Aviva Earnings: Half Year Misses Our Estimates but Tracking Well Against Internal Targets

Aviva has reported a net profit of GBP 377 million for the first six months of 2023, or GBX 12.1 per share. This means that as of the first six months of the year, Aviva is behind our full-year net income forecasts. The company is worth GBP 9.4 billion in shareholder value, so its earnings have delivered an 8% return to shareholders. If Aviva stays on this track, it is likely to deliver a return for the full year that is above the cost of capital that we apply of 11%. While a good part of the increase in operating profit over last year under the new accounting standard relates to the company’s investment result, there is still good underwriting profit growth, albeit at lower margins than the prior six months. We maintain our rating of no economic moat, and we are likely to adjust our GBP 4.8 per share fair value estimate, but not by much.