Welcome to Aviva plc's Q3 2021 results call for analysts and investors. I will now hand you over to CEO Amanda Blanc.
Good morning, everyone. I hope you're all well, and thank you for joining Jason and me for our Q3 trading update. I'll start by providing a summary update on the progress we are making towards our strategic priorities before I'll hand over to Jason, who will take you through the detail of our results. We'll then open the lines for Q&A. I'm pleased to report that we have continued to make excellent and rapid strategic progress right across Aviva. After a busy quarter, we're almost there with our portfolio refocusing, having now completed the disposals of France and Italy general insurance. We have collected GBP 4.9 billion of proceeds from the total of GBP 7.5 billion. The last remaining disposals of Poland, Italy Life, and Vietnam are expected to complete by the end of 2021, with all the regulatory approval processes and completion activities currently proceeding to plan.
Our GBP 750 million share buyback is progressing well, and we have already executed over half of the total since we announced it in mid-August. As I said previously, we remain absolutely committed to returning at least GBP 4 billion of capital to shareholders by the half-year 2022. So, as we come to the sharp end of the disposal process, we will go through the regulatory approval process and provide an update on our plans for the remaining capital return at our full-year results in March 2022. In terms of transforming performance, we're also making strong progress, and it starts with our customers. MyAviva customer registrations have reached GBP 5.5 million, their highest level ever, and up 17% from the start of the year. Customers are continuing to use MyAviva more regularly, with average monthly logins in Q3 2021 up 22% versus the prior year.
This customer success is translating into growth, and in the first nine months, I'm really pleased to see that we are delivering in our target areas, including the highest general insurance premiums for a decade, driven by commercial gross written premium of GBP 2.9 billion, which is up 14% year-on-year. Savings and retirement net fund flows of GBP 7.3 billion, up 21% year-on-year. Bulk purchase annuity volumes of GBP 4 billion, and we expect momentum to continue in Q4. And finally, Aviva Investors' external net fund flows of GBP 1.6 billion, up 37% year-on-year. We continue to remain highly focused on improving cost efficiency, with controllable costs down 2% year-on-year, despite absorbing inflation headwinds and our targeted investments in growth. We remain on track to achieve our savings target of GBP 300 million in 2022, and this is a waypoint on our path to top-quartile efficiency.
Importantly, our balance sheet remains extremely robust, with Solvency II coverage ratio of 215%, central liquidity of £4.5 billion, and debt leverage of 28%, below our 30% target. Turning to ESG, Aviva's target of being net zero by 2040 continues to be industry-leading, and we remain committed to being at the forefront of tackling climate change as a core part of our overall sustainability ambition. Indeed, Aviva were awarded the best climate change reporting in the FTSE 350 at the PwC Building Public Trust Awards last month. By the end of 2022, we expect to invest £10 billion of policyholder funds into low-carbon strategies, and we have committed to invest an additional £10 billion in core U.K. infrastructure and property by 2023. This is really important to us, to our employees, and increasingly to our customers.
So, in summary, I'm pleased to report that we are making excellent and rapid strategic progress to focus and re-energize Aviva. We remain on track to meet our key financial commitments, and we are focused on generating attractive value creation for our shareholders through the return of substantial capital in the short term and through the delivery of growth and a transformed performance over time. Let me now hand over to Jason, who will take you through the Q3 trading numbers in more detail.
Thank you, Amanda, and good morning, everybody. Let me start by reiterating that we're on track to meet or exceed our cash remittance and cost savings targets, and also that we have positive momentum in our key lines of business. So, let me take a few minutes to walk through some of the key numbers in today's update. I won't be covering everything in the release, but there's a few areas that I'd like to highlight, beginning with our trading performance. First, we saw strong continued net flows in the savings and retirement business, which increased by 21% to over £7 billion, with record inflows in the first nine months of the year. Our advisor and direct savings platform continues to perform very strongly, with net flows up more than 60% to £4.2 billion, representing 12% of opening assets.
We delivered our two highest quarterly inflows ever in Q1 and Q3 this year. In workplace, net flows also remain strong at GBP 3.6 billion, representing 4% of opening assets. While this is slightly lower than last year, this largely reflects a return to a more normal level of outflows compared to 2020, when we saw particularly strong persistency owing to fewer people moving between jobs. Aviva Investors continue to show positive progress, with year-to-date external net flows of GBP 1.6 billion, up by 37%. It's pleasing to see the progress the business is making, as it focuses on its core strengths in real assets, infrastructure, private debt, and of course ESG, which runs across the business. Following a subdued first half of the year, bulk purchase annuity volumes improved in the third quarter, with GBP 2.4 billion of new schemes written.
This takes the total amount of BPAs written in 2021 to £4 billion, with a healthy pipeline in place, and we expect to write £5 billion-£6 billion for the full year. As seen in previous years, VNB margins are lower at this point in the year, pending achievement of our target asset allocation and finalizing our reinsurance. While we expect margins to improve by the year-end, the current low spread environment means that margins will be lower than in 2020. Of course, we remain very focused on returns, and we're confident that the quality of the business we've written has very attractive IRRs, which will deliver long-term value to shareholders. So, while the credit spread backdrop does provide a near-term headwind, our outlook for BPAs remains positive into 2022 and the medium term.
Our general insurance business continues to perform strongly, as evidenced by a combined operating ratio of 92.4%. This is a 5.7% improvement on the prior year, despite the weather events seen in July. Of course, with claims frequency beginning to normalize and with softer rates in personal lines now earning through, we do expect the core to tick upwards in the fourth quarter. However, the guidance I gave you at the half-year, of better than 94% combined ratio for the full year, remains unchanged. Premiums in general insurance grew by 5% over the period to £6.5 billion year-to-date. This is the highest level written in at least the last 10 years and included 7% growth in the U.K. and 4% in Canada. Personal line premiums were down 1% in the period, a good performance considering the rating dropped off.
Of particular note is our U.K. retail business, which grew 4%, with strong performance on price comparison websites. Commercial lines were up 14%, benefiting from a combination of strong retention, well-priced new business, and continued rate momentum. In the U.K., we saw excellent growth in SME digital, as well as across mid-market and global specialty, while in Canada we saw strong growth in mid-market, a key target area for us. Turning to costs. As we've said before, efficiency is a key focus for us at Aviva. Controllable costs of GBP 2 billion are 2% lower year-on-year. This excludes the cost reduction implementation and IFRS 17 costs. We remain on track to meet our GBP 300 million cost saving target in 2022, and as a reminder, this is above absorbing inflationary headwinds. Onto capital now. As you may recall, we provided a pro forma Solvency II position at the half-year.
This made allowances for returning the entire GBP 7.5 billion of cash divestment proceeds, including GBP 4 billion directly to shareholders. Using exactly the same assumptions, the Q3 update for this pro forma ratio, also allowing for the impact of interest rate reductions since the end of September, is estimated at 197%, compared to the 195% we reported at the half-year, the increase being favorable market movements and net operating capital generation. Under our capital framework, we continue to consider capital above Solvency II ratio of 180% over time as excess. As such, any excess is available for two key uses: first, for investment in the business, organic and inorganic, and also for further returns to shareholders. As we said at the half-year, we'll update the market on our capital return plans with our results in March, following the completion of our divestments.
So, in summary, trading in the first nine months supports our confidence in Aviva's growth potential. Strategic delivery has been swift, but we're not resting on our laurels. There is much to be done. So now, let's turn back to the operator for Q&A.
Thank you, Jason. We will now begin our question and answer session. Ladies and gentlemen, if you wish to ask a question, please press star and one on your telephone and wait for a name to be announced. If you wish to cancel that request, please press the hash key. So once again, it's star and one if you wish to ask a question.
Okay, so I think we are ready to take some Q&A.
Our first question today comes from the line of Louise Mylott of Morgan Stanley. Please go ahead. Your line is now open.
Hi, good morning. Thanks for taking my questions. Just three from me, please. So the first one is on the FCA pricing practices, which is obviously being implemented on the 1st of January. Can you just give us a bit of color about how you're adapting to pricing ahead of this? That's in the U.K., obviously. And then my second question is on the BPAs. You've had very strong volumes in the third quarter. I'm just trying to get a bit of a feel for the market competitiveness more generally, really. Obviously, there were a couple of annuity writers who also had lower volumes in the first half. I'm just trying to understand, was there a lot of activity in the market? Were you closing on a lot of deals, or was it just that you kind of priced a few deals the best of everyone?
So it'd be good to get some color on that. And then finally, a question on capital. So you're clearly very committed to the capital return, the GBP 4 billion, and you're clearly very committed to the delivering. That's clear from what you said today and earlier as well. I'm just wondering, obviously, you've given the pro forma solvency as 197% once you've allowed for all of that. I mean, that means there's only about 17 points left above the 180, and that's roughly GBP 1.5 billion. I mean, what would you do in a scenario that there was a very attractive target put in front of you, or there's a very compelling investment opportunity put in front of you that you're not able to fund from those 17 points? Perhaps if this opportunity offered very strong growth or something, what would you do in that scenario? Thanks.
Okay, thanks, Louise. I'll pick up one and three, and Jason can pick up question two. So on the FCA pricing practices review, obviously, we've been working very hard on this since the FCA made the announcement. And actually, we support the announcement around bringing greater clarity and consistency to consumers. So we've been working with the FCA and with the industry to make sure that we're implementing the new rules. I think it's really important that the changes that are being made are fair to everybody, and I think the industry does remain vigilant that there are no sort of unintended consequences for some groups of customers, and that's the process that we will be going through as we launch our new rating and making sure that we're in good shape. But we're all prepared for it, and we'll be ready to do that in January.
As you know, Aviva has already taken some actions previously about reducing the difference between new and renewing customers, and so we're in reasonably good shape, but we are currently testing all of our new products, all of the new pricing engines. But as I've said many times on these calls, this is an unprecedented change. There's never been a time before where everybody, every insurer in the market, will have launched a new rating model at exactly the same time. And therefore, I think there could be some tricky periods over the coming months as everybody settles into this new way of working on rating. On your points on I think your question was if there was a compelling investment opportunity, what would we do?
I mean, I think, look, to just go back to this, because I imagine this will come up a couple of times, our absolute focus here is about transforming the performance of Aviva, and we've talked today, I think, and given some good proof points about growth and efficiency. And it is largely going to be an organic strategy, but we are very thoughtful about where M&A could enhance our capabilities or accelerate our development. But there will always be a very high bar for M&A investment, and everything that we do has to be and fit very well with our strategy and enhance value for our shareholders. And I think the other point I would make is we've been very clear that the capital return is at least £4 billion.
And I think we also said last year that our priorities would be around debt reduction, which I think we've done what we said we would, but also investment in the business to accelerate the organic growth and also the simplicity and digitization of the business. So hopefully, that sort of answers that question. Jason, do you want to pick up the BPA market?
Of course. So BPA market does remain pretty well supplied, actually, both from people coming to the market and in terms of capital seeking to write new business in the market. One of the stats that we look at to sort of sense-check whether we are about right on pricing is our sort of win rate in terms of new business, and we're around a third, which is sort of roughly where we'd like to be. We obviously know exactly which ones we want to win and not, but it's around that sort of level, and that feels about right across in our market share, sort of within the 15%-20% space. So I feel that whilst it's competitive, we're winning where we want to play.
I think others, obviously, have got their own strategies and trading through the year, but we continue to see value there, and we continue to see really good growth in that market, and that is sufficient to keep the industry all pretty busy, actually.
Thanks, very clear.
Thanks, Louise.
Thank you. Your next question today comes from the line of Blair Stewart of Bank of America. Please go ahead.
Thank you very much. Good morning, all. I've got two or three questions. Firstly, just on the annuity margin outlook, I think you've been clear in guiding that, well, two things. It's very volatile on a quarterly basis, and it will get trued up in Q4. I just wondered if you could talk a little bit about some of the risks to the asset allocation side, perhaps. And just also on the guidance for margins, annuity margins have been in the kind of low fours, mid-fours, high fours over the last two or three years. So could you maybe help us a little bit in terms of where you expect that to land rather than just a kind of vague, lower comment? I wonder a little bit second question. I wondered a little bit about the pro forma liquidity number that you've given. These are very helpful, by the way.
Just wonder what are the moving parts there? You've obviously got more ends and a few more routes, of course. But what assumptions have you taken, Jason, on the kind of normal cash remittances and the outgoings as well in terms of dividends? I just wonder what you're thinking in there as if you've made any assumptions. And finally, just looking at the combined ratio, the guidance for this year below 94, what would be the reasons for that to deteriorate or change, let's say, going into 2022? You talked about softer pricing being earned through a return to kind of more normal activity levels, and of course, you've got the pricing reforms as well. So I just wonder what your thought process is with regards to the combined ratio given the below 94 starting point going into next year. Thanks very much.
Okay. All right, Blair. So on the annuity outlook, I'll just take them in the order that they came. We're doing pretty well in terms of asset origination, but it does tend to be Q4 weighted. It has been every year. And we also put our reinsurance in sort of normally shortly after we transact. Some of the reinsurance has already gone in. That wasn't there at Q3. There's another little bit to do. I mean, one of the uncertainties is also the volume. We're given a relatively wide range of GBP 5 billion-GBP 6 billion, so that will also if we have better success on the asset side, we'll probably ride a bit more if we have some more challenges or things spill into Q1, we'll ride a bit less. So we're reasonably confident around the margin growth across the board.
I mean, my comment is mainly around VNB, and the IRRs remain good. We manage the capital to the level of assets that we've got, and that will step up. I'm not going to give you more specific guidance as there was quite a bit of quite a range on this going into the full year numbers, but the IRRs remain in the teens, and it's quite an important thing as we allocate capital across the board.
Sorry, just on the Jason, have you already originated assets to back the business that you've written, or is there a little bit of kind of shortfall there of kind of warehousing in some way?
We are sort of excess liabilities, if you like, which is why the margins are lower at this stage. So we're backing with cash and gilts, and then we'll sell that as we switch into assets over the period. As you might imagine, we're never precisely on, and we've got good strategies around managing that gap. The pro forma liquidity is very much just for the divestments and the capital return assumptions. So as of Q3, I'm not saying anything about future remittances or future dividends. It's purely if we were to do the capital return and all the divestments completed, that's what you'd have for capital GBP 19.7, liquidity GBP 2.3. Obviously, capital return is likely to be Q2 next year, but that's how we've got everything in place. So there'll be dividends paid out, there'll be remittances received in, and that will move further forward.
The combined ratio, I mean, there's only statements of the obvious I'm capable of providing here about weather and large losses, I think. But broadly, our assumptions are quite conservative. I think we're at 92.4 as we go into Q4. We've had six weeks, sorry, of Q4 already, and we're pretty confident as a target.
It was more a question on obviously, you can't predict weather, but it was more a question on whether your pricing is at least in line with claims inflation or expected claims inflation, for example.
Absolutely. We've been through on the commercial side, the technical rate is actually strong, and it's very strong, and we're working that through. So that's something, as you might imagine, that we keep a close eye on across the board. On personal lines, Amanda was talking earlier about some of the uncertainties into motor, particularly in Q1. But our rating is keeping up with inflation. We're comfortable that there is the technical price is going through. Notwithstanding, there'll be some volatility between new business and renewals.
Great. Great. Thanks very much.
Thank you. Your next question today comes from the line of Dominic O'Mahony of Exane BNP Paribas. Please go ahead.
Hi folks. Thanks for taking questions. three from me, if that's okay. Just to start with the savings, I mean, really great volumes. So I wonder if you could give us some sense of what sort of revenue margin you achieve on your new contracts there. I mean, I can see on the website, you have a 40 basis point charge, but there's obviously adjustments for large balances, and I suspect that workplace platform may be lower than that, but I'd really appreciate some sense of what the revenue margins are on sort of a blended basis for new contracts. Second question, equity release, clearly the main moving part in annuities and equity releases is the BPA stuff. Curious to hear what's going on in the equity release market, whether that's to be banded properly and how you're participating in that. And then a really quick, simple one.
Forgive me, I'm not sure I've seen what the proceeds from Vietnam were expected to be. Is that something you've disclosed or that you can disclose? Thank you.
Okay. Thanks, Dom. I think those are good questions for Jason.
Excellent. I'll start with the easier one. Vietnam is around GBP 150 million. I can't remember the precise number, but it's in that ballpark, and we expect that to come in by the end of the year. Equity release, I think, had a very strong first half, bouncing back. Actually, as of Q3 year to date, we are up 27%. So it's a nice pickup. We'd like to do more, though. I mean, 2020 was depressed. So while the percentages are very healthy indeed, there's more that we can do to support that market into 2022 and beyond. But I haven't on the savings side, at this point, I can just point you to the growth in the VNB, which is the stat in the actual release. You can see it's a very healthy uptick on savings and retirement, 78% pickup to GBP 141 million of VNB.
It does remain competitive, obviously, on the revenue side. We touched on that a little bit at the half year, but we are driving further efficiencies out, and growth, particularly on the adviser platform for us, where we were a bit smaller than we'd like to be, is coming through now in terms of operational leverage quite positively. We're starting to see whilst the revenues and the margins, as you say, have got some competitive pressures, we are getting to scale. The platform is now sort of GBP 40-ish billion. We'd like it to be bigger than that, but that's starting to make a big difference. On the workplace side, we're number one in the market. We are a scale player, and that is profitable growth.
Brilliant. Thank you.
Thank you. Your next question today comes from the line of Larissa van Deventer of Barclays. Please go ahead. Your line is now open.
Thank you. Good morning. Two main questions from my side. The first one on BPAs. You've spoken about the pipeline being robust and companies coming in. Are you seeing competitive margin compression as everybody is gunning for the space, or do you believe that current margins are sustainable? Then the other one just on personal lines pricing. You mentioned on weakness coming through in the earnings at the moment, and you've spoken about the challenges around the first quarter of next year. Do you have a sense of whether price increase pressure is likely to be a longer-term challenge, or do you expect it to revert to historical levels as the markets normalize after the first quarter of next year? Thank you.
I'll pick up the second point, and Jason can pick up a point on BPA. On personal lines pricing, I think to assume that they will move to normalized levels after the first quarter is probably a little bit ambitious. I mean, as I said earlier, this is a significant change that we will see. And what the likely consequence of the Pricing Practices Review is, is that renewal prices will come down and new business prices will go up. I think we've always been very clear that there isn't a significant level of excess margin, particularly in motor, that the market can just absorb that and that everybody's prices will come down. If you look at the recent ABI stats, I think the motor pricing is already 7% down sort of this year versus last year.
So we've already seen some changes this year because of frequency benefits as a consequence of COVID. You've got the Whiplash Reforms and the new portal coming in place. Then you overlay that with the FCA pricing practices review. I think 2022 is going to be an interesting year as we see those players perhaps without backbooks coming into the market and making statements and those with backbooks having to correct. So I think I would say 2022 could be interesting for the whole year. All I can say from an Aviva perspective is that we've been in pretty good shape on it. The brand is really strong. Our growth on the price comparison website is really strong. We have taken a lot of the action around the sort of the new and renewal premium already.
So we are in very good shape, but of course, we operate in a market with competitors, and we will have to respond to that competitive landscape as it develops. Jason, on BPA?
I mentioned this a moment ago. BPAs is competitive. So the question is, what are your competitive advantages? I think we've got a number, particularly around the asset origination side. Aviva Investors does a great job for us originating good quality long-term assets. We've got scale. We've got good buying of reinsurance and great relationships with reinsurance partners. We can deliver to clients swiftly. Chetan Singh is now running that business, is doing a great job at actually winning new business. And we've got an efficient balance sheet. We're a diversified player. So across the board, our capital does give us an advantage. So while there will be competition, like any market, I think we're well set up for success.
Thank you. Just one question to clarify. Amanda, on the personal pricing line, does that mean that to maintain the 94% combined ratio, you need to rely on cost efficiency and claim management? Is that a fair assumption?
Yeah. Yeah. I mean, I think to maintain 94%, you have to do all of those things. You have to have very good pricing sophistication. You have to be efficient, and you have to be managing your claims indemnity. I mean, the great position that we're in is that obviously, being a scale player, we do have that is a significant benefit. We also have our Solus motor car repair network, which is the second largest car network in the country. So these are all benefits that play to our scale.
Thank you very much.
Thank you.
Thank you. Your next question today comes from the line of Andrew Crean of Autonomous. Please go ahead.
Good morning, all. It was a question really around central liquidity because obviously, if you're going to exceed the GBP 4 billion capital return, you need the headroom over the 180 solvency, but you also need the cash. Historically, you said that your central cash target is GBP 1.5 billion-2 billion, but that's when you had a much bigger perimeter of businesses. So I was wondering really two things. For the current perimeter of businesses, what is the central cash that you'd like to keep? And secondly, against that GBP 2.3 billion of cash at center, what are the remittances which are coming through in the fourth quarter? Is there a sort of a big amount of dividends to come through in the fourth and first quarter of next year as different businesses sort of complete their year and pay up to the group?
Okay. So I'll jump in on that one. So in terms of the fourth quarter, we've not given a specific guidance. We've said we've done GBP 1.1 billion thus far, and remittances will be up strongly on the GBP 1.4 billion that we did last year as we grow towards GBP 1.8 billion. I talked about this at the half year. So a number that we're expecting better than GBP 1.4 billion, strongly better than GBP 1.4 billion, less than GBP 1.1 billion that we've already received. That's the sort of guidance in Q4 that I will give you. In relation to central liquidity, we've not reestablished yet our formal liquidity appetite, but I expect it to land around GBP 1.5 billion. It will be slightly lower than the guidance I've given you in the past.
It might be slightly higher than that before a dividend and slightly lower than that after a dividend as we look at cash profiles across the board, but we'd expect to have clear paths to build back to that. So I think for guidance purposes, I think around GBP 1.5 billion would be a sensible assumption.
Okay. Just sort of following on from that, it sounds to me as though the cash remittances coming the fourth quarter will basically pay for the final dividend, which would leave you with central liquidity, which is about GBP 800 million above that 1.5. Is that sort of the right logic?
It's not crazy, Andrew. Of course, the final dividend is paid in May, so we do tend to get quite a lot of remittances in in the first half of next year. I mean, this year, we got just over GBP 1 billion in in the first half. So it's a moving target as we manage cash through the period. So you have to think you have to look forward. And the way we manage cash, as you'd imagine, is we really do look 12 months forward.
Okay. Great. Thanks.
Thanks, Andrew.
Thank you. Your next question today comes from the line of Ming Zhu of Panmure Gordon. Please go ahead. Your line is now open.
Thank you. Good morning. Thank you for taking my questions. Two questions, please. First is on the BPA asset allocation. What is stopping you to execute your assets on day one or within the very short period of time once you got the liability in rather than wait in Q4? Because some of your competitors are able to do that, to execute all the corporate bond on day one. My second question is on the GI. You've had very strong growth in commercial. Could you just give some color on how much of that is due to rate and how much is the underlying organic growth you will be expecting going forward? Thank you.
Okay. Thanks. I mean, I'll take up your second question, and then Jason can talk about the asset allocation. On GI, the growth in commercial line, it's about 50/50 rate and new business, which is obviously very pleasing. And I think Jason referenced this in his script. We basically are seeing good technical pricing and good discipline in commercial lines, which obviously is very encouraging. And our strong position with distributors means that we're able to really capitalize on that on the asset allocation.
Sure. So BPAs, I mean, we could back it immediately with corporate bonds, but that's not our asset allocation strategy. Our asset allocation strategy is a balance between corporate bonds, equity release, and illiquid assets. Equity release comes through on the drip as we write around GBP 70-odd million a month on that. And then the illiquid assets tend to be projects. They do tend to complete in Q4. We've seen that. I've been involved in this now for five or six years, and we do see that coming through pretty consistently. And that's no different this year. So ahead of that, we don't want to not trade on the BPA side, so we just aim off a little bit. Of course, the day we book it, we don't have those assets, so the margins are a bit lower.
Okay. Thank you.
Your next question today comes from the line of Greig Paterson of KBW. Please go ahead.
Morning, everybody. Can you hear me?
We can.
Yes. Two questions. One is, you mentioned a new entrance into the bulk annuity space. I wonder if you could just call out who they are and how many have entered recently. The second question is, the private debt origination, to me, is a bit of an arms race, and you've got to constantly look at new initiatives to get new types of collateral. I wonder if you could give us some of your thinking around your pipeline for new collateral categories. And then the third question is, having spoken to competitors of yours, Aviva has been cited as one of the players aggressively going for share in the second half of this year in home, hoping it will stick post the FCA review. I wonder if you could just comment on whether you recognize that characterization. Thank you.
Okay. Thanks, Greg. I'm not sure we did mention new entrants in those purchase annuities, but if we did, I'm not sure that we meant to. I think we see the usual players in that market, the private equity-backed players and also the strategists like us. So I'm not sure whether perhaps we definitely didn't say that.
The second thing was a question, not a good answer.
The second point around the private debt origination and new collateral, I mean, I think we're obviously constantly looking at that, and we benefit from having Aviva Investors and a fantastic real asset team, probably one of the biggest real asset teams in the market, helping us to do lots of creative things in that space. So I think we are always looking at that point. And in terms of aggressively going for share on home, no, I don't think it's crazy. The numbers that I'm looking at show that we've increased our customer count by about 5%. So I would say that that is not aggressive in anybody's state, and that's in our direct portfolio.
Absolutely.
Thank you very much. Keep safe.
Thanks, Greg.
Thank you. Your next question today comes from the line of Steven Haywood of HSBC. Please go ahead.
Good morning, everybody. Thank you. I think, Jason, you might have mentioned about the BPA outlook for 2022 remains positive. Can you elaborate on that? Are you going to be seeing GBP 5-6 billion BPA per annum, or do you potentially could see more than that going forward? Secondly, within your Solvency II ratio over the quarter and also year to date, can you tell me if there's been any inflation impacts, how much they have had an impact on your Solvency II ratio progression over the year? And then finally, on Canada in the non-life rates, can you discuss your expected rate changes in this market when the review process is happening and what are the implementations of any potential new rates coming in here? Thank you.
Okay. Thank you, Jason. [crosstalk] I'm going to pick up.
Take them in order, shall we? Then on the BPA side, we would expect to grow the BPA business sort of steadily over the period. I've said many times that GBP 6 billion last year was an excellent performance. I think GBP 5 billion-GBP 6 billion this year will be another excellent performance. But we will expect to continue to grow from that baseline as we look forward. We're not going to leap into multiple billions above that, but we want a good quality business making good returns, utilizing the asset production that we have in-house. And that's my expectation for certainly for the foreseeable future. On the inflation side, I mean, there's no direct sort of specific impact I would point you to.
We have made assumptions, as you would imagine, across both the life and the non-life business for inflation as we think about that impacts claims, it impacts equity release, it impacts commercial property, all of which is baked into our Q3 estimate. We'll obviously update those at Q4. But we look through it. I mean, one short spike of inflation in the next 6-12 months really won't make a big difference on the capital.
On Canada, the rating I didn't quite catch all of the questions, but in commercial lines, the rating is pretty much, as we said earlier, sort of 50/50 between rate and new business, the growth. In the personal line space, of course, the rate is lower because we've seen frequency benefits flowing through, and we have made changes as we've submitted to the various provincial regulators.
Yeah. Things have stabilized. There were some rate reductions that I've talked about, particularly in Ontario Motor, which is our biggest segment. Ontario, with the full reopening of the economy, or certainly the full reopening of all the roads and driving, Canada is slightly more working from home and slightly more on the roads. So we're seeing actually regulators open-minded now to rate risers. I think that is likely to be in the next few months, so starting to be earned for the first time in 2022.
Okay. Thank you very much.
Thank you. Your next question today comes from the line of Abid Hussain of Shore Capital. Please go ahead.
Oh, hi. Morning. I think I've got two, possibly three questions. The first one is on operational efficiency. Once you reach your cost-save target, so GBP 300 million reduction, where do you think you'll be in terms of operational efficiency against your peers or your benchmarks? Is it the sort of thing that you are slightly targeting, or you will be top quartile across the segments, or will there still be some segments where you're not quite at scale and you need to do further work? That's the first question. The second question is on capital. You talked about the GBP 1.5 billion excess capital above the 180%. I just wanted to get a sense of how much of that GBP 1.5 billion would you typically utilize for organic investment in the business over the next two to three years? And then just finally, just a quick clarification on the commercial lines.
You said, Amanda, that the business was growing 50/50 between rates and genuine new business coming onto the books. Just curious if you can give a little bit more color on the new business coming on. Is that sort of new product lines you've entered, or is it taking market share in existing lines? And sort of how do you see the outlook of that new business element coming through in the next couple of years? Thank you.
Yeah. Okay. Thanks, Abid. So on the operational efficiency, we've been very clear to say that the GBP 300 million will not get us to the upper quartile. It will get us a long way to the upper quartile, but it doesn't get us there across all of the segments. And so we will still have some work to do once we reach that GBP 300 million, which I think we are in good shape to do. Of course, as we get closer to achieving that number, then we have much more clarity around the types of projects, the types of things that we need to do to take costs out and to make us more efficient.
So we've had headcount reduction, simplification in terms of our spans and layers within the business. We've got property reduction costs, technology reduction costs, and then automation to help us with some of the processing.
So I think that there will always be more work to do because the competition will always move, and therefore, we'll have to move along with them. In terms of, I think you asked, will there be some segments where there is more work to do than in other areas? I think I guess I'd call out a couple of areas. It's obvious, I think, that the cost-to-income ratio on Aviva Investors needs to improve, and Mark's putting in place a lot of work in that area to take decisive action to address that. And I think that we saw good progress in the first half of the year, and obviously, we've reported at the full year about the further progress that has been made there.
Also, touching on retail general insurance, which we've obviously done a fair bit this morning, it's obvious that we will need to do more to ensure that we get to top quartile in that space because it is such a competitive space. And so there will always be more work to do there. But I think every line of business, what we're doing is we'll measure the top quartile against the competitors within those product segments to make sure that we are competitive and we won't blend it across the business because then I think you do lose some of the necessary action that you need to take. I think on the capital and the GBP 1.5 billion, how much would we typically utilize for investment?
I mean, I think we've spoken in the past about the amount that we invest in the business and the fact that we want to accelerate the growth. I mean, on a typical year, we invest about GBP 400 million in the business, which is to do regulatory changes, to do the changes that we have to do on things like investment in cyber, and then any growth or acceleration projects above that. We have though said that we will want to put a little bit more investment into the business because we do believe there's an opportunity to accelerate our growth and do things like improve pricing sophistication across the life and GI business, but also to simplify processes for the benefit of our customers and also, obviously, for the cost of the business. So we're not going to give specific numbers on that today.
I'm sure a lot more to come on that in the future. On the commercial lines, rates versus new business, what is it? Yeah, I think we are taking market share. We know we're growing in the mid-market. We're growing in the SME. We're growing in some of the specialty lines. We have launched some new products. So, for example, the AXA XL team that joined us in the high-net-worth space, we'll obviously see some growth coming from that area. We've launched some Cyber SME products. So I think we'll continue to look at where the gaps are in the market, and we'll continue to fill those. But I think we've got plenty of headroom in our market share, whether it's in general insurance or in commercial lines.
There's plenty of opportunity for us to continue to go and to maximize on, I think, the market-leading position we have with our intermediaries, which, of course, this is, as you know, largely an intermediated market. Therefore, having that strong position with intermediaries is absolutely key for our growth agenda.
Thank you. That's useful color, though. Thanks.
Thank you.
Thank you. Your next question today comes from the line of Alan Devlin of Goldman Sachs. Please go ahead.
Hi. Thanks, guys. A couple of questions for me. First, I wanted to follow up on the platform. I think you said, Jason, that that was reaching scale. Is the adviser platform actually profitable today? And if not, what level of AAM does it need to get to before it reaches the scale? And then a second question is on the FCA reforms coming in. Your predecessors announced or launched the Aviva Plus product, the multi-subscription service, a few years ago. I just want to know how that's kind of doing in the market, and in the post-FCA world, you'd expect this product to actually gain a lot more traction? Thanks.
Okay. Thanks, Alan. Do you want to pick up the platform one, Jason?
Sure. So the platform is profitable. It's very profitable for VNB, obviously, where we're looking through current trading. And you can see that in the numbers in the release where the pickup in VNB, obviously, we're taking different persistency type assumptions. And on a cash basis, yes, it's profitable. It has been not hugely so, but it is continuing to produce IFRS profits, which I talked about a little bit at the half year. But we'd expect that to grow materially through the next three years as we've gone from naught to sort of GBP 40-ish billion as we go up beyond GBP 50 billion. Ideally, further and further, that will continue to be significantly accretive to profits.
Yeah. On Aviva Plus, yeah, we learned a huge amount from Aviva Plus. And I think that what we've done in the last year is launch the Aviva Online product on the PCWs, which is, as we've noted this morning, going very well. A 4% growth year to date there and about 250,000 new customers. So I think we are very, very pleased with what we learned from Aviva Plus and what we've learned from our digital experience. I think we're in good standards and good stead there. The key thing, though, I think we learned from Aviva Plus is around the pricing and the investment in that pricing sophistication and the requirement to ensure that our analytics is really good, that we are constantly keeping on top of all the pricing sophistication with tools within the market.
That investment definitely pays off when it comes to looking at the FCA pricing practices within next year. Thanks, Alan.
Thank you.
Thank you. There are no further questions at this time. Back to you, Amanda.
Okay. Thank you, everyone. And thanks for dialing in. And I think a really good range of questions there. Just a quick summary, I guess, to repeat myself, but I think we're making some real excellent and rapid strategic progress right across Aviva. We're on track to meet our key financial commitments. And hopefully, what you can see is that we're really focused on generating attractive value creation for our shareholders. And we are very much looking forward to speaking to you in March at the full year 2021 results. Thank you very much. Have a good day.
Let us conclude our conference call for today. Thank you all for participating.