Aviva shares fell on Thursday after the insurer’s third quarter performance fell short of expectations despite a sharp rise in equity release and annuity sales.
The FTSE 100 insurance giant said individual annuity and equity release sales jumped 24 and 39 per cent, respectively, over the three months to the end of September.
The firm also said it was on track to almost double its cost savings after its acquisition of Direct Line earlier this year.
Aviva now expects to generate £225million of savings following the £3.7billion deal, nearly twice its original estimate.
But Aviva shares were down 4.39 per cent or 30.40p to 662.20p on Thursday, having risen over 45 per cent in the last year.
Thursday’s decline came as Aviva underperformed analyst forecasts for life insurance profitability and and gross written premiums within general insurance.
Value of new business within life insurance – a measure of profitability – was 10 per cent short of UBS estimates at £189million
Meanwhile gross written premiums within general insurance were 9 per cent short of the investment bank’s £4billion target.
Rising: Aviva saw annuity and equity release sales rise sharply in the third quarter
However, Aviva surpassed UBS’ estimates for present value of new business premiums – a key sales measure – within life insurance by 4 per cent at around £11.3billion.
UBS analysts said: ‘We expect a negative share price reaction, given lower guidance than UBSe and expectations.’
Aviva’s three-year plan
In its update on Thursday, Aviva also announced three new three-year targets.
The fresh targets include an 11 per cent compound annual growth rate in operating earnings per share through to 2028, a return on equity exceeding 20 per cent per cent by 2028, and over £7billion in cumulative cash remittances between 2026 and 2028.
Elsewhere, the insurer said it was on track to hit group targets for next year a year early and has set higher ambitions for growth, capital returns and profitability.
The group reported 12 per cent growth in general insurance premiums to £10billion, with growth in the UK and Ireland up 17 per cent to £6.7billion.
Aviva’s wealth arm secured net flows of £8.3billion, taking assets under management to £224billion.
Protection and health sales reached £384million, while retirement sales came in at £5.3billion, including £3.9billion of bulk purchase annuity.
The company now expects to deliver around £2billion operating profit for this year.
Blanc said: ‘Over the last five years we have transformed Aviva, delivering again and again for our customers and shareholders.
‘We continue to make excellent progress and now expect to achieve our financial targets in 2025, one year early.
‘Crucially, we have achieved this significant milestone thanks to the consistently strong performance of Aviva, before any impacts of the Direct Line acquisition are included.’
Russ Mould, investment director at AJ Bell, said: ‘The market seems underwhelmed by Aviva’s latest update and in particular its three-year targets for the business.
‘This does follow a strong showing for the shares so far in 2025 so a pause for breath is understandable – particularly given evidence of strong competition in the bulk purchase annuity market, where insurers take over the running of corporate pension schemes.’
He added: ‘This is a profitable area but an increasingly crowded market and that was reflected in a meaningful drop in sales.
‘Otherwise, the integration of Direct Line continues to motor along as the company continues to up the expected synergies from the deal.’
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Freetrade
Freetrade
Investing Isa now free on basic plan
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
