Aviva’s UK health and protection business saw profits rise to £107m in the first half of 2021, up by a third from the same period last year.
The insurer also noted it had raised prices while increasing underwriting questions and manual referrals to reduce its Covid-19 exposure.
The insurer said the better performance was due to focusing on a more profitable mix of business including consumer health and direct individual protection, and improved group protection claims.
Health insurance operating profit also increased as the insurer said it benefitted from “strong expense management”.
However, new protection and health sales dipped 3% to £1.2bn.
Individual protection volumes grew in comparison to last year when the first national lockdown hit.
This was outweighed by lower group protection sales, due to a subdued market, and a drop in health insurance business with fewer large group schemes being written.
However, health insurance consumer business “performed well” which Aviva said was down to the launch of its Expert Select product early in the year.
Profitability of new business improved due to higher individual protection and health margins, reflecting changes in business mix, it added.
Tighter underwriting and higher pricing
Aviva also highlighted changes to underwriting it had made to limit its exposure to those at the highest risk of Covid-19.
In individual protection it introduced more additional underwriting questions, adjusted pricing and referred more cases for manual underwriting.
It also increased group life prices to limit its potential Covid-19 exposure from new business in that market.
“As the mortality threat from the UK outbreak subsides steps are being taken to relax these additional underwriting measures in a controlled way,” Aviva said.
Overall, it noted that increased protection claims as a result of Covid-19 have been financially offset due to a higher number of people dying in its annuity portfolio.
Ireland Life
Sales in its Ireland Life business increased by 6% to £820m driven by strong sales of unit-linked and protection business.
But operating profit was reduced from £8m to zero as the insurer said it invested heavily in the future of the business through long‑term cost reduction initiatives.
Returning £4bn to shareholders
Overall, Aviva reported a loss of £198m compared to £874m profit in H1 2020 which it said included a £538m expected loss on the sale of its France business.
“We expect to recognise a profit on disposals of Poland and the remaining Italian operations on completion in the second half of the year,” it added.
But operating profit from its continuing operations increased by 17% to £725m.
And it announced the intention to return at least £4bn to shareholders within the next year, including up to £750m via share buyback which will commence immediately.
Group chief executive officer Amanda Blanc said Aviva had made good progress on all fronts in the 12 months since launching its strategy.
“The breadth of Aviva, across life insurance and general insurance, is a key strategic advantage and has driven a 17% increase in operating profit to £725m,” she said.
“We also delivered some of our best ever sales figures in the first six months. In UK general insurance we delivered our highest sales in a decade.
“In savings and retirement, net flows increased by 24% to a record £5.2bn, and we’ve added 100,000 new workplace customers, reinforcing our number one position.”