Aviva’s group risk and private medical insurance (PMI) sales offset a falling individual protection market while higher claims hit profitability in the first half of the year.
The insurer said the value of new business generated from its health and protection arm in the first six months of 2022 rose 5% to £100m compared to the same period last year, thanks to a 6% increase in protection and health sales year-on-year.
However, operating profit from the group’s UK protection and health business fell by 11% to £95m from £107m in H1 2021 which the provider said was “primarily driven by the absence of favourable claims experience in the first half of 2022”.
The insurer did not separate its health, protection and group risk sales further into product groupings, and did not publish annual premium equivalent (APE) figures typically used, but said the segment had continued to perform well over the period, supported by a series of group protection and health scheme wins and strong retention of existing business.
“Growth in health and group protection was partially offset by a more subdued individual protection market due to lower volumes, as the first half of 2021 benefitted from stamp duty relief, coupled with higher interest rates [which] have adversely impacted sales,” it said.
“Our group protection business saw a 31% increase in sales which included a significant scheme win in the first quarter while health volumes grew 8% as we saw continued momentum from the Expert Select proposition launched last year.”
Across the group’s Ireland Life segment, operating profit improved significantly to £26m from £0 in the first half of 2021 driven by reduced expenses, improved underlying performance and modelling improvements.
It noted the value of new business in its Ireland operation rose to £16m from £10m driven by a reduced product offering driven by strong sales in unit linked business, but again was hit by lower protection sales.
Aviva is not the only insurer to report shrinking demand for protection cover with Royal London and Legal & General posting 43% and 19% declines in protection sales respectively over the last couple of weeks.
However, when it comes to private medical insurance, Bupa has added 150,000 customers across UK its private medical insurance (PMI), health trusts, dental and cash plans products in 2022.
Post-tax loss hits £633m
Overall the group’s UK & Ireland Life business reported a 19% increase in operating profit from £545m in H1 2021 to £651m in the first half of this year, with a 4% increase in sales from £16,240m to £16,843m over the same period.
However the insurer reported a post-tax £633m loss over the period, up from a loss of £198m in the same six months last year, which it said “largely reflects adverse market movements, with no impact on capital or cash remittances.”
Doug Brown, chief executive officer of UK & Ireland Life at Aviva, (pictured) pointed to a “robust” set of results amid challenging UK market conditions and sustained global volatility.
“Our protection and health businesses have continued to perform well in the first half of the year, supported by a series of group protection and health scheme wins and strong retention of our existing business,“ Brown said.
“Looking ahead to the second half of this year, our wealth business is strategically important and remains a key focus. We are a major player in the IFA and workplace markets, and we are also significantly expanding our advice capability through the acquisition of Succession Wealth announced earlier this year.
“This will ensure that we can offer much-needed financial advice to more customers. We will also continue to grow our BPA business in an efficient way, whilst supporting our social purpose of using BPA assets to invest in sustainable projects in the UK.”