Aviva is on course to almost double its cost savings after the acquisition of Direct Line earlier this year.
The insurer said it now expects to make £225m of savings from combining the two businesses – nearly twice its original estimate.
The news was revealed in its third quarter results, published today (13 November), which showed strong performance across the group.
The insurer said it is on course to hit group targets for 2026 a year early and has set higher ambitions for growth, capital returns and profitability.
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The insurer now expects to deliver around £2bn operating profit for 2025.
General insurance premiums rose 12% to £10bn, with UK & Ireland up 17% to £6.7bn, while its wealth division secured net flows of £8.3bn, taking AUM to £224bn.
Protection and health sales came in at £384m, while retirement sales were £5.3bn including £3.9bn of Bulk Purchase Annuity (BPA).
Individual annuity and equity release sales rose 24% and 39%, respectively.
Aviva also plans to resume share buybacks next year at a higher level, reflecting the enlarged share count.
Group CEO Amanda 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.
“The integration of Direct Line is well underway and we are increasingly confident of reaping the full benefits of this acquisition, contributing materially to Aviva’s future growth and shareholder returns.
“We now expect to achieve £225m in cost synergies, nearly twice our original estimate, unlock at least £500m of capital synergies, and we expect to resume share buybacks next year, at a higher level in response to the increased share count.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown, said: “Aviva shares dropped around 5% in early trading – a harsh reaction to what looks like a solid set of results.
“Management raised targets, accelerated timelines and gave investors a clearer path to buybacks, all while showing good progress on integrating Direct Line.
“Cost savings are well ahead of expectations at £225m and a chunk of capital, to the tune of £0.5bn, is expected to be freed up by 2026.
“That matters because freeing up capital should help restore solvency levels faster post-acquisition and bring buybacks back into play sooner – a clear positive for shareholders.
“Still, it’s worth keeping perspective: Direct Line adds roughly £300m of annual operating profit at its current run rate, a useful boost but a relatively small slice of Aviva’s £2bn-plus earnings base.
“Elsewhere, the core business continues to deliver, though the backdrop is shifting. Premium growth remains strong, but rate softening in the general insurance through the year could squeeze margins if it persists, a dynamic that benefits consumers more than insurers.
“For now, Aviva’s diversified model and capital-light tilt provide resilience, and the raised targets underline confidence in that strategy. Investors will likely welcome the mix of operational progress and capital return signals, even as the market keeps an eye on pricing trends and Direct Line execution.”
