Aviva’s Irish operating profits jump to €87m amid higher investment returns

The combined operating profits of Aviva’s Irish general insurance and life and pensions businesses rose 81 per cent last year to €87 million, driven by higher investment returns in the general coverage arm.

Operating profit in Aviva Insurance Ireland, the third-largest personal and commercial insurer in the State, rose by €72 million from €32 million for the previous year as premiums increased 5 per cent to €521 million and its investments pot benefited from a higher interest rate environment.

The company’s combined operating ratio – a gauge that compares claims, costs and expenses as a percentage of premiums – remained stable at 96 per cent.

A figure below 100 per cent indicates an insurer is writing business at a profit. Insurance companies typically target a ratio of 90-95 per cent in a functioning market.

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The increase in commissions was down to strong growth in our commercial lines business and a return to growth in personal lines, according to Declan O’Rourke, chief executive of Aviva Insurance Ireland.

“We welcome the significant progress made by Government in implementing the Action Plan for Insurance Reform in 2023, particularly in the areas of anti-fraud, rebalancing the duty of care and the introduction of mediation by the Injuries Resolution Board (IRB) as part of the Personal Injuries Resolution Board Act,” he said.

However, he said while it was expected that the introduction of personal injury guidelines three years ago would have led to a sharp fall in IRB claim assessments being rejected by claimants with their solicitors, the level has actually increased from 49 per cent to 56 per cent.

[ Aviva’s Irish operating profits jump to €87m amid higher investment returns ]

“These rejections are eroding the benefits of reform, delaying compensation to claimants, adding to legal costs and, ultimately, leading to increased premiums for customers,” he said.

Meanwhile, a lot of personal injury cases going through – or likely to end up in – litigation remain in limbo pending a ruling from the Supreme Court on a significant test case, heard a year ago, concerning a challenge to the constitutionality of the awards guidelines.

Separately, Aviva Life and Pensions Ireland, the fourth-largest life and pensions provider in the Republic, led by chief executive Barry Cudmore, saw its operating profit dip to €15 million last year from €16 million in 2022.

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