Aviva’s 2024 earnings surge 20% as dividend growth and direct line acquisition fuel expansion

Aviva plc has delivered a significant 20% increase in operating profit for 2024, reinforcing its financial strength and strategic momentum. The UK-based insurer reported a total operating profit of £1.77 billion, up from £1.47 billion in 2023, demonstrating consistent execution of its growth strategy. With strong sales across its general insurance, wealth, and retirement divisions, Aviva continues to expand its market leadership while maintaining robust capital reserves.

The company also increased its total dividend per share by 7%, reaching 35.7p, reflecting its commitment to delivering long-term shareholder value. As Aviva moves into 2025, its proposed acquisition of Direct Line Insurance Group remains a key focus, aligning with its capital-light growth strategy. The insurer anticipates that the acquisition will accelerate market expansion and enhance profitability, further solidifying its position as a leading UK insurer.

Aviva Operating Profit Surges Amid Strong Market Positioning

Aviva’s 2024 results underline the insurer’s resilient business model, which has benefited from strategic investments, disciplined underwriting, and strong demand for its products. The company’s insurance, wealth, and retirement (IWR) sales surged by 22%, reaching £43.5 billion, driven by continued growth in wealth management, protection, and retirement services.

The general insurance segment recorded a 14% rise in premiums, reaching £12.2 billion, with UK and Ireland general insurance premiums growing by 16% to £7.7 billion. The company’s strategic pricing adjustments and improved underwriting discipline contributed to a strong combined operating ratio (COR) of 96.3%, reinforcing its ability to balance premium growth with profitability.

Industry analysts highlight that Aviva’s capital-light business expansion strategy—which focuses on areas requiring lower capital investment while maintaining strong returns—has been instrumental in sustaining this performance. The insurer now derives 56% of its operating profit from capital-light businesses, with plans to increase this figure to over 70% following the Direct Line acquisition.

Dividend Growth and Shareholder Returns Strengthen Aviva’s Market Appeal

Aviva has consistently prioritized shareholder returns, and its dividend growth of 7% in 2024 reflects its strong financial position. The company reported a final dividend of 23.8p per share, bringing the total annual dividend to 35.7p, up from 33.4p in 2023. This increase underscores Aviva’s commitment to returning capital to investors while maintaining financial flexibility.

The insurer has also highlighted £10 billion in capital returned to shareholders over the past four years, demonstrating a track record of disciplined financial management. Market analysts suggest that Aviva’s steady dividend growth, strong cash remittances of £1.99 billion, and a Solvency II cover ratio of 203% position the company for sustained investor confidence and stock market stability.

Direct Line Acquisition to Drive Expansion and Market Leadership

Aviva’s proposed acquisition of Direct Line Insurance Group is expected to be a transformative step in its market expansion, further strengthening its position in the UK insurance sector. The acquisition, which is expected to be completed in mid-2025, remains subject to regulatory approvals and shareholder approval.

The company estimates that the transaction will boost earnings per share (EPS) by approximately 10% on a run-rate basis while delivering £125 million in cost synergies beyond Direct Line’s existing efficiency targets. Experts suggest that the deal aligns with Aviva’s capital-light growth approach, allowing the company to leverage its scale, enhance pricing competitiveness, and improve customer service offerings.

The acquisition also supports Aviva’s long-term digital transformation strategy, which aims to enhance underwriting efficiency, expand product offerings, and improve customer experience through AI-driven automation and advanced analytics. Analysts indicate that Aviva’s ability to integrate Direct Line’s operations while maintaining its financial discipline will be a key factor in determining the long-term success of the transaction.

Aviva’s 2025 Outlook: Growth Momentum and Strategic Priorities

Looking ahead to 2025, Aviva remains confident in its ability to drive further growth, with a target of reaching £2 billion in operating profit by 2026. The company also aims to achieve £1.8 billion in Solvency II own funds generation and cumulative cash remittances exceeding £5.8 billion from 2024 to 2026.

The insurer expects continued growth across its general insurance, health, and wealth segments, with a focus on pricing discipline, risk management, and customer-centric innovation. In the retirement sector, Aviva anticipates sustained demand for bulk purchase annuities (BPAs), which saw record sales of £7.8 billion in 2024, reflecting strong market appetite for retirement solutions.

Aviva’s international operations in Canada and Ireland also continue to show promise, with Canada’s general insurance segment growing by 11% to £4.5 billion despite natural catastrophe-related claims affecting profitability. The company remains optimistic about future expansion in international markets, driven by strategic partnerships and digital transformation initiatives.

While Aviva’s IFRS profit for the year declined by 36% to £705 million, primarily due to investment variances and economic assumption adjustments, its underlying earnings remain strong, supported by diversified revenue streams and disciplined capital management.

Investor Sentiment and Market Reaction to Aviva’s Performance

Aviva’s stock performance has remained relatively stable, reflecting positive investor sentiment following its strong financial results and long-term growth strategy. Analysts view the company’s focus on capital-light business expansion, disciplined cost management, and shareholder returns as key drivers of investor confidence.

Financial experts indicate that Aviva’s robust dividend policy, strategic acquisitions, and strong solvency position provide a solid foundation for future stock appreciation. However, investors will be closely monitoring regulatory developments regarding the Direct Line acquisition and Aviva’s execution of its growth strategy in the coming quarters.

As the company moves into 2025, its ability to integrate Direct Line efficiently, maintain pricing discipline, and enhance digital transformation efforts will be critical factors shaping its long-term success. With a clear roadmap for expansion, strong earnings momentum, and a solid balance sheet, Aviva is positioned to maintain its leadership in the UK insurance market while delivering sustained value to shareholders.