Aviva returns to writing general Irish insurance at profit

London-based Aviva returned to writing general insurance in the Republic at a profit in the first quarter of the year on the back of a sharp rise in commercial premium income, drop in motor claims amid Covid-19 restrictions, and benign weather.

Aviva Insurance Ireland’s combined operating ratio (COR) – the cost of claims and administration relative to premiums earned – fell to 94.4 per cent for the reporting quarter from 105.5 per cent for the same period last year, according to a trading statement from its UK parent on Thursday.

A figure below 100 per cent indicates that an insurer is writing business at a profit. Insurers typically target a ratio between 90 per cent and 95 per cent. The wider group - also spanning its UK and Canadian businesses - also swung into writing business at a profit in the first quarter.

Performance

"UK, Ireland and Canada COR improved sharply to 90.6 per cent from 118.7 per cent owing to better underwriting performance, benign weather experience, a reduction in Covid-19 related claims compared to the prior year and frequency benefits in motor lines from continuing lockdowns," it said.

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“While the significant decline in motor rates seen over the last 12 months combined with increasing claims frequency as lockdown restrictions are lifted will have an impact on COR going forward we still expect our full year COR to be below 95 per cent.”

Aviva’s Irish personal lines of insurance premiums, including motor and home business, declined by 7 per cent to £53 million (€61.4 million) on the year, though its commercial premiums rose by 12 per cent to £57 million, according to the statement. It did not give a breakdown of movements in policy numbers or rates.

Remuneration

The Irish Times reported on Thursday that Aviva Insurance Ireland's total remuneration for senior executives doubled in 2020 to €4 million, a year of major change at the top ranks of the UK-owned general insurer, including the exit of then chief executive John Quinlan, who was replaced by Declan O'Rourke, the former general manager of US insurance giant AIG's Irish business.

Meanwhile, the Aviva Life & Pensions Ireland unit reported £424 million of new business premiums in the first quarter, measured on a so-called present value of new business premium (PVNBP) basis. That was down 5 per cent on the year-earlier period.