UK insurer Aviva’s Irish general insurance operating profit dropped 16 per cent last year as personal coverage rates dropped and the business absorbed the impact of a new motor levy.
Operating profit in the unit fell to €53 million from €63 million for the previous year, as earned premiums declined by 2 per cent to €479 million “in an increasingly competitive market”, it said on Thursday.
In addition, Aviva General Insurance Ireland's results were affected by a new 2 per cent levy that has applied on motor policies in the Republic since the end of 2018.
However, these hits were partly offset by lower large losses and more benign weather than in 2018, the group said.
The division’s combined operating ratio – the cost of claims and administrative expenses relative to premiums earned – was broadly unchanged at 93 per cent. A figure below 100 per cent indicates that an insurer is writing business at a profit. Companies in the industry typically target a ratio between 90 per cent and 95 per cent.
The Irish general insurance company’s chief executive John Quinlan has been on leave since last November. A senior executive at the wider UK group, Nick Amin, is acting as interim chief executive.
Life and pensions
Aviva's Irish life and pensions business, which was boosted in 2018 by the €130 million purchase of Friends First, delivered a 44 per cent operating profit surge in 2019 to €72 million, driven by a one-off accounting change and first full-year inclusion of the business acquired the previous year.
The net present value of new business premiums increased to €1.76 billion from €1.37 billion, driven by “strong sales” in the fourth quarter as fears over a hard Brexit receded and individuals put more money to work in their pensions and investment plans. The unit is led by chief executive Tom Browne.
The wider Aviva group saw its operating profit rise 6 per cent to £3.2 billion (€3.7 billion), with the company revealing that it has received about 500 travel insurance claims so far related to the coronavirus outbreak and paid about £500,000 (€578,000).
Group chief executive Maurice Tulloch said that Covid-19 epidemic "presents a new uncertainty into 2020".