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Aviva plc (GB:AV)
LSE:AV
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Aviva plc
(LSE:AV)
Rating:81Outperform
Price Target:―
Positive Factors
Earnings Impact
The acquisition is expected to be EPS accretive from the first year onwards.
Strategic Acquisition
Aviva's proposed acquisition of DLG is considered a good strategic fit, driven by promising scale benefits and synergies.
Target Price Increase
The target price for Aviva has been increased by 5% to 565p, with an upgrade to Overweight, suggesting potential upside.
Negative Factors
Combined Operating Ratio
General Insurance undiscounted COR (uCOR) was 99.5%, 20bps worse yoy, driven by heavy cat activity in Canada.
Solvency Ratio
Aviva's solvency ratio stood at 195%, 10pts below 1H24, impacted by economic impacts and interim dividend.
Aviva plc (AV) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£16.25B
Dividend Yield5.84%
Average Volume (3M)8.53M
Price to Earnings (P/E)25.9
Beta (1Y)1.07
Revenue Growth-1.13%
EPS Growth-38.11%
CountryUK
Employees29,091
SectorFinancial
Sector Strength83
IndustryInsurance - Diversified
Share Statistics
EPS (TTM)0.25
Shares Outstanding2,677,962,600
10 Day Avg. Volume9,239,410
30 Day Avg. Volume8,527,758
Financial Highlights & Ratios
PEG Ratio-0.47
Price to Book (P/B)1.86
Price to Sales (P/S)0.00
P/FCF Ratio1.89
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£637.50Price Target Upside4.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Aviva plc Business Overview & Revenue Model
Company DescriptionAviva plc provides various insurance, retirement, investment, and savings products in the United Kingdom, Ireland, Canada, and internationally. The company offers life insurance, long-term health and accident insurance, savings, pension, and annuity products, as well as pension fund business and lifetime mortgage products. It also provides insurance cover to individuals, small and medium-sized businesses for risks associated with motor vehicles and medical expenses, as well as property and liability, such as employers' and professional indemnity liabilities. In addition, the company provides investment management services for institutional pension fund mandates; and manages various retail investment products, including investment funds, unit trusts, open-ended investment companies, and individual savings accounts for third-party financial institutions, pension funds, public sector organizations, investment professionals, and private investors. It markets its products through a network of insurance brokers, as well as MyAviva platform. The company was formerly known as CGNU plc and changed its name to Aviva plc in July 2002. Aviva plc was founded in 1696 and is headquartered in London, the United Kingdom.
How the Company Makes MoneyAviva plc generates revenue primarily through the premiums collected from its insurance policies, which include life, health, car, home, and commercial insurance products. The company also earns income from its asset management services, where it manages investments on behalf of clients. Additionally, Aviva benefits from investment returns on its own portfolio, which supports its ability to meet policyholder claims. Significant partnerships with financial institutions and brokers enhance its distribution capabilities and market reach, contributing to earnings growth. Further, Aviva's strategic focus on digital transformation and customer-centric services helps improve operational efficiency and revenue generation.
Aviva plc Financial Statement Overview
Summary
Aviva plc shows strong cash flow management and a stable balance sheet, despite challenges in net income affecting profitability metrics. The company maintains a solid equity base and cash reserves, positioning it to withstand industry fluctuations and pursue growth opportunities.Income Statement
Aviva plc has shown a fluctuating revenue trend with a slight decline in 2024. The gross profit margin remains stable due to consistent revenue recognition policies. However, the net profit margin has decreased significantly compared to 2023 due to lower net income. The company had positive EBIT and EBITDA margins in 2023 but faced challenges in 2024 due to a lack of EBIT, impacting overall profitability.72
Positive
Balance Sheet
The balance sheet indicates moderate leverage with a relatively stable debt-to-equity ratio. The company maintains a strong equity position, although it has decreased over the years. Aviva's equity ratio reflects a healthy portion of assets financed by shareholders. Despite the slight increase in total debt, the company's overall financial position remains stable with sufficient equity backing.80
Positive
Cash Flow
Aviva plc's cash flow statement exhibits a strong free cash flow position in 2024, recovering significantly from negative cash flows in 2023. The company demonstrates effective cash management with a high operating cash flow to net income ratio. This robust cash flow generation provides flexibility for strategic investments and debt management.85
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 31.76B | 32.92B | 23.09B | 31.98B | 31.08B | Gross Profit |
| 31.76B | 33.95B | 23.09B | 31.98B | 31.08B | EBIT |
| 997.00M | 1.03B | -1.62B | 97.00M | 2.88B | EBITDA |
| 1.58B | 2.43B | -2.73B | 1.36B | 2.61B | Net Income Common Stockholders |
| 683.00M | 1.08B | -1.18B | 416.00M | 2.06B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 23.48B | 17.27B | 22.50B | 12.48B | 16.90B | Total Assets |
| 353.88B | 328.84B | 302.26B | 343.44B | 466.52B | Total Debt |
| 6.89B | 7.37B | 8.57B | 8.42B | 11.13B | Net Debt |
| -16.59B | -9.91B | -13.94B | -4.06B | -5.78B | Total Liabilities |
| 345.26B | 319.24B | 289.86B | 323.99B | 445.96B | Stockholders Equity |
| 8.30B | 8.79B | 12.09B | 19.20B | 19.55B |
| Cash Flow | Free Cash Flow | |||
| 8.27B | -3.08B | 3.85B | 3.19B | 8.91B | Operating Cash Flow |
| 8.45B | -2.73B | 3.95B | 3.30B | 9.05B | Investing Cash Flow |
| 162.00M | -350.00M | 11.13B | -6.58B | -12.70B | Financing Cash Flow |
| -2.49B | -1.82B | -5.47B | -3.91B | -339.00M |
Aviva plc Technical Analysis
Positive
610.80
Price Trends
544.32
Positive
512.70
Positive
484.34
Positive
Market Momentum
19.91
Negative
78.21
Negative
97.61
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:AV, the sentiment is Positive. The current price of 610.8 is above the 20-day moving average (MA) of 579.25, above the 50-day MA of 544.32, and above the 200-day MA of 484.34, indicating a bullish trend. The MACD of 19.91 indicates Negative momentum. The RSI at 78.21 is Negative, neither overbought nor oversold. The STOCH value of 97.61 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:AV.
Aviva plc Risk Analysis
Aviva plc disclosed 15 risk factors in its most recent earnings report. Aviva plc reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Aviva plc Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | £16.25B | 25.90 | 5.48% | 5.84% | -1.13% | -38.11% | |
79 Outperform | £10.23B | 15.42 | 56.17% | 3.68% | 34.86% | 95.18% | |
70 Outperform | £21.37B | 12.55 | 12.68% | 2.11% | -17.12% | 30.62% | |
67 Neutral | £6.32B | ― | -60.34% | 8.53% | -6.33% | ― | |
64 Neutral | $12.64B | 9.78 | 7.67% | 17015.08% | 12.23% | -6.02% | |
63 Neutral | £3.92B | 26.89 | 5.97% | 2.32% | 26.11% | -29.43% | |
56 Neutral | £13.70B | 82.80 | 4.06% | 8.93% | -21.56% | -61.14% |
* Financial Sector Average
Performance Comparison
GB:AV
Aviva plc
610.80
163.06
36.42%
GB:ADM
Admiral
3,340.00
808.49
31.94%
GB:DLG
Direct Line Insurance
302.00
101.50
50.62%
GB:LGEN
Legal & General
239.30
8.13
3.52%
GB:PHNX
Phoenix Group Holdings
633.00
180.05
39.75%
GB:PRU
Prudential
826.40
79.07
10.58%
Aviva plc Earnings Call Summary
Earnings Call Date:Feb 27, 2025
(Q4-2024)
| % Change Since: 22.20%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Aviva's strong financial performance, growth across various segments, and strategic acquisitions that have positioned the company for future gains. Despite challenges in the Canadian market due to severe weather, the overall financial metrics and strategic moves indicate a positive trajectory.Q4-2024 Updates
Positive Updates
Strong Financial Performance
Operating profit increased by 20% to nearly £1.8 billion and underlying own funds generation rose 18% to £1.5 billion. Cash remittances increased to £2 billion, and return on equity was 13.6% on a Solvency II basis. Capital position remains strong at 20%.
Dividend Increase
A final dividend of 23.8p per share was announced, with the total dividend per share up 7% year-on-year.
Growth in U.K. and Ireland General Insurance
Achieved 16% growth in premiums, with personal lines growing 22% and commercial lines 12%.
Canadian Market Performance
Delivered double-digit growth despite challenging CAT season, with a leading claims net promoter score.
Wealth Segment Success
Assets on the adviser platform reached £50 billion, with overall assets nearing £200 billion.
Record Retirement Segment
Delivered record bulk purchase annuity volumes with continued support on asset origination.
Strategic Acquisition and Integration
Proposed acquisition of Direct Line expected to create a leader in U.K. personal lines with £125 million in cost synergies.
Negative Updates
Impact of Canadian Weather Events
Canada experienced the worst insured year for weather on record with over CAD 8.5 billion in losses, impacting operating profit.
Decline in Operating Funds Generation
Total operating funds generation was 4% lower in 2024 due to the prior year's benefit from the partnership extension with Diligenta and FNZ.
Company Guidance
During the call, Aviva provided guidance on several key metrics, emphasizing their strong financial performance in fiscal year 2024 and strategic plans for future growth. Operating profit increased by 20% to nearly £1.8 billion, while underlying own funds generation (OSG) rose 18% to £1.5 billion. They announced a final dividend of 23.8p per share, resulting in a total dividend per share up 7% year-on-year. Return on equity was reported at 13.6% on a Solvency II basis, with a robust capital position at 20%. Aviva also highlighted their achievements in the U.K. and Ireland General Insurance segment with 16% growth, and double-digit growth in Canada, supported by a leading claims net promoter score. The wealth division reached £50 billion in assets on the adviser platform, cementing their number one position in the U.K. Plans for the proposed acquisition of Direct Line were detailed, projecting £125 million in cost synergies and significant capital benefits, further enhancing shareholder distribution. The company remains on track to meet its 2026 targets, with ambitions to continue delivering strong shareholder returns, having returned £10 billion of capital over the past 4.5 years.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.