Amanda Blanc optimistic about Aviva Investors’ outlook
Pardon the Interruption
This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
Amanda Blanc, the chief executive of Aviva, is confident that the firm’s in-house investment team, Aviva Investors, will remain “undeniably an important part of the group” even though the unit has lost more than half of its profits as a result of market volatility.
Operating profits for Aviva Investors plummeted to £5m in the first six months of the year from £14m 12 months earlier. The decline was down to lower revenues as a result of the “tough market backdrop”, partly offset by cost-saving exercises.
Its revenue was 12% lower at £167m in H1, compared with £190m in H1 2022, primarily reflecting the “adverse impact of weak investment markets” in 2022 continuing into 2023.
Blanc described the revenue for all asset managers as “a very tricky place” but argued the reforms of Solvency II in the UK, the Mansion House proposals and the growth of the annuity business will bring opportunities to Aviva Investors.
Aviva expects to invest £25bn in infrastructure projects as a result of the lower risk margin. Blanc said the company’s in-house investment expertise would help deliver that.
“Mark [Versey, CEO of Aviva Investors] and the team with their real assets expertise are perfectly placed to help us invest £25bn over the next 10 years as a result of the Solvency II reform,” she told analysts on Wednesday.
“What Mark and the team are able to do is access the highest quality of illiquid assets at attractive spreads for Doug [Brown, CEO of UK and Ireland Life] and his team. And I think that real assets franchise is particularly important when you look at the Solvency II reforms.”
Blanc added: “[Aviva Investors] is undeniably an important part of the group and will remain as a separate P&L.”
One of the decisions made in respect of the Solvency II reforms was the reduction of the risk margin by 65% for life firms and 30% for general insurers.
Blanc expected the reduction to bring “mid-single digit benefits” to the insurer’s solvency coverage ratio.
What benefits can the Solvency II reforms bring to your organisation?
