said Nick Major, managing director of commercial lines at Aviva unit UK General Insurance.

The UK and global corporates should deliver 10% compound annual growth in gross written premium through 2024, the presentation showed. Brokers will lead that charge as Aviva leads broker surveys and can ease broker jobs with an improved digital experience, unit CEO Adam Winslow argued.

But that picture of Aviva charging into a rough-and-tumble London market that has chewed up and spit out bigger names in recent years raised some signs of alarm amongst analysts participating in the Tuesday (January 18) call.

Officials moved quickly to ring-fence the Aviva ambition.

"What we are talking about here are selective areas of growth, where we have expertise," group CEO Amanda Blanc cut in to add. "A disciplined approach, not a pile into everything approach."

Major and Winslow rattled off a series of specialty lines that Aviva will foreswear, including as a result of disposals from the recent restructuring. "We are not trying to do everything for everybody," Major told analysts. "A lot of global players have come unstuck trying to do just that."

Major suggested that within the global corporate sector, Aviva will target "one tier down" from the biggest names and exposures where Aviva can still apply "a more standardised product" and then beat the competition on better risk analysis.

In SME segments, Aviva can take 8% average annual compound growth through 2024, up from the 5.5% annualised rates that took Aviva from 2017 through 2020. Scales are lightly tipped towards the small and micro-firms.

Through it all, management plans operational efficiencies to push the expense ratio south of 12% and the loss management or good luck to keep the combined ratio at or below 94%.

Aviva's UK commercial lines may have delivered £2.6 billion in GWP in 2021, the company's early estimates suggest, a 15% rise on the prior year rendering a 10% compound annual growth rate since 2017.

Management claims to have gained half the 2021 increase in premiums from volume growth and half from the hardening rates, a presentation to the conference showed.

Aviva will spell out the details on 2021 earnings on March 2.

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