Aviva rises after reassuring on costs of U.K. cold snap
By Geoffrey Smith
Investing.com -- Aviva (LON: AV ) stock rose in morning trading on Wednesday after the insurer reassured investors that the costs of the cold snap that hit the U.K. in December would be manageable.
Aviva estimated the cost of additional claims due to weather-related damage at around £50 million (£1 = $1.2305), but said that at a Group level, weather-related impacts were only marginally above long-term averages in the fourth quarter, because the uptick in U.K. claims was offset by lower-than-average claims in Canada. Over the full year, it added, weather-related claims had been broadly in line with the long-term average.
The update means that Aviva, one of the U.K.'s largest insurers, emerged from the cold snap in considerably better shape than rival Direct Line (LON: DLGD ), which suspended its dividend payments after having to take a £90M hit from a week of Arctic temperatures that caused a surge in burst water pipes and other accidents. Direct Line shares had fallen over 20% on that news and dragged down other U.K. insurance stocks with it.
However, by 06:00 ET (11:00 GMT), Aviva stock was trading above where it had been before Direct Line's update, trading 3.0% higher on the day.
Aviva said that its general insurance business "continued to trade positively over the closing months of 2022," and indicated that it was still managing to pass on any higher operating costs to customers, saying, "We continue to price appropriately for the high inflation environment, in particular in U.K. Personal Lines, responding at pace to emerging data and trends."
The group upheld its guidance for profits and payouts over the full year, saying it expects a combined operating ratio - which measures underwriting costs against premium income - of around 94.6%.
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