Commercial lines premiums at Aviva Canada grew by 17% in 2022 Q1 (13% at constant currency), according to the company’s quarterly financial results.
“Sixty per cent of the growth overall [in commercial lines] is coming from rate and about 40% from new business,” Aviva plc group chief executive officer elaborated in an investor’s call Thursday to discuss the Q1 results. “And you know, we’re monitoring obviously the technical prices to make sure that we are making the most of the opportunity, I guess, which is a hardening market in commercial lines.
“I think it’s really important to stress, also, if there’s an underlying inflation question, that the commercial lines have index linking on the vast majority of their policies, so the rate, in essence, is on top of the index linking that we see in those commercial lines products.”
Overall, Aviva Canada wrote £302 million in commercial premium in 2022 Q1, up from £259 million during the same period last year. In particular, the company has targeted growth in the area of small and medium-sized enterprises (SMEs).
“We think about the UK, we made a concerted effort to go out and recruit into regional mid-market underwriting and we’ve seen growth in those areas,” Blanc said in the conference call. “And the same is true of Canada.”
Aviva Canada also saw muted growth in the personal lines space, home and auto, with 6% premium growth in the first quarter. This reflects rate increases during a hardening market, as well as the impact of inflation on claims costs. It also takes into account increasing auto claims frequency, which was anticipated as people start to drive more often after the easing of pandemic restrictions.
In part because of the more normal claims frequency in auto, Aviva Canada’s combined ratio increased by 3.7 percentage points over the same period last year — from 88.1% in 2021 Q1 to 91.8% in 2022 Q1.
Blanc said the company will still need to maintain rate discipline to manage the inflationary headwinds expected in personal lines.
“In Canada, for [auto], you have to file your rates,” she reminded UK investors on the call. “And so, we’re definitely managing volume in Canada to make sure we can deal with any of the inflationary pressures in personal lines.”