Aviva has reported an 18% increase in health and protection new business in 2022 to £221m, from £188m in 2021.
The insurer said this had been spread across its individual and group business in both health and protection, attributing the growth to a combination of increased business wins and distribution partners, competitive pricing, and Cigna’s departure from the market.
Strong performance amid cooling housing market
In an exclusive interview with Health & Protection, Aviva managing director of protection Fran Bruce (pictured), noted the insurer had a strong year in group protection.
She cited a number of scheme wins from large corporates and SMEs which delivered record portfolio growth of 12% driven by 41% increase in new business premiums in the year and “excellent” retention of existing schemes.
Bruce added that Aviva now covered about 2.7m lives across its group protection book.
On the individual protection side of the business, Bruce revealed there had been 9% growth year-on-year, which she described as a “really, really strong” performance in light of a cooling housing market in 2022.
She attributed this growth primarily to new distribution partners such as going live with Reassured in 2022 and product enhancements across critical illness, growth across income protection and adapting pricing to be able to target “certain segments” where Aviva was underweighted before.
SME growth, Cigna exit and Covid payments
On the health side of the business, managing director for health Steve Bridger also pointed to growth of the firm’s SME business, with this segment up 41% year-on-year, as well as positive improvement across the corporate side picking up business following Cigna’s departure the market.
Bridger added that “good consumer, good SME and good corporate” numbers had led to portfolio growth in terms of premium of 12% – with consumer growing around 9%, 16% in SME and 11% in corporate.
This was also reflected in growth in the number of lives covered, with the number of lives tracking close to premium growth.
Bridger described this as a good indicator that the insurer had not had to massively price for inflation concerns, adding that premium and the number of lives covered were up about 10% year-on-year.
Pricing, product and claims team performance
But earlier in the day in response to a question about the performance of the firm’s protection and health business from Health & Protection in a conference call following release of the full year results, Aviva CEO Amanda Blanc hailed the the firm’s claims team.
“I went up and spent some time with that team and listened to the way they handled the protection claims and I think that makes a massive difference,” Blanc said.
“We’ve got strong customer feedback always in that area. We’ve worked hard on our pricing and on our product proposition and I think that the team is just very, very focused on improving.
“I think we had a couple of years where our market share was not where we want it to be but there is plenty of opportunity for us to continue to grow both the health and protection market share.
“We’ve also had a very strong performance in group protection so I think it’s just a combination of pricing, product and of course brilliant service from the Aviva team.”
The numbers
Aviva’s results reveal protection and health value of new business increase to £221m from £188m in 2021, which Aviva reported was driven by strong sales, robust margins and beneficial assumption changes, partly offset by negative impacts from changes in the yield curve.
However, operating profit was flat and in line with 2021 at £229m due to higher new business profits being offset by higher claims on group income protection in 2022.
Protection and health sales under the present value of new business premiums (PVNBP) alternative calculation increased to £2.5bn from £2.37bn in 2021 amid strong sales in protection and health products, which was offset by the greater impact of discounting future premiums due to higher interest rate rises.
The insurer attributed a 29% increase in group protection PVNBP to large scheme wins, strong increments on existing schemes and excellent retention.
Excluding the impact of discounting in reported individual protection PVNBP, new business sales on an annual premium equivalent (APE) basis increased by 9%. Health PVNBP rose by 14% driven by strong sales in the SME channel, while the insurer’s Expert Select product continued to attract new business from consumers.
Over in Ireland, new business increased to £36m from £22m in 2021 driven primarily by improvements in unit-linked and protection margins, however the insurer noted it was partly offset by lower protection and annuity sales.
Ireland Life operating profit was significantly up to £50m from £11m in 2021 – driven by improved underlying profits, reduced expenses as well as modelling improvements.
Overall the insurer reported a loss of £1.12bn after tax compared to a £2.04bn profit in 2021, which it said largely reflects “adverse market movements”.