The insurer said the value of new business flowing through its retirement arm jumped to £143mn in the first nine months of this year, up 794 per cent from £16mn over the same period last year.
Its retirement arm is also made up of individual annuities and the bulk purchase annuity business, but Aviva said these parts suffered “lower volumes”, putting the growth solely down to equity release.
The company’s mortgage loans and equity release portfolio totals £9bn.
“In equity release, we have seen continued excellent momentum during Q3 and our pipeline of applications remains strong,” the business said in a trading update today (November 9).
“As interest rates increased, our pricing discipline has meant we were quick to react, repricing on a weekly basis allowing us to stay in the market and to continue to offer customers a way to release value from their homes while managing our risk appetite.”
In the quarter, July to September, value of new business was up 300 per cent compared to the same three months last year, up from a loss of £34mn to a profitable £68mn.
Some brokers have pointed to a difficult final quarter for equity release, with many clients putting off locking into deals due to interest rates of up to 9 per cent in some cases.
Rates jumped after Aviva’s third quarter, following former chancellor Kwasi Kwarteng’s ‘mini’ Budget.
The insurer also recorded a 3 per cent dip in the value of new business for its protection and health insurance arm, saying individual protection volumes were flat and that present value of new business premiums were down due to higher interest rates.
Overall, life sales were down 2 per cent, but UK&I Life - which includes the annuity and equity release business, was up 49 per cent.
Wider Aviva business
Group chief executive of Aviva, Amanda Blanc, said the company’s trading is positive and performance is “consistently strong”.
"Our customers have continued to save for their future and protect what is valuable to them," she said.
“Flows in our wealth business were encouraging and general insurance volumes continue to grow, especially in commercial lines. Profitability also remains robust across both life and general insurance.
"We remain confident in the outlook for Aviva.”
Aviva’s platform net flows dropped 20 per cent to £3.4bn in the nine months to September this year.
The company said this was a reflection of market volatility, and lower consumer demand amid the uncertain economic environment.
Despite this, flows into Aviva Investors were positive, with £709mn invested in the period, just under half of the £1.6bn for the same period last year.
This included £507mn between July and September.
Aviva said the net inflows had been helped by the company’s strength in real assets.
However, overall the company say total net outflows of £3.3bn, due to “anticipated strategic actions” totalling £3.7bn, from “clients previously part of the group, mainly in France”.
The turmoil in bond markets led assets under management to be reduced by 6 per cent to £218bn, primarily due to the impact on valuations of fixed income assets.
Aviva said it does not have any exposure to the liability-driven investment market, other than the Aviva staff pension schemes.
The company completed the acquisition of Succession Wealth earlier this year, in a deal Aviva said would "significantly enhance" its presence in the wealth market.
ruby.hinchliffe@ft.com, sally.hickey@ft.com
