Insurance provider Aviva said a “significant reduction” in the size of the equity release market led to a 54% drop in product sales.
In its half-year report, Aviva completed £114m in new equity release business, down from £245m the year before.
The operating profit of its equity release division also decreased, falling from £42m in 2023 to £37m this year.
Its retirement division, which includes equity release, completed lower sales of £3.03bn, down from £3.22bn a year earlier. Aviva said this was down to a contraction of the equity release market and lower bulk purchase annuity sales.
The company said most of its £9.8bn mortgage loan and equity release portfolio was internally securitised, with a low average loan to value (LTV) of 28%.
Some 84% of its equity release loans have an LTV of less than 50%.
Aviva said house price growth had reduced LTVs and insisted it remained a “conservative lender”.
The provider also said that since 2015, the no-negative-equity guarantee feature for equity release had resulted in around £7m of losses.
This protects borrowers from owing more than the value of their property when it is sold, and the Equity Release Council (ERC) made this feature a standard on lifetime mortgages.
Including the impact of its acquisition of AIG Life, Aviva saw its protection sales rise 49% to £205m.
Over the first half, Aviva’s operating profit increased 14% year-on-year to £875m.
Amanda Blanc, group chief executive of Aviva, said: “We have achieved another six months of excellent trading. We have generated growth right across Aviva, thanks to our leading positions in attractive markets such as workplace pensions and general insurance in the UK and Canada.
“We remain very positive about Aviva’s prospects. Trading conditions across the UK, Ireland and Canada are excellent. And the UK market, our largest, is highly attractive and growing. We see many reasons to invest here, including greater economic stability and political certainty. This encouraging backdrop – and Aviva’s continued strong financial performance – means we are increasingly confident we can deliver even more for our customers and shareholders.”
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
