Financial Data and Key Metrics Changes - The estimated COVID-19 claims impact on general insurance is £160 million net of reinsurance, assuming lockdowns remain until the end of June [6][10][50] - The Solvency II cover ratio is estimated at 182% at the end of March, inclusive of the suspended final dividend for 2019 [10][11] - Life new business volumes increased by 28% year-over-year, while general insurance net written premiums rose by 3% in the first quarter [12][90] Business Line Data and Key Metrics Changes - The investment portfolio remains well positioned, with only 3% of the corporate bond portfolio downgraded by a full letter and less than £10 million downgraded below investment-grade [9] - The commercial mortgage portfolio has an average loan-to-value (LTV) of 56% and a high interest cover ratio of 2.9 [9][24] Market Data and Key Metrics Changes - The company has a circa 5% exposure to sectors most impacted by the crisis, including retail, leisure, aviation, and oil and gas [9] - New business activity slowed in April due to government confinement initiatives, but strong in-force retention and customer renewals partially offset this decline [12] Company Strategy and Development Direction - The company is taking a cautious and defensive position on capital and cash management due to the uncertain economic outlook [11] - There is no change in appetite for bulk purchase annuities (BPA), with a disciplined approach to ensure adequate returns on capital [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledges significant challenges posed by COVID-19 but emphasizes the company's preparedness and adaptability [4][12] - Early signs of increased business activity have been observed, indicating a potential recovery [12][75] Other Important Information - The company has suspended the final dividend for 2019 and will revisit the decision in the fourth quarter [10][39] - The company is not currently writing new business for care homes but is supporting existing customers [68] Q&A Session Summary Question: Details on business interruption (BI) claims and reinsurance - Management clarified that the net retention for BI claims in the UK, France, and Ireland is £150 million, and in Canada, it is $50 million [16][40] Question: Impact of COVID-19 on solvency and capital - Management indicated that the solvency figure performed as expected, with actions taken to reduce sensitivity to interest rates [17][19] Question: Commercial mortgage portfolio concerns - Management explained that while LTVs are strong, they are taking a forward-looking view of prices to assess potential covenant issues [24][25] Question: Future liability claims and voluntary contributions - Management confirmed that they are not currently writing new business for care homes and are supporting existing customers [68][75] Question: Dividend expectations and capital management - Management reiterated that there will be no interim dividend and that the board will reassess the situation in Q4 [39][45]
Aviva(AVVIY) - 2020 Q1 - Earnings Call Transcript