Aviva’s Irish arm saw its operating profit fall to €15 million during the first six months of 2022, down from €25 million a year earlier, on the back of higher insurance claims. The fall-off was also driven by “reduced personal lines profit due to delays in the emergence of benefit from personal injury reform”, it said.
Chief executive Declan O’ Rourke said the insurer was concerned by the rejection rates by claimants in PIAB (Personal Injuries Assessment Board), now 63 per cent, up from 49 per cent prior to the implementation of the personal injury guidelines.
“This is leading to more claims going to court, which is the most expensive claims settlement channel due to high legal costs, and will undermine the impact of reforms,” he said.
“We call on Government to urgently implement in-progress legislation to strengthen the powers of PIAB and to compel early engagement in settling claims and reduce the percentage of claims going to the courts.”
Despite the reduction in operating profit, Aviva Insurance Ireland said the business “performed positively” in a challenging market with its operating ratio, a key measure of profitability, increasing to 96 per cent.
Gross written premiums increased marginally to €253 million due to strong growth in commercial lines business, it said.
“We continue to expand both our product and service offerings to large commercial and high-net-worth customers,” Mr O’ Rourke said.
Shareholder payouts
The group’s UK parent said on Wednesday that it planned to give more money back to shareholders as it posted a better-than-expected 14 per cent rise in first-half operating profit, helped by a strong performance in commercial lines.
Aviva, which has significant businesses in Britain, Canada and Ireland, is under pressure from activist investor Cevian Capital, a holder of 6 per cent of the insurer’s shares, to boost investor payouts.
Aviva has already given £4.75 billion (€5.6 billion) back to shareholders after raising £7.5 billion following a string of disposals around the globe since Amanda Blanc was appointed chief executive in July 2020.
Cevian has previously called on Aviva to return £5 billion to shareholders by the end of 2022.
Aviva said it planned to launch the share buyback with its 2022 results, and the board would decide on its size at year-end.
“We are increasingly confident in Aviva’s prospects,” Ms Blanc said in a trading statement, describing trading as “encouraging” across all the firm’s big businesses.
Its operating profit rose 14 per cent to £829 million versus £742 million seen in a company-supplied consensus forecast.
