Aviva's third quarter trading update call. I'm Rupert Taylor Rea, Investor Relations Director. Firstly, apologies for the confusion and mix-up this morning. One of our call providers had a technical issue, so we have reverted to this Teams call. When we get later on to Q&A, I'll come back on and just explain how we're gonna run the Q&A. Before we get to that, Amanda and Charlotte have some prepared remarks, so I'll hand over to Amanda.
Okay. Thanks, Rupert, and again, apologies everyone for this morning and for the delay. Good morning, and welcome to our third quarter update. As usual, I'm joined by Charlotte, so I'll give a brief overview and then hand over to her for more details before we take questions at the end. It's been another quarter of excellent progress for Aviva, and what today's numbers tell you is that the unique, diversified business model that we've built is actually working, and that we have the right strategy for Aviva and for our investors. We've delivered growth right across the group, and particularly in our capital-light focus areas, which make up over half of our portfolio. In general insurance, we've delivered double-digit growth in the UK and Canada, and protection and health continue its excellent momentum from the first half.
In wealth, many of you will have seen the fantastic In Focus session that we held last month. The recording and slides are available on the website if you missed it. The wealth market is set to triple in size over the next 10 years and represents a phenomenal tailwind for us here in the UK, and the business has performed well this year in the face of a challenging backdrop. And finally, in retirement, volumes were up at the nine-month stage, and we've delivered strong BPA and individual annuity volumes in Q4. Putting customers first remains absolutely central to our strategy, and we've continued to to deliver for them in Q3.
We've helped customers with claims following wildfire, hail, and flooding in Canada, and after Storms Babet and Ciarán in the UK, we've had teams on the ground helping our customers, arranging repairs to damaged properties, and providing alternative accommodation. We also made good strategic progress in Q3. We announced the sale of our remaining stake in Singapore, further simplifying the group's footprint. We announced the acquisition of AIG's UK protection business, accelerating our growth in this attractive market. And we have been selected as preferred bidder to develop the world's leading district for cancer research and treatment at the London Cancer Hub. We also remain confident in our targets.
We are reaffirming our guidance for 5%-7% growth in operating profit this year, and we expect to beat our medium-term targets on cash remittances and OFG, as well as hitting our cost savings target this year, which is a year earlier than planned. This will support our growing dividend, and we continue to anticipate further regular and sustainable returns of surplus capital. So to conclude, today's update demonstrates once again that this company is completely different from the Aviva of the past, is now a company with a clear strategy, with real momentum, and we are delivering consistently. Thank you, and with that, I'll hand over to Charlotte.
Thanks, Amanda, and good morning, everyone. It's great to be talking to you about another quarter of really strong progress. Trading momentum across the group continues to be very positive. Our capital position is extremely healthy at 200%, and I'm pleased to reconfirm our guidance of 5%-7% growth in operating profit this year. I'll begin with the businesses before covering the group topics. First, in general insurance, we delivered further disciplined growth. Overall, premiums grew 13% at constant currency, with double-digit growth in both the U.K. and Canada. The group undiscounted COR was 96.3% and included the impact of the severe weather in Canada during Q3. On a discounted basis, the COR was 92.5%. In the U.K., our growth momentum continues, with premiums up 15%.
Commercial lines grew 11%, with strong new business in mid-market and in global corporate and specialty line, supported by the continued favorable rate environment. Personal lines premiums were up 20%. Just over half of this was rate driven, as we continue to price for inflation and claims frequency trends. Personal line volumes grew overall, notably Aviva Zero and the high-net-worth channel continued to grow strongly. The U.K. undiscounted COR of 96.1% compares to 94.5% last year. It includes the impact of higher reinsurance costs and claims frequency trends returning to more normal levels, as we have previously discussed. This was partly offset by benign weather. The discounted COR in the U.K. was one point better than last year, at 92.8%. In Canada, premiums were up 11% at constant currency.
Commercial lines premiums grew by 14%, with strong, profitable new business growth in global corporate and specialty and in mid-market. In personal lines, both auto and property drove overall growth of 9%. Strong rate increases made up around 2/3 of this growth. The undiscounted COR in Canada was 96.7%. This reflects the impact of adverse weather in Q3 and an increase in auto theft-related losses, as we and other Canadian insurers have previously explained. For Q3, we booked estimated claims costs of GBP 115 million relating to the severe and prolonged adverse weather. This amount should be broadly as expected, given industry estimates and our market share in the affected areas. As a result, year-to-date weather in Canada is around one point higher than our long-term averages. Turning now to insurance, wealth, and retirement. Protection and health sales were up 23% on an APE basis.
We saw growth of 17% in individual protection, with strong performances in both the IFA and direct channels. Group protection had a good third quarter. Year-to-date growth is 1% on a particularly strong prior year. In health, sales were excellent, with APE up 56%. Pricing remains strong, and we saw growth across all channels as demand for private medical insurance continues to be high. VMB for protection and health was up 18%, driven by volume growth. Wealth net flows were GBP 6.4 billion and represent a resilient 6% of opening AUM. Flows were 9% lower than last year as market volatility continues. We won an impressive 357 new workplace schemes and saw high retention in the period, which, alongside the ongoing impact of salary inflation, contributed to an excellent 26% growth in net flows.
We are the number one player, and the business continues to go from strength to strength. In platform, as you would expect, net flows were more challenged as market volatility continues to impact customer appetite for investment activity. We expect this to continue in the short term. But as you heard in our in-focus session last month, we have a really attractive proposition that is admired by advisors, and we are well positioned to benefit when the market returns. In the retirement business, BPA volumes were up 9% to GBP 3.2 billion at the end of Q3, and with the end of year now in sight, our volumes stand at GBP 5.5 billion today, driven partly by the growing market. We also recently launched a new streamlined process for smaller schemes, which has received good early feedback.
The higher interest rate environment has increased consumer demand for individual annuities, which were up 15%, but it has reduced demand for Equity Release, which was down 46%. VMB was broadly consistent year-on-year for BPA, a good outcome when remembering the strength of 2022 margins. Individual annuity margins were strong but lower than last year, and our lower Equity Release volumes impacted VMB. All this together explains the 19% lower VMB for retirement overall. That covers the business unit highlights, and I'll now move on to the group metrics, starting with costs, which were down 1% compared to last year. This is a really strong delivery as we absorb significant inflationary headwinds and continue to make excellent progress with our cost efficiency program. As you heard earlier, we expect to deliver our GBP 750 million cost reduction target at the end of this year, a year earlier than planned.
Our capital, cash, and leverage positions remain strong and resilient. On capital, the group's Solvency II cover ratio remains strong at 200%. The movement in the quarter mainly reflects positive capital generation of three points, offset by the interim dividend. Liquidity remains healthy and largely unchanged from half year, at GBP 1.5 billion at the end of October, and our pro forma Solvency II leverage ratio stands at 30.6% after allowing for the maturity of the senior notes in October. And finally, our high-quality shareholder asset portfolio remains defensively positioned and continues to perform well. Now, before I conclude, a brief word on outlook. Our continued momentum and consistent delivery reinforces our confidence as we look to the end of this year and beyond.
We currently estimate that year-to-date weather-related claims across the group, including the recent storms, Babet and Ciarán in the U.K., are within our annual long-term average for weather. This average is around four points of the undiscounted COR and reflects the changes to our reinsurance program at the beginning of the year. So today, we are reconfirming our guidance for 5%-7% growth in operating profit this year, subject of course, to normal seasonal weather over the remaining six weeks of the year. That brings me to the end of my review. I'm sure you will agree that we've had another strong quarter of delivery, and the outlook for Aviva, Aviva remains very positive. With that, I'll hand back to
Rupert.
Rupert.
Right. We're gonna get into Q&A. Apologies, obviously, this isn't our usual platform, so you're gonna have to just bear with us. We will get through everybody. For those of you that are dialed in on Teams, we can see your name on our screen. Those of you that have dialed in on the phone, we just see phone numbers, so we can't easily identify you. So, if you're on Teams, please raise a hand in Teams. If you're dialed in on the phone, you can press star five, or you can email Mick, who has actually just put an email in your inbox, and you can just reply to that, and let us know you want to ask a question, and we'll come to you.
But don't worry, we will get to everybody. Please do stay on mute in the meantime, but clearly unmute your phone when we get to you for a question. And obviously, for the benefit of everyone listening, please do say your full name and institution when we come to you. Okay, so let's start with Farooq. Farooq, I believe you're on the line. Can you hear us, Farooq?
You're on mute.
You're on mute, Farooq, I think.
You might have to take him off mute then.
Hi, I'm off now. Can you hear me?
Yeah.
Yeah.
Hi, sorry about that. Just quickly get back to my question. Sorry. Yeah, so, going back to UK combined ratio, you've indicated there's been some normalization. Just kind of want to get a sense of how normalized you think this combined ratio is, and if you can sort of guide to, you know, whether this is sort of a base from which we can start modeling improvements going forward. Second question was on your kind of commitment to a regular sustainable buyback. I think you've indicated and, you know, that you want it to be regular sustainable, but given disposals that you've made, the acquisitions that you've made, do you have room for more? And what are your thoughts on that as of now?
Then lastly, if you could just come back to, you know, your guidance, your long-term guidance on combined ratio. I mean, what visibility do you think you have on getting back to kind of the 94% type of level on undiscounted? Thank you very much.
Okay, thanks. Thanks, Farooq. So Charlotte will pick up the two points on combined operating ratio, but maybe I'll start on the commitment to to regular and sustainable returns of capital. So I think, you know, we use our words very carefully here, as you know, and we completed the GBP 300 million share buyback in the summer of this year that we announced in March. And you wouldn't expect us, in a trading statement, to sort of make any additional comment on that, other than to just reaffirm, you know, our commitment to regular and sustainable return of capital. Now, your point around the the sale of Singapore and obviously we have made the commitment to buy the AIG protection business in the last quarter, then these are all,
These are all things which go into the mix when the board will consider the buyback at the end of the year. But I just want to reaffirm the regular and sustainable, and also to say to you that, you know, we are investing in the business, and what you see today in the performance of, you know, the growth in the business is down to that investment. So we are ambitious for the business, and we do believe that there's a real opportunity. The investment we've made into efficiency is coming through in the cost reduction.
What we don't want, what we want to do is to balance the return to shareholders, which has clearly been over GBP 8 billion in dividends and capital returns since we started three years ago, and also the investment in the business, whether that's for M&A, both on M&A or for investment. So, you know, that's the way we're thinking about it at the moment, and we will obviously say more at the year end. Charlotte, on the combined operating ratio.
Yeah, so on the combined for the UK, I mean, the underlying call was strong for Q3, showing that rate continuing to go through. So, you know, if you look at the discrete for Q3, it was 95.7. Year to date, it's 96.1. You know, we are definitely seeing the frequency levels returning to normal, and as I say, if I look underneath that at the underlying claims ratio, I can see improvement as the rate continues to, you know, earn through and is ahead of claims inflation. So, you know, I think we are at a good place with this.
Obviously, we'll see the weather coming through in Q4, but on an underlying basis, again, as I say, continued improvement, but you know, relatively stable. And then I think when we think about the long-term ambition to be sub 94, I mean, we absolutely continue to have that ambition. And we're holding the businesses, you know, feet to the fire on making sure that they're making the right underwriting decisions to get us there. The continued work that we do on cost, the continued work we do on claims, all of those are driving the underlying loss ratios down, improvement thereof. And so we maintain that longer term ambition of being sub 94.
Okay.
Thank you.
I mean, that, sorry, that always has to be balanced by, you know, the LTIR and this higher rate environment, but, you know, we will be very cautious about, you know, letting that slip into any of the underwriting discipline, so we don't effectively. Thank you.
Okay, let's, let's move on to next question. Farooq, if you wouldn't mind just remembering to re-mute your phone, that would be much appreciated. Thank you. So look, for those of you who can see the list on Teams, I won't go precisely in that order because I'm trying to balance those of you that have emailed in, versus those of you that have raised your hands on Teams. So can we go to Rhea next? Rhea, are you there?
Yeah. Thanks. Thanks, Rupert. Thanks, Amanda, Charlotte. Just two questions for me. The first on UK personal, the statement spoke about seeing some volume reduction in UK personal because you prioritize rates and margin. Could you quantify that? And at what point, if you're saying that you're seeing rates help the combined ratio because they're above claims inflation. So at what point would that turn in terms of prioritizing volume again? And then second, just around deleveraging. When do you think you will reach the 30% or below 30% leverage ratio target if you have now completed the program?
Okay. So I think, look, on volume reduction and prioritizing rate, I would say that, you know, across the portfolio, we've still seen good retention and we are winning new business. The focus has been on the new propositions, so Zero and the high net wealth segment have been areas where we've really seen growth. It's been some of the retail where we've seen, you know, less growth or a volume decline, but it's fairly marginal. We have continued, as we say, to prioritize, making sure that we can get rate through. And, you know, in motor, our new business rate is around 40 points up to the end of September. So we are continuing to win new business.
But as I say, we're maintaining that discipline, and you could see that, as I said, in my earlier remarks on the way the underlying ratio is reacting, showing that the rate is earning through, and that's good. So but we're always, It's very dynamic. You know, the team are in the minutiae of the detail, checking to make sure that the volume versus the price metrics always make sense. But to date, it has been focused on making sure we've got that rate adequacy through to protect the ratios. And then on leverage, I mean, we have with the October redemption, we have now completed the original leverage program, and effectively, you know, we are sort of close to 30%.
We tend to look at that as a longer term, you know, aiming point rather than a hard, specific level. So we're comfortable with where the debt is. Over time, our preference will be to look at it, but it's not a pressing issue, and to some degree, it depends a little bit on where the rate environment is, because actually rates coming off can affect that. So ultimately, we're comfortable with it. As we go from here, it will be largely refinancing activity that gives us or it will be refinancing the book. But as you can see, we've got a number of dates that come each year, and it gives us an option, optionality to just tweak around the edges if we need to.
But ultimately, we're very comfortable with the leverage ratio as it is.
Thank you.
Okay. Thanks, Rhea. Can we go to William next? William, are you there?
Hello, all. Can you hear me?
We can.
Hey, lovely. Thank you very much. First of all, ignoring the frequency issue that you referred to, can you talk a bit more about what you're seeing in terms of insurance claims, inflation trends, between the UK and Canada? There's a bit more convincing evidence that core CPI is rolling over, but we know that that's a very loose guide to what's going on in the insurance world. So any kind of discussion about correlation or lag effect or whatever, between what we're seeing in the economy and what's going on in the insurance markets, please. And then secondly, the 4% weather loss, long-term average that you've given, thank you for that. Could you talk a bit around that? I mean, is that a good guide to the future?
I mean, it's a long-term average, and maybe your underwriting has improved, but reinsurance has gone against you. I've no idea about Mother Nature. You know, do we take 4% as a baseline for the future, or should we be thinking about a different number? And are there any kind of interesting skews in that between UK and Canada, commercial, retail, or if I'm just building my model, do I just assume it's 4% anywhere, anytime? And then lastly, please, thank you for the solvency roll forward information. That's always helpful. Can you just help me in the capital generation bit understand, were market movements separate from operational things? Were market movements positive or negative for available and required capital? Thank you very much.
Okay. Thanks, William. I'm gonna take those in a different order from which you provided them, just to change the topics a bit. In terms of the capital generation, I mean, I'm not gonna give you an overall breakdown, because it's a trading update, but suffice it to say, you know, there's been operating capital generation for the quarter. We usually guide at sort of a point a month, but obviously with the Canada storms in October, that pulled that a little bit back.
Interest rate was a small positive, driven largely by the shape of the curve, so yields were up a bit at the long end and down at the short end, and then, you know, equity spreads and property were all much of a muchness neutral effect. So, I think that's probably all I'd say on capital generation. On the weather loss, I mean, look, it is 4% in the round, and it's sort of across the whole group. It was refreshed last year or for this year, following the reinsurance renewal round at the beginning of the year. Because as you know, that was a much tougher round. Prices were higher, and therefore, there was always a lag.
Although we've been pricing for that since, there was always gonna be a lag between the insurance pricing and that reinsurance pricing, which all came in on the beginning of January, and slightly higher retention levels. So we reset long-term averages for that. As we look into this renewal round for reinsurance, we expect it to not be the same step change as we experienced last year. So, you know, ultimately, I'm not expecting a significant change in the long-term averages as well. But clearly, we're always gathering data. We gather our own data, we have industry data, and that, you know, that will inform how we build the budgets as we go across for the next few years.
Then, in terms of inflation and specifics, I mean, I think what we're seeing across the U.K. is inflation and, you know, for 2023 has been around 9%-11% for motor and home, and that's really quite similar to 2022, and it's similar as we look out. Now, we have seen some signs of second half car prices and spare parts, you know, improving. So we would, You know, as we look forward, we're hopeful that it will be a bit better, but it's still gonna be ahead of longer term inflation trends. And, I mean, our point is we look at every single input. We monitor it.
You know, we've got the Solus car network, which gives us firsthand and very direct information on how supply chains are holding up or not, whether, you know, we've got enough labor to do the mechanics. So we've got a very, very quick feed through. So I think the reality of it is, it's still something we're absolutely all over, and is still elevated. And then in Canada, again, while general inflation trends are somewhat improving, there's a very specific phenomenon around car theft. And you've heard us and the other Canadian insurers talk about that. And getting on top of that and getting that through the rate filings, taking the actions with tags, getting opening the discussion with regulators about what action can be taken more across the piece, becomes important.
That is a very specific inflationary point that we're all over.
Very helpful color . Thank you.
Okay, let's move on to our next question. Just before I do that, so just a reminder, I can see a few names in the team's chat box. I can also see a lot of phone numbers, so I can't identify you on the phone if you want to ask a question. So do just email Mick just to identify yourselves. That would be incredibly helpful. Thank you. But we'll go next to Andy. Andy Sinclair, are you there? Andy?
Is that his number?
Yeah.
Hopefully, you can hear me.
Oh, there we go.
Yeah, we can. Yeah, we can.
Fantastic. Thank you.
Mm-hmm.
Thank you. Thanks, guys. A few for me. First, just wanted to dig into reinsurance a little bit more, just in terms of what protection have you got from reinsurance this year, if any? And I know you said you're not expecting big changes from in terms of the cat budget next year for the reinsurance program, but can you tell us a little bit more about what you're expecting to do with the reinsurance program for next year, any change to the structure of it? And then on BPA, sounds like it's been a good start to Q4 so far. Just really wondered if you can give us a bit of an update on the pipeline, both, I suppose, into year-end, but perhaps even more so into 2024.
What you're seeing there and maybe some color on some of the mega bulks that have been talked about, what involvement you're having there, what you're hearing. I'll leave it there. Thank you.
Okay. Let me take the reinsurance one to start with. I mean, look, the reinsurance round last year, as we've discussed before, was a tough one. It was a tough one in terms of capacity and pricing. And if you remember, it kind of really changed in that run up to Christmas with Hurricane Ian and, you know, all in those last few weeks of the year. I mean, we were pleased with where we landed our reinsurance pro-program. And you know, it's worked for us. It has got higher retentions, so you know, that's kind of built into those long-term weather averages that I was talking about before. But you know, we have the per event, we've got aggregates.
You know, we've got a very secure and safe program. It just cost us a bit more per risk, but that we've reflected. And the retention levels were a little higher. As we look forward into 2024, we're really expecting it's going to be much the same. So the price, there's a bit more capacity in the market. The pricing is, you know, not a step up at all, and the structures, and we're having the conversation. We've also had very long-term relationships with our main providers on the program. They stuck with us last year. You know, clearly, they'll stick with us this year. So, you know, I feel positive about the protection that we have.
On BPA, so including our preferred provider status, as we said in the release, we've written GBP 5.5 billion year to date. So, given there's only a few weeks left in the year, we're not expecting that number to move along materially before the year end. But we are actually still quoting, and we are winning deals for Q1 already. So the pipeline is very healthy, indeed, and obviously we're confident to meet those ambitions that we set out when we did the deep dive on BPA last year, of GBP 15 billion-GBP 20 billion over the three years. So, you know, very good progress, I think, there.
Thanks, Andy. Thank you. Can we go next to Dom O'Mahony? Are you there, Dom? I know you emailed in saying you wanted to ask a question.
I don't know which one to unmute, do we?
Dom, are you there? Okay, we'll come back to you.
Yeah, I think something happened.
Can we go to Tom, Tom Bateman? Are you there?
Hi, good morning, all.
Hi, Tom. We can hear you.
Hi there, brilliant. You talked a little bit about individual annuity margins being good, but down year-over-year. Could you just give a little bit of color around those two aspects? So what is good for you, and how much are they down year-over-year? The second question is just on your international investments in China and India. Obviously, we've seen you dispose of Singapore, but how are you thinking about those two other ventures that you have? And finally, just in health, could you talk about margins in health insurance, how inflation is impacting the business there?
I don't know if you can give a combined ratio, but maybe give some feel for whether that's, that's up or down year-over-year, and, and maybe how you're managing inflation in that business. Thank you.
Okay. Let me start with the individual annuities, and you do international, and I can come back on health. I think in individual annuities, we have seen strong demand, and we are happy with the margins. This time last year, there was a little bit of a sort of, If you remember, the interest rates rose rapidly and quickly, and so this time last year, there was kind of a margin effect caused by that. When you look at the year-on-year comparison, it's down, but it is strong. When we look to kind of overall margins for the retirement business through to year end, we expect it to kind of be in that 3% round. That's all of the retirement business. I'm not going to break out any more specifics on that.
International?
Yeah. So on international, so the Singapore deal obviously realized some excellent value for us, and we were really pleased with that. And there's no update today on the other businesses in China and India, and obviously, we've got excellent partners in those markets, and they continue to give us some optionality. So nothing more really to say on international. Okay. And then in health, you know, look, over the last, it's obviously been a growing business, as we've discussed. There's a lot of demand because of the state of the National Health Service. And what we've seen over the last six to 12 months is an increase in claims frequency. And that's really suggesting that more customers are relying on their private medical insurance for treatments than they perhaps have in the past.
And, you know, there has been some inflationary pressures on claims, but we're rating ahead of those inflationary aspects. So whilst we don't give a call for this business, it's tracking in line with where we want it to be. And it's a very good one. Or it's a good one. So, you know, I think that's probably all we have to say. And the relationships we've got with the suppliers, the hospitals, means that we have very, you know, good delivery for our customers when they need service. And it's an area, of course, with such growth potential that we are investing significantly in it for the future as well.
That's brilliant. Thank you so much.
Okay, let's try and go back to Dom. If you press star six, that should enable you to unmute your line. Dom, are you there?
Can you folks hear me?
Yeah, we can.
Yeah.
There we go.
Oh, fabulous. Hello. Better luck.
Hi.
Thank you. Thank you folks for taking the call, the questions. Dom O'Malley from BNP Paribas Exane. Really just two questions left for me, if that's okay. One, just reflecting on the platform flows, completely get the macro headwind there. When you folks are looking at the drivers of customer behavior, I was wondering whether you might be able to give a bit more color on whether you're seeing customers hoarding cash ready to use for investments, whether this is uncertainty, so they're just waiting for the uncertainty to buy, to allocate, or whether you're seeing people use cash for other uses, so you know, paying down mortgages.
I'm trying to work out whether there's essentially a wave of cash ready to come back into platform, as in time, as and when market conditions are better, or whether actually there's sort of a structural demand constraint because of deleveraging. So any color there would be very helpful. Second question, I'm afraid, is a little bit of a technical one. On general insurance discounting, I think a half year for the group, it was about 3.5% benefit. I think it was 3.8% at nine months, given you use, I think you use start of year interest rates for your discounting, well, I would have expected the effect to reduce over the course of the year as claims are actually paid.
But it's actually gone up, and it seems to have gone up actually a fair amount in the third quarter discrete. Do you think that that number is going to increase over the rest of the year or decrease? Wanting you to give some sort of explanation of the direction on the discounting effect. Thank you.
Okay. Thanks, Dom. So what we're seeing on the withdrawals, if you like, so there has been an increase in withdrawals in 2023, and I think obviously that is our customers looking for optionality in terms of access, you know. And this is one way that they can access their retirement funds via the platform. It's hard to say, and we, you know, whether this is cost of living pressures, and they're using it to keep it in cash for optionality or whether they're using it to pay down. We don't. I don't think we know that. But it's not been significant enough, I think, for us to be,
For it to sort of be a cause for concern, and obviously, we are benefiting, you know, reasonably significantly from the very strong flows in workplace, and that is as a consequence of, you know, two things, low unemployment and also higher salaries. And so, you know, obviously, contributions are going up, and it, the, and employment is in a good place. And, you know, Charlotte mentioned it, 357 new schemes in workplace. So, so I think, you know, I think we believe that people are, you know, are keeping hold of cash for optionality.
We definitely see that workplace is just goes from strength to strength, and we're also optimistic about, you know, the flows coming onto the adviser platform over the coming period, as you saw in the session that Doug and Michele did on wealth a couple of weeks ago.
Right. On the discounting, I'm gonna give you some information, but, we might need to come back to you, or come back to the team afterwards. But if I take opening 2022 was what we would have been using for the whole of 2022, and therefore, the Q3 discrete would have been opening 2022. So you sort of seen minimal difference between the discrete and the full-year, and the year to date. But obviously, this year, it's much larger, given the rates were higher on the first of January. So, I mean, we'll come back to you in a bit more detail. But I, you know, again, with the storm claims coming through, that...
Yeah, I think there's a number of moving parts, which probably makes it a little bit more difficult to unpick than your general statement.
Understood. Thank you very much.
Okay, thanks, Dom. Ashik, are you there?
Me?
We can hear you.
Perfect. Thank you, Rupert, and good morning. Just one question I have, actually. I mean, recently, there was quite a bit of speculation about you being interested in RSA's personal lines business. Now, I appreciate that you would not want to comment on such speculation, but linked to that, if I could ask that, what would be your appetite to consider acquiring stuff in personal lines business in UK? That would be something very helpful to know, and, I mean, you have done acquisition in protection, in UK protection, you have done something in wealth. So, any reminder you want to give us, "Okay, these are the business lines where we want to do bolt-ons, where we want to add capabilities, capacities," anything you want to strengthen? So any color on that would be very helpful. Thank you.
Okay. Thanks, Ashik. So, yeah, you're quite right, we wouldn't obviously comment on any speculation, but if we think about our appetite for M&A, what, you know, what we've done, I think over the last number of years is focus on those areas where they're either, you know, either strategically important to us or we get some sort of synergistic value, either through expense or through capital. So the acquisition of Succession Wealth was a strategic acquisition to enable us to have a more advised capability, and I think, you know, that is obviously starting to play through now.
We have obviously done the AIG deal in the last few months, which gives us, you know, a number one position in both individual and group protection, and an additional 2.5 million customers. But don't forget, we've also done the high net worth acquisitions over the last couple of years, which again gives us a sort of number one position in high net worth. So I think we've been very strategic and careful about how we've deployed capital, and if we think about the personal lines market in the UK, so to answer your question very specifically, we're very happy with our personal lines business.
What you've seen is we've been able to, in many respects, reinvent that business, the growth of the Aviva Zero business, the Quote Me Happy, the different ranges that we've developed there. I think it shows that we have enough scale, and we have enough and our brand is strong enough in the market, that we are able to sort of do what we need to do ourselves there, and we have a very good quality business. I think the team have really done a great job. They, you know, pricing ahead of inflation, and really sort of, you know, being very disciplined around the pricing, that I think we feel very strongly that we're in a good position, and we wouldn't want to, in any way, jeopardize that.
Okay. Yeah. Thank you. Thanks a lot. Very clear.
Great. Thanks, Ashik.
So look, I can see two more. So we're gonna come to Nasib and Abid in just a second. As I said, if, if you do want to ask a question, I can't see any other or identify any other names, so do drop Mick an email, if you'd like to ask a question, but let's go to Nasib next. Nasib?
Thanks, Rupert. Can you guys hear me?
Yep.
Yeah.
Perfect. So first question on the capital targets. There was a question earlier about the leverage, but also extending that to the solvency target range of 160-180. In a high rate environment, I guess those targets would be a little bit different, but if rates stay higher for longer, would you consider updating those targets anytime soon? And then linked to that, on the liquidity, the GBP 1.5 billion, I think that was set a long time ago, and now you're a smaller, leaner business. Would you consider updating that target anytime soon as well? Then second question on Consumer Duty, apologies if this was already discussed at the Wealth in Focus day, but just around your business, do you see any issues around Consumer Duty, any things you need to address?
And related to that, do you take any cash margin, retain any cash margin on your platform or Wealthify or any other parts of your business? And then finally, sorry, third question, again, coming back to international, Amanda, you say there, there is optionality that China and India give you. What, what does that mean? Because you're really small in those markets. To me, it means, like, if you see, potential for growth in those markets, it would be M&A driven, as opposed to organic growth. Thank you.
Okay, so I'll pick up all of those other than the liquidity one, which I'll let Charlotte- It's a target question as well, so, Yeah. Okay.
So on the capital framework, and the way we target, so what we said is the 160-180, you know, I think you can expect us to be targeting the top end of our capital range at around 180, over time, and while we can see interest rates being higher for longer, I agree with what you're saying there, I still think we believe that there is a lot of market volatility out there, and you would expect us to remain sort of cautious on that, as we think about the capital base, for the shareholders, for customers, and also for our colleagues. So, you know, so no change to really the update in those targets. Yeah. Do you want to say anything specifically on liquidity, Char?
I mean, only to say on liquidity, you know, when I, as Amanda says, we're not refreshing any targets today. We need to keep, and like to keep, healthy liquidity at the center. You know, it ebbs and flows during a period as we pay dividends and other things, so keeping it around that level is where we like to be. Could it drop a little bit from the 1.5 down? Well, it does from time to time, so it's not a hard and fast level in any case. On new Consumer Duty, so we did talk about this at the Wealth deep dive, but there's no problem in going through it again.
So we started from a very good place for customers. It was already very much part of, obviously, our strategy and the way that we work here. So on our, on cash held on the platform, so the direct adviser platforms currently pay 4.5% on cash balances, which is obviously better than many of our customers, and we do not retain any interest on the cash paid, and we pass all of the benefit on to our customers, and that has actually been the case for some time. So we believe that we're in a good place here. Now clearly, we continue to review, and it's on,
It's on a constant part of our agenda, but we believe that, you know, the way that Aviva has looked after its customers and, you know, we've got, you know, the 18 million customers, you keep those customers because you look after them, and, you know, that is part of the ethos here. On international, please don't read anything into my optionality. It is not going to be a focus for M&A. We have been disciplined, I think, on saying that we have been in, we, you know, our focus is in UK, Ireland, and Canada, and that is not going to change. We have, you know, I think we have been,
That we've worked very hard over the last three years to focus the portfolio, and I think we're seeing the benefits of that today, and we do not intend to lose discipline in that area at all.
Thank you very much. That's very clear. Thank you.
Thanks, Nasib. Abid, can you hear us?
Hi, morning, yes. Can you hear me?
Can hear you, yeah.
Fantastic.
Go ahead.
Excellent. I think I've just got one question remaining. Most of my questions have been asked and answered already. So just coming back to the M&A questions, and in particular, the growth across your P&C book, I was wondering if you are still considering, or indeed, if you would consider, expanding into the Lloyd's market, given that rates there are very favorable, conditions are very favorable there, generally speaking, and perhaps it also provides an additional diversification to what's going on in the retail segment, in the car and home segment. I'm just wondering if that is an area that fits strategically, and given the sort of synergies that you described, the criteria for synergies and strategic criteria, if the Lloyd's market fits within that. Thank you.
Yeah. Okay, Abid. So, first of all, just to, I guess, reinforce the point around, we are already diversified in that 50% of our business is commercial lines and 50% of our business is personal lines, and whilst I know we often spend quite a lot of these calls talking about motor rates and weather and general insurance, you know, we've got a very diversified business. But on saying that, Lloyd's is a topic that we keep under review, and why is that? It's because it would give us a distribution opportunity that we don't have access to necessarily today.
So it's not about us writing different products or in different geographies, but it does give us access, it would potentially give us access to a different distribution, and particularly, it would complement our existing global corporate, specialty portfolio. And you're right, the, you know, the well-managed syndicates have made attractive returns over the 10-year period, in the market. So it is something that we keep, we keep under review, but to just go back to the point, we will be disciplined. This is not about M&A for M&A's sake. We will do it if we believe it is the right deal at the right price that complements the portfolio.
That's very clear. Thank you.
So I think that's the end of the questions.
Yeah, so look, I guess I just wanna say thank you for bearing with us on that. Our platform provider had a problem this morning, and, you know, we obviously wanted to get the call done, recognizing that you've all got busy days. So we really appreciate you dialing in. We appreciate you bearing with us. It wasn't, it doesn't actually seem to have been too bad, so, I'm not saying we would do it like this all the time, but, you know, we really appreciate your questions this morning. Thank you very much, and if you've got any further questions, give Mick and Rupert a call. Thank you.