Combined ratio for Aviva plc for Canada up 3.9 points to 95.8% in first half of 2016

Aviva plc has reported a general insurance combined ratio of 95.8% for Canada for the first six months of 2016, up 3.9 points from the H1 2015 combined ratio of 95.8%.

In particular, the combined operating ratio for the first six months of 2016 was 97% for Personal lines, compared to 93.6% for the first six months of 2015 and 94.6% for full-year 2015. The combined ratio for Commercial lines  in Canada was 94% in H1 2016, compared with 89.2% in H1 2015 and 92.5% for full-year 2015.

In Canada, general insurance operating profit fell to 88 million pounds (H1 2015: 131 million pounds), Aviva said in a statement last week announcing its 2016 interim results. Underwriting profit declined to 42 million pounds (H1 2015: 82 million pounds) with the Fort McMurray wildfire in Alberta and lower levels of prior year development partially offset by improvement in claims frequency. Net written premiums were $1.049 billion pounds, up 5% on a constant currency basis from 1.013 billion pounds. “The growth predominately reflects rate increases on personal property and across commercial lines,” the report said.

Overall, Aviva plc’s general insurance combined operating ratio deteriorated from 93.1% in H1 2015 to 96.2% in H1 2016, affected by an increase in natural catastrophe and weather claims, mainly from fires in Canada and floods in France (1.5%), Flood Re (0.6%) and commission strain from new distribution partnership in the United Kingdom (1%).

General insurance & health operating profit declined 17% to 334 million pounds (H1 2015: 400 million pounds). Underwriting profit of 165 million pounds (H1 2015: 222 million pounds) deteriorated due to the 23 million pound Flood Re levy in the United Kingdom and a c. 55 million pound increase in weather and natural catastrophe claims following fires in Canada and floods in France. “During the second half of 2016 we expect our general insurance operations to benefit from the RBCI acquisition in Canada and distribution partnerships in the U.K.,” the statement said, referring to last month’s announcement of the completion of sale of RBC General Insurance Company to Aviva Canada Inc.

Overall, general insurance net written premiums increased 7% to 3.991 billion (H1 2015: $3.678 billion) “reflecting our new partnership agreement with Homeserve in the U.K. and improved competitiveness across the Group as we benefit from operating expense reductions, our investment in digital and Solvency II diversification benefits,” the statement said.

The company’s European insurance businesses delivered operating profit of 430 million pounds, similar to the first-half 2015 operating profit of 431 million pounds. Life operating profit of 395 million pounds (H1 2015: 372 million pounds) was stable in constant currency terms with growth in protection and with-profits products offset by lower unit-linked asset management charges, a new regulatory asset levy in Poland and higher expenses as we invested in a number of projects in France. General insurance operating profit fell to 35 million pounds (H1 2015: 59 million pounds) mainly reflecting adverse weather experience in France, which experienced severe flooding in the second quarter of this year.

“Aviva is delivering consistency, stability and growth despite the challenging market backdrop,” said Mark Wilson, Aviva’s Group chief executive officer, in the report, noting that the company’s operating profit increased 13% to 1.325 billion pounds (H1 2015: 1.170 billion pounds), despite higher weather claims in general insurance, lower bulk purchase annuity sales in U.K. Life and new government levies. “The steps we have taken to improve strength, resilience and operational consistency are reflected in our results,” Wilson said. “We remain confident in our ability to deliver on our key commitments to grow earnings, cash and dividends.”