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Good morning, everyone. It's actually fantastic to see you all here. Thank you for joining us for our full year 2022 results presentation. So I'm going to start today with a brief update on our full year performance, covering the key part of today's announcement. Then Charlotte will take you through our results in more detail, and then I'll update you on the strategic progress that we're making here at Aviva. And then finally, of course, we move into your favorite bit, which is the Q&A.
So before we get stacking, I wanted to start by thanking all of my Aviva colleagues for their contribution to the results that we have announced this morning. In the face of a very challenging year, the team really delivered. And every single customer that chooses Aviva, every single life or business that we protect, every single claim that we handle well is down to our people and their ability to deliver for our customers.
And we can only present these results because of what they do every day. So a very big thank you to the Aviva team.
So turning then to the results. And Aviva had an excellent 2022. As you will have seen, we delivered strong results throughout the year. We have demonstrated consistent and reliable momentum. And we've done that by focusing on disciplined, profitable growth and tight cost control. Our capital position remains very strong and has proven resilient in the face of considerable market volatility.
We have demonstrated that once again that our strategy is the right one and that the diversified business model that we have built is working. Importantly, together with delivering this strong performance, we have also invested for Aviva's future just as we said we would. We've invested to improve customer experience, to drive further cost reduction and in bolt-on M&A where it makes sense.
We completed a £4.75 billion capital return program during 2022. And the momentum and consistency in our performance, together with our capital strength now allows us to go further as we said we would. So today, we have announced a new £300 million share buyback scheme which starts immediately, delivering on our promise to be disciplined in our capital management. We have also delivered on our dividend promise for the year.
And today, we announced a further upgrade to our dividend guidance, more on this later. Finally, we have been actively supporting our customers communities and colleagues as the U.K. wrestles with financial inclusion and the worst cost of living challenge that we have seen for decades.
So looking then at the results. Aviva is growing. Value of new business is up 15%. Gross written premiums are up 8%, and we've had over £9.1 billion of net flows into the Wealth business. Our costs continue to fall and we're down 3% on last year. We've maintained our focus on cost discipline despite the significant inflationary pressures.
Profitability is strong, with own funds generation at 37% and operating profit up 35% on last year. We've delivered an impressive overall combined operating ratio of 94.6% despite the impact of inflation and adverse weather in the U.K. This demonstrates the benefit of the scale and diversification of our General Insurance businesses in the U.K., Ireland and Canada.
Finally, cash generation of £1.8 billion was up 11% on the previous year. And with good visibility of cash remittances over the coming years, we expect to exceed our 3-year cash target. These results are testament to the progress that we've made over the past 2 years. We have simplified the business, built resilience and further embedded a performance culture at Aviva. As we have said repeatedly, our strategy is very deliberately customer-led, putting customers first is critically central to everything that we do. And we're bringing this to life on a daily basis.
In 2022, we paid £23 billion in claims and benefits. We launched Quote Me Happy Essentials, helping customers access lower-cost insurance products. We committed £9 million to support communities through the U.K.'s Citizens Advice and the many advice trust. And we've supported 9,000 of our colleagues with one-off payments to help with rising energy costs.
We made it easier for customers to do business with us by making over 200 improvements to MyAviva and Aviva Connect. And we had 0.5 million new MyAviva registrations. And I want to highlight this because it is important. MyAviva customers are more than twice as likely to buy a second policy from us.
We continue to enjoy strong auto and online experience scores, and we are seeing the benefits of all of our actions and our ability to grow our franchise. We have over 18.7 million customers, including £15.5 million in the U.K. More than 1 in 4 adults in the U.K. is an Aviva customer. And this year, we've won over 370 new workplace schemes.
We have scale, but we're also delivering growth. And despite the challenging backdrop, growth remains positive right across Aviva's insurance, wealth and retirement businesses. In insurance, Jason and the team in Canada grew commercial lines by 14%, with great performance in mid-market and GCS. In personal lines, they grew our key RBC partnership and our direct channel. In fact, Aviva is now the #2 insurer in Canada. Just one more slide Jason.
In the U.K., Adam and the team delivered 13% growth in our GI commercial SME business, and we also saw strong growth in Group Protection and Health. In Wealth, workplace net flows were up 14% to £6 billion, driven by strong retention, [indiscernible] and the inflationary impact on salaries.
In Aviva Investors, Mark and the team delivered positive net flows of £1.3 billion from our external clients in an extremely volatile year. and Aviva Investors were recently ranked third in share actions report on the responsible practices of the world's largest asset managers.
Finally, in our Retirement business, we transacted on 50 BPA deals in 2022 with £4.4 billion of premiums at very strong margins. The BPA pipeline is positive as we look to 2023 and beyond. And we announced an £850 million buy-in transaction with the Arcadia scheme just last month. We've also seen strong growth in individual annuity sales, external, which were up nearly 70%.
We know that we continue to face into a very challenging macro environment. But we have momentum, which is fueled by the right strategy, the right people and the right purpose.
Turning now to capital return and dividend. Charlotte will talk through our capital framework in a minute, but our commitment remains for a strong and sustainable ordinary dividend, supplemented by regular and sustainable returns of surplus capital over time. Today, we delivered on our commitment to further shareholder returns.
As you will have seen, we announced a new £300 million share buyback program starting immediately. This takes total capital returns to shareholders to over £5 billion since 2021. As I said earlier, we've also upgraded our dividend guidance today, recognizing that share buybacks would otherwise reduce the overall share count.
Our confidence in the performance trajectory of Aviva and in the positive outlook for cash generation means that we now expect to grow the cash cost of our dividend by low to mid-single digits. So in summary, our plan and strategy to transform Aviva remains unchanged. It centers around our 4 strategic priorities of customer, growth, efficiency and sustainability. It is the right strategy for Aviva, and we are making great progress in executing on it. And it is unlocking the competitive advantage of Aviva's model.
In turn, our strategy is delivering higher quality and more consistent financial performance that will benefit our shareholders. And this underpins our confidence in the delivery of our targets. As you will hear later, we are on track to exceed our OFG and cash remittance target and to deliver on cost reduction. I'm now going to hand over to Charlotte, who's going to go through the financials. And after that, I'll come back and update you further on our strategic progress before we head to Q&A. Over to you, Charlotte.
Thanks, Amanda, and good morning, everybody. I'm delighted to take you through the highlights of an excellent year for Aviva. We've continued to see positive momentum across the group, and we've delivered great results across all key metrics. Our funds generation was up 37%, supporting the growth in sustainable cash remittances, which were up 11% to £1.8 billion.
There was a strong improvement of underlying operating profit, up 24% with total operating profit up 35% to £2.2 billion. And importantly, costs continue to fall, down 3% on the prior year. Now despite market volatility in the second half of the year, our capital position remains robust at 212%. This is 207% on a pro forma basis and 196% after payment of the final dividend and the completion of the share buyback. These results really demonstrate that our diversified model is working.
Now let me talk you through the business unit highlights before returning back to the group performance and balance sheet. And I'll start with U.K. and Ireland Life, which operates across insurance, wealth and retirement. This business has had a great year. We've seen strong growth across the key profitability measures. Total operating profit and OFG were up 34% and 44%, respectively, with the core business performance, very strong. Underlying operating profit was up 21%, and underlying OFG up 17%.
On new business, VNB is up 15% to £767 million. This is a very good result achieved against the headwind of higher interest rates, and it is well ahead of our ambition of 5% to 7% growth per annum. And importantly, we've seen margin improvement across all 3 segments.
So now I'll go through the components of the U.K. and Ireland Life result in a bit more detail, starting with Protection & Health. Sales were up 6%. We saw strong growth in Group Protection and Health, up 29% and 14%, respectively. Partly offset by individual protection, where APE was up, but PVNBP was down or lower because of higher interest rates. This is a strong outcome given the prior year benefited from the impact of stamp duty relief.
Across Protection & Health, we also achieved a higher VNB, up 18% and saw margins improve. Operating profit was flat as we didn't see the repeat of 2021's favorable claims experience in group income protection, which also impacted the relative own fund generation.
Moving now to our Wealth business, which has performed well in a challenging environment. Net flows of £9.1 billion across workplace and platform were extremely robust at 6% of opening AUM. In Workplace, net flows were up an impressive 14% to £5.8 billion as we saw new scheme wins, strong retention and the benefits of wage inflation coming through on contributions.
In platform, we were #2 measured in net flows. Now consistent with the market, we saw reduced demand with net flows of £3.9 billion, which is down 32%, amid market volatility and the impact of cost of living inflation for our customers. We expect platform net flows to remain challenging in the near term. But that said, we are well placed to capture available flows with a platform that is highly regarded in the market, for its functionality and competitive pricing.
On assets under management, completing the Succession Wealth acquisition added £3 billion. Own Funds generation saw a strong increase in 2022, up 96%. This was driven by new business, a growing in-force book and improved cost efficiencies including a one-off expense provision release. Excluding this one-off effect, OFG was up 50%.
Operating profit was lower due to the impact of market volatility on revenues and because of an adjustment to cost allocations. Excluding this impact, it's broadly flat. Lastly, in our Retirement business, of the £6.2 billion of sales, bulk annuity volumes were £4.4 billion as we maintained our pricing discipline, especially in the thin markets of Q4 where trustees focus their attention on liquidity in the wake of the LDI crisis.
Equity release saw strong growth in sales of 17%, partly offset by individual annuities where we maintained pricing discipline. We had another solid year of asset origination supporting the annuity business, a key area of strength where the Aviva investors team have again proved the value of the business in supporting U.K. Life.
The higher allocation of illiquids and pricing discipline meant that margins on BPAs improved to 5.1% and VNB increased by 6%. OFG and operating profit for the Retirement business increased by 34% and 32%, respectively, benefiting from both the improved asset mix as well as favorable experience variances.
Now looking forward, we continue to see a positive outlook for BPAs in the medium term due to the improved funding positions from the higher rate environment and the very evident increased appetite from trustees to derisk.
Now moving to our general insurance business, where we have deliberate diversification across geographies, products and channels. This means we're able to grow the business in a targeted and profitable way as we did in 2022, where premiums were up 11%. Group Core was 94.6%, which is an excellent result, especially when considering the return to more normal claims frequency as well as the inflationary environment for which we continue to price appropriately.
The quality of the underlying result was extremely strong with low reliance on prior year development and weather broadly in line with long-term averages. Operating profit was up 1% and as more normal claims frequency and elevated inflation impacts were more than offset by improved reinvestment yields.
In U.K. and Ireland, premiums grew 7% and to £5.7 billion. Within that, Commercial lines grew 12%, evenly split between rate and volume. In Personal Lines, premiums were up 2%, with our principal focus on maintaining pricing discipline in the inflationary environment. We have high expectations for this business as we outlined in January.
The core of 96.1% for UKGI is a really good result. It demonstrates strong risk selection, disciplined growth and our proactive response to inflation. We continue to leverage and invest in our claims processes and the value of our Solus network to ensure good customer outcomes and strong claims cost management.
Operating profit was down 5% as an improved investment result mostly offset frequency and inflation impacts. In Canada, we had another fantastic year and the business is going from strength to strength, achieving further profitable growth. We enjoyed strong growth in both Commercial Lines and Personal Lines.
In Commercial, premiums were up 14% in constant currency, owing to strong new business growth in mid-market and large corporate. Personal lines grew 6% in constant currency and we put through rate increases in Ontario Auto and made great progress with our key RBC partnership. We achieved a very strong core of 92.5%. Now this is a little higher than the prior year as similar to our U.K. experience. In Canada, we also saw claims frequency return to more normal levels.
Within the claims ratio, there was a very modest impact for positive prior year development and favorable weather impacts as we experienced minimal cats activity in the year. Higher investment returns also helped to increase the operating profit by 6%.
Now before we move away from general insurance, I'd like to update you on our recent reinsurance renewals. You'll be aware that it's been a very challenging market, but we were able to fully place our cat reinsurance program. We achieved lower risk-adjusted rate increases than the double-digit averages seen in the market, which, in turn, we are now pricing for.
Like most, we did raise our retentions given the market capacity and pricing. But return periods are still below many of our peers and retention levels are broadly flat when allowing for portfolio growth. We were also pleased to renew our cat ag cover to protect capital and earnings in the case of multiple events, an important differentiator versus many in the market.
Now the changes to the reinsurance program have led to an increased capital requirement. But importantly for Aviva, this is only about 5 points on the group cover ratio, which is lower than it would be for a stand-alone GI business, another benefit of our diversified model. Overall, it was a good outcome and supportive of our strategy and growth plans.
Turning now to Aviva Investors. The business has been making good progress with its strategy and structure and focus. However, because of the extremely difficult market conditions for all asset managers on the face of it, the results don't yet demonstrate this. Assets under management about £45 billion lower than last year, mostly driven by the impact of weak investment markets.
External net flows remained positive at £1.3 billion and included about £4.6 billion in Q4 as we ended the year well. Importantly, we've completed a number of structural cost reduction initiatives, which have delivered £50 million of savings. This includes major outsourcing of both operations and loan servicing. These are critical levers to improve efficiency, continue the turnaround and allow progress towards our target cost/income ratio when revenue strengthens.
And whilst the revenue outlook remains uncertain, we have started this year well, the team is fully focused on the path ahead. And as I've spoken about earlier, Aviva's investor plays a critical role for the group, particularly for the retirement and Wealth businesses. So that completes the review of the individual business units, so we return them now to the group.
And I'll start with the progress to making towards our group targets. I'm pleased to report that the controllable costs are down 3% year-on-year to £2.8 billion which represents 11% reduction from the 2018 base. This is continued good progress towards our £750 million cost reduction target. We achieved a further £200 million of cost reduction or 7% in 2022, which takes the total to £575 million and means we are firmly on track to meet our target by the end of 2024.
And once we reach this target to repeat what we've said in the past, we intend to maintain the strong focus on efficiency to deliver quartile efficiency ratios for each of our businesses. Now as well as making great focus on efficiency, I'm pleased to say we've been growing at the same time.
So let's start with own funds generation, where our target is to achieve £1.5 billion annually by 2024. Own funds generation grew by 37% year-on-year. Now 2022 includes the benefit of higher balance sheet actions of £597 million, more than we typically expect to see. Principally they're due to positive longevity benefits and expense assumption changes reflecting the cost reductions achieved by the group.
So on an underlying basis, OFG was up 15% to £1 billion as we saw strong growth coming from our Wealth and BPA businesses. Given our progress, we expect to exceed our target of £1.5 billion by 2024 even allowing for a more normalized level of management actions. And while the actual amount of management actions may differ in any given year, we expect these typically around £200 million.
This capital generation is translating into growth in cash remittances, which were up 11% to £1.8 billion. Our cash remittance target is for more than £5.4 billion between '22 and '24, and we expect to exceed the £5.4 billion.
Moving now to capital. Our shareholder Solvency II cover ratio remains extremely robust at 212%. Our balance sheet showed resilience in the face of market volatility in '22. We maintained a strong capital position throughout. The development from full year '21 was driven by a combination of £3.75 billion capital return, dividends, the acquisition of Succession Wealth and £500 million of debt reduction.
We've generated about 14 points of solvency from operating capital generation through the year, and we've benefited from 17 points of nonoperating capital generation principally for the impact of rising rates. We still have further debt reductions to complete and the £75 million that was committed to the pension schemes was made in Q1.
Taking these items into account, our pro forma cover ratio is 207%. And then taking the final dividend and the share buyback into account, our estimated coverage ratio will be about 196%. Our pro forma leverage ratio is 30% and center liquidity at the end of February is £2.2 billion. Finally, just a reminder of our capital management policy, which remains unchanged. And is predicated on a Solvency II cover ratio of about 180, center liquidity of around £1.5 billion and a leverage ratio of under 30%. We also seek to maintain doubling the credit ratings.
So to recap, surplus capital has 3 main purposes. First, we are investing in the business to drive targeted profitable growth and efficiency, which as '22 results performance enhancing; secondly, we continually screen potential bolt-on M&A opportunities that are in line with the strategy in our core markets and meet or exceed high hurdle rates, examples are the recent acquisition of Succession, Azur, AXA XL, high net worth; third, we make additional returns to shareholders, releasing excess capital as we have announced today. And we anticipate further returns in the future with our preference being that these are regular and sustainable.
So summing up, I've now been at Aviva for 6 busy and productive months. During this time, I've lived the market turbulence following the mini budget in September. I've led the business and performance reviews as well as the forward planning and resource allocation round. And I visited most parts of our group to really understand our culture and customers and how we serve them.
This stage of Aviva's journey is all about delivery, execution and focused growth in our core markets. We're making great progress with this, and we're firmly on track to exceed our OFG target to beat our cash remittances target and deliver on cost reduction. We launched the new share buyback of £300 million, and we have upgraded our dividend guidance. Thank you. And with that, I'll hand back to Amanda.
Okay. It's great to have Charlotte here for her first full annual results at Aviva. So you've heard about our strong delivery last year. Now I want to talk to you about why we're optimistic for the future. So in 2020, I set out 3 clear commitments to focus the portfolio, to rebuild financial strength and to transform performance. We delivered a focused portfolio and financial strength with our divestments, which generated excellent value for shareholders.
What you are now seeing is the transformation of the performance of this business. We've come a long way in 2022, but there is still much more to go after. So let me tell you about our strategic progress and how we're investing in Aviva's future to secure that performance, that cash generation and ultimately, dividends.
So Aviva has a bright future. I can say this with confidence because we have strong focused businesses with market-leading positions and unrivaled customer franchise and the #1 brand in the market. And this is a fantastic position of strength to build on. We know it's tough out there with the cost of living crisis, high inflation and macroeconomic uncertainty. But even in these difficult times, we are driving growth from a rich seam of opportunities across our business.
So let me give you some examples. There is substantial pent-up demand for pension risk transfers, which we will capitalize on with our leading BPA offering. Increased pressure on the NHS means more people are looking to take out private medical cover and we have a strong proposition here. There is growing demand for pension savings and retirement solutions because of low unemployment and an aging U.K. population, and we can capitalize on this.
Even regulation can offer opportunities to grow. Solvency II reform will allow us to put more money into infrastructure across the U.K., including schools, hospitals, social housing and green energy. That's positive for our business, but it's also positive for customers and for communities. All of these opportunities gives us the confidence to continue to invest in our business.
During 2022, you'll remember that we committed £1 billion of investment back into Aviva. We're putting £500 million into accelerating organic growth and efficiency improvements over 3 years. We acquired Succession Wealth to close the capability gap in advice. And we have recently acquired the Barclays Home Insurance back book, allowing us to further enhance our market-leading position in home insurance in the U.K. And we have made bolt-on acquisitions to grow our high net worth general insurance business.
So we have the right strategy. But we're only really just starting to realize the full potential of this business. The investments that we are making will further strengthen our competitive advantage across customer, diversification and scale, and we will ensure a strong future for Aviva for many years to come.
Now let's take each of those 4 strategic priorities in turn, starting with customer. So we obviously want more customers to stay with us for longer so that we can look after more of their needs. And we're making really good progress here, as you heard from me earlier. So what's next for customers?
We are building an engaging mobile-led customer experience. We've already driven over £600 million of gross fund flows through our enhanced MyAviva digital pension journey. So we know that we can generate results here. On brand, we want to be #1 for trust and consideration across all of insurance, wealth and retirement markets. We'll help customers better understand our offering by continuing with our making a click campaign in the U.K., which showcases the breadth of financial puzzles that we can help our customers solve.
We will also partner with key employee benefit consultants to bring the best of Aviva to our customers. This will help us to grow the number of corporate customers who hold more than 1 product from Aviva, which is already about 30%. We're also investing in innovation. And as we know, this is critical for us to stay relevant over time, and I'm really pleased with the momentum that these investments are generating for us.
Just let me give you 2 examples of new services. Last March, I talked about the launch of Aviva Zero, which is a disruptive carbon-conscious proposition in motor. We have now sold over 100,000 policies in the first year and offset over 300 million miles of driving.
Today, I'm excited to talk about our new AI-led service, which is powered by fabric, which helps customers trace and combine their pensions. This is all going to be available for our workplace and direct customers. Now let's move on to growth. Each of our businesses plays a critical role in our portfolio. with insurance and wealth leading the way, while our retirement business continues to play a major role in supporting our cash generation. So what's next in growth?
In insurance, our ambition is to achieve above-market growth. We will continue expanding our commercial and GCS capability in Canada and in the U.K. We will build on our leading position in U.K. high net worth, and we will leverage Aviva's distribution network to supercharge health SME.
In wealth, we're aiming for at least 10% annual increase in net fund flows. We continue to enhance our master trust proposition, which will further our market leadership in workplace. We are now focused on building our direct wealth offering and an integrated wealth proposition will help us to recapture some of the £6 billion of annual fund outflows. And Doug will host an in-focus session, which we'll go into more detail on wealth in September.
And in retirement, we're taking advantage of the growing BPA market by enhancing our BPA proposition. And we're building a team of advisers because it can help support growth in equity release. So now let's turn to efficiency. Despite the extremely high inflation across our core markets, we have exceeded our original 2022 cost savings target, and we are firmly on track to deliver the £750 million of gross cost reduction by the end of 2024.
We've simplified customer journeys, we have reduced our property costs, we have streamlined our IT and our product set all of which generate efficiencies, and we have reduced costs at the group center 2. All of this points to a new culture of operational efficiency that we are embedding across the group. So what's next?
We're committed to delivering top quartile efficiency in each of the business lines and realizing more of the benefits of scale. In general insurance, we've already hit our targets in the U.K. And our business in Canada is also, as you can see, very efficient, but we are not stopping there. These are dynamic targets, which we will continually reassess. We will deliver more through product simplification and streamlining our commercial lines operations in Canada.
In the Life business, Doug has already done a great job of managing the cost base. Now we're focusing on really transforming the operations to make things simpler, reducing the number of platforms and consolidating our outsourcing partners.
On Aviva Investors, we've secured £50 million worth of cost savings in 2022 through the operating model transformation and middle and back-office outsourcing, which leaves the business leaner and more focused on the customer. And we will see the impact of all of these actions flow through to the efficiency ratios as the macroeconomic environment normalizes.
So finally, let's turn to sustainability. We continue to lead the pack on climate action, working towards our ambition to become a net zero company by 2040. We are now ranked fifth amongst global insurers by Sustainalytics. And I'm proud of how much we've done here, including donating £38 million to restore Britain's lost temperate rainforest. This is part of a broader £100 million program to help address climate change through support for biodiversity, which has been incredibly well received by customers.
So what's next for sustainability? This year, one of our biggest pushes is on social action. We're stepping up our ambition with our communities regeneration program. injecting £25 billion into the U.K. economy over the next 10 years, and we will continue to use 2% of our profits in supporting our communities every year.
Now to conclude today's presentation. You've heard we've had an excellent year. We've delivered strong and resilient financial performance quarter-by-quarter. And importantly, we have grown. Our plan is working, and the combination of insurance, wealth and retirement brings clear benefits as is evidenced by the numbers that we have reported here today.
We have leading positions in our core segments. We have high-performing businesses, and we have a formidable brand. We have the right strategy, which is unlocking the unique advantages of our model across the customer, diversification and scale. We have full confidence in our medium-term targets. We are generating an attractive and growing cash dividend, and we are aiming for regular and sustainable capital returns alongside this. We have delivered and we will continue to deliver. But we are far from believing that we have achieved what needs to be done.
We know that there is so much more to go after to satisfy our big ambitions. We are always restless for more. So we have the strategy, we have the leadership, we have engaged and committed people. And now we have these results to show that we can and we will deliver on Aviva promise.
So thank you for listening. I'm now going to hand -- ask Charlotte to join me on the stage, and we will open up for questions. [Operator Instructions] And just give us a minute to get ourselves on the seats and our glasses on. Thank you very much. Right. Okay. So where can I go first? Right. I'm going to go to Alan, please.
Alan Devlin from Goldman Sachs. Maybe 3 questions. First of all, could you talk about your appetite in the BPA market, one of your competitors yesterday. You're talking about a number of large deals in the market. If the pricing is right and the margins are right. And obviously, do you have the capital? Would you be -- would you consider to lose large kind of one-off type transactions?
And then the second similar question on just capital allocation overall, how do you think about when you do allocate capital between the different life and nonlife divisions? Organic versus inorganic growth versus buyback? Is it the same kind of threshold regardless of where you're allocating the capital?
And then thirdly, just to right at the end, you talked about the social action, which was quite interesting to be commended. Could you kind of talk more about what you mean by the social action and the kind of things you're doing? Because I think it is a very good thing to do.
Thank you very much. Okay. So on BPA, let's start there. Obviously, it's been a big topic, I guess. And you will have seen that we delivered a really strong margin performance in 2022. And clearly, we believe that there is a strong outlook as we look forward for 2023 and beyond. We are not constrained in terms of the size of deal that we choose to do. But we will -- and Doug and the team and Dave is here also, we'll maintain our discipline on pricing for those deals, and we will look to those deals as they come into the market. You'll remember when we did the deep dive I think it was back in -- it seems like a long time ago now, but it was it June last year that we did it. We talked about our ambition to write between £15 billion to £20 billion of BPA business over the 3 years. We still maintain that ambition. And clearly, the team is sort of geared up and ready to go and the pipeline looks strong -- they've had a strong start to 2023.
On capital allocation, so I think that we have -- we clearly think very, very carefully about this. And we thought about -- we've always said that there are 3 uses for capital. The first is that we will invest in the business. And what you've seen here today is, I believe, as delivering on that investment, whether in growth, you've seen that coming through in the growth initiatives, on the cost, you've seen the cost coming out. And also where we thought it was the right thing to do on bolt-on M&A. So that's the first thing.
The second thing is around that M&A opportunity, we will invest, but only where we really feel that it is something that will add substantively to the business and give us a scale or capability that we do not have today. And then we have always said that we will not hold on to capital. And I think that what you've really seen from today is that we are delivering on that. And the right -- we believe that the right way to do this, and we use our words, of course, very carefully, is regular and sustainable. And that is what you've seen today. You know what the cash generation of the business is, the cash remittances of £1.8 billion. The net cash remittances of £1.3 billion by the time we take off the group. The dividend cost is £870 million.
What we're doing is returning the operating the capital that we're generating from the operation of the business, not the excess capital, which has been driven through the market volatility. And we will maintain for the time being that discipline.
On social action, we're really excited about this because we believe that there is a real opportunity that we can play in the communities in which we operate. So clearly, there's the infrastructure investment that we can make in local communities outside of the usual sort of Southeast and we believe that Solvency II reforms will really help us to do that with the different treatments of capital. But also the work that we've done with the Citizens Advice bureau and the many advice trust means that we have been able to significantly improve the number of advisers that the Citizens Advice have been able to help over the last few months, and we will continue to do that.
We've also been able to help in the contribution towards their website, which means that a lot of people can actually be helped digitally. And we're also helping SMEs as well. So it's not just customers in the local community. Clearly, we're also working really hard with all the communities in which we're operating in. We've recently set up a foundry in Norwich, where we've got our own people who are retraining to do different roles. But we're also working with the local schools and the local colleges to retrain individuals from maybe contact center roles into the more digital and data skills of the future.
So I could go on for a very long time on that, Alan, but perhaps there are a few more questions. Hopefully, that's enough to give you a bit of a flavor for what's going on. We won't let you get away with it next time, Charlotte. There's definitely going to be a question for you. Okay. Who's next? Ashik?
Ashik Musaddi from Morgan Stanley. Just a couple of questions. Sorry to go back on capital allocation. I guess, I mean you have made it very clear about your priorities with respect to bolt-on deals, investment in the business, et cetera. But if I look at your today's update, I mean, you have upgraded the OFG guidance. You are now highlighting that remittances will be higher. So what needs to happen in the future that will give us more confidence that, okay, the dividend can grow a bit faster or the buyback could be a bit faster because there still remains a bit of a gap between what you're generating and what you're paying out. I agree you have announced a buyback, so it might be a bit too early to ask this question, but still -- it would be great to know what needs to happen for that to be better.
Secondly is, again, on your BPA, $15 billion to $20 billion, I mean, it's a very clear guidance, definitely, but in past, you have always commented that diversification is something that matters quite a lot at Aviva. But let's say, if a big deal comes out, which is £10 billion, would you still consider it and ignore diversification in any given year, et cetera. Or would you still consider focusing on the diversification overall? I mean the reason I'm asking is there is a big focus on big acceleration in BPA volumes for 2023-2024. Don't know whether it's right or wrong to go with that, but just want to get some color from you.
Okay. Thanks. So maybe I can -- sorry, Charlotte, just pick up both of those. There will definitely be a question for you. There will. So on the capital allocation and what needs to happen next. Look, I think that what we've shown today, Ashik, is a very strong delivery in terms of the dividend. We gave the number last year in terms of what we would deliver and we've delivered on that.
We've also upgraded the dividend guidance to say that it's low to mid-single digit. I really struggle with this on cash cost and a £300 million buyback. I think that, that is a considerable, if you like, what was the word, recipe, that's a good return and I think for our shareholders, and I think it shows us being disciplined and thoughtful about the way that we are allocating our capital. And we will continue to be disciplined and thoughtful, particularly when we think about the environment in which we are operating. So it will obviously be constantly something that we will be thinking of.
And on BPA and the big deal, which is, I think, a similar question to that, which was asked earlier. So we're not limited to the size of scheme that we can transact. And we will clearly look at every scheme on its own merit. And we are expecting some of those larger schemes to come into the market, bearing in mind what happened last year. And we look forward to sort of having a look at them. But I think we are in the lucky position of being able to think about where and how we allocate our capital. We are not a one-trick pony. We are not just a BPA player. We also have very strong wealth business, a very strong insurance business, and we will think very carefully about how we allocate our capital across those businesses because we strongly believe that a diversified business has been the key to these results and will be -- continue to be the results going forward.
So if that means that we cannot deliver the ambitions that we've set ourselves in some of the other areas of the business, we will clearly think very carefully about that. But we are not prohibited in any way from looking at those deals. But the pricing, as we've shown, discipline is really important. Thank you. Sorry, I don't know your name.
Abid Hussain from Panmure. Just 2 questions, if I can, please. Just coming back to capital bolt-on M&A. Are there any capabilities that you feel you still need to buy in? I know you've conducted a number of transactions, Succession Wealth, most recently. Just wondering if there's anything else that you feel you need to buy in, in terms of capabilities that meet the criteria, add scale, et cetera, et cetera.
The second question is on asset sourcing and bulk annuities. I was just wondering, is there anything you think you need to be doing differently to improve your pricing or your margins or both? And just a sort of follow-up, do you think the Solvency II reforms are going to move the dial enough for you in this context.
Okay. So I'll pick up the first question. Charlotte will pick up the second question. On capabilities, I think we are pretty well covered in terms of our capabilities. We filled a gap clearly last year with the acquisition of Succession Wealth, which gave us the advice capability. If you remember, we were really keen to address some of the flows that were leaving the business, and a lot of them were leaving and taking advice before they landed on another platform. So with the acquisition of Succession Wealth, that filled quite a big capability gap.
In General Insurance in the U.K., we had a gap in high net worth. And Adam was able to fill that with the deals that he did there. So it's always an area we're always looking on our radar, as you would expect in terms of what else there might be, but we do actually feel we have good coverage in those areas that we want to be successful in. On the asset, Charlotte?
So on the asset sourcing and support for the BPAs, this '22 was a year where we sourced great assets. So actually, the mix of liquids against the BPAs last year was closer to 65%, which is higher than the normal and contributed to the higher margin. That is one of the advantages, the big advantages of Aviva investors being in-house. They have an excellent real asset and illiquid team that are sourcing. We get those into the warehouse. So we're kind of ahead of when the BPA deals come to market. So all of that has improved the margin last year. We also did some -- we moved up more from gilts into corporate bonds last year. That's also helped the margin. We did that quite opportunistically looking at market spreads when we executed those.
So we think all of that and the pipeline for that continuing in '23 is really strong. We also have Aviva Capital Partners, which is another way that we're investing in early-stage infrastructure products. I mean it's early days for that, but we're hoping to have some things to announce there very soon. So I think there's a lot of sources of the high-yielding illiquids that can support strong margin for the bulk.
On Solvency II reform, we believe that, that is going to be -- or can be a very positive driver for change, particularly in the infrastructure investment. And so obviously, we're very, very supportive of that and hope that it all passes through quickly. That's what we're keen to do.
Actually, one final point is that 65% illiquid is probably at the higher end, we would normally look to be a bit lower than that. So actually, we hit high margins last year. So you shouldn't read that directly across into '23. But the sourcing of illiquidity has been strong.
Andrew?
It's Andrew Crean, Autonomous. Three questions, if I can. Firstly, you've got scale businesses in most areas, but in Asset Management, you're certainly below scale. Have you thought of selling that and outsourcing asset management, your thoughts on that?
Secondly, in both Canada and U.K. personal lines, what should we expect for 2023? Have you got enough rate coming through the earned premium to counter the rise in burn cost? Or should we expect combined to go up there?
And finally, I mean, the 197% Solvency ratio is, I think, £1.25 billion above your £180 million target range. How should we look at the £180 million, is it the sort of the level you want to be on average across the cycle? Or is it the level that you are happy to touch down on in dire circumstances?
Okay. So I'll pick up 1 and 3, and Charlotte will -- can pick up to. On Aviva Investors. So I think clearly, Aviva Investors is an important part of the group. And yet, it's not where yet needs to be and I think Mark would recognize that. I think we should really look at what the sort of key things that Aviva Investors brings to.
Well, firstly, Charlotte has just talked about. From the annuity business perspective, what Aviva Investors does is bring really high-quality assets to allow Doug and the team to be able to price the deals. And I think in many respects, Mark isn't getting the credit for some of that margin, which you're seeing in the VNB in BPA. But it is the team really working very, very closely together to make sure that they're sourcing those sort of high-quality illiquids.
On the real asset franchise, obviously, the future potential for us to play into the new Solvency II reforms is also there. So we're pretty excited about that. In wealth, the multi-asset funds for the customers and for workplace pensions are particularly an area that the teams are working together on. And then I think the credibility that Aviva Investors gives to the group on ESG, you've seen some of the achievements. I think they are really punching well above their weight in terms of that, and they're very credible from that perspective. Distribution is being improved and we've seen a strong end to last year. But I think 2020 here for Aviva Investors was a year of taking out cost. And I think -- I hope you'll agree, the £50 million of cost out is a significant cost out and it puts Mark and the team in a really strong position to move forward. So it's a very strong, important part of the group. On Canada, Charlotte?
It was U.K. and Canada, right?
Sorry, U.K. and Canada.
Yes. So I think on personal lines, we've said it a few times. We think we really got ahead on the inflation. So the 2 big things that are factoring into the pricing decisions are obviously the continued inflation and the effect of the reinsurance brand that we've just owned. So if I look at what we achieved last year with an inflation across personal lines of between 9% and 11%, we really rated ahead across motor new business, which was about 20 points and home, which is about 13%, whereas the market was more like 10%. So getting ahead of that, that's sort of already beginning to earn through. I think -- and then we saw reasonable retention from those levels.
In Canada, the CPI increased about 7% year-on-year, and we saw repair inflation of about 9.5%. We've managed to rate about 12% in personal auto in Ontario and 11% nationally. When it comes to then tackling the reinsurance, that is something we're pushing through now. In Canada, the immediate concern is in the property portfolio and making sure that all the terms and conditions are right and getting that through as quickly as possible.
So far, volumes for January and February are holding up with this -- pushing this rate through, but we need to be sensitive and see how others are playing clearly to keep our market position. But so far, I think we -- because we were so early on the inflation and inflation is starting to drop off, making sure now that we tackle the effect of the reinsurance is there. But there will be a lag on an earn-through basis a little bit because of the renewal round.
On the £180 million question, I think hopefully, we were clear that the capital management framework is unchanged, Andrew. And we have to reflect the higher interest rate environment. So I think expect to target the top end of our capital range, which is the £180 million whilst that environment is in place. But once there continues to be a significant amount of market volatility, you'd expect us to be cautious. And the way we think about capital is the stuff that's actually generated from the performance of the business and then the stuff which is generated through the market conditions, and we will treat them slightly differently for the time being.
And just staying on that chart, 17 points is coming from the sort of short-term market movements. So if you take in that £196 million, the £17 million that came from those during the year.
Okay. And thank you. Gord, come to you next?
Gordon Aitken from RBC. Three questions, please. First, on costs. Aviva is obviously the combination of 3 very big acquisitions a long time ago. But 15 years ago, you were running 250 systems roughly. Just wondering how many you're running now and just to give us an idea of the opportunity.
And second point on the pension schemes. You touched on those, but can you just tell us who owns the surplus in the pension schemes if there is one? Is it the company or is it the trustees?
And finally, on longevity, so you were slightly different to your peers when Solvency II came in, some of them chose to reinsure some of their pre-'16 back book, you didn't. So you've got a fair bit of longevity risk in there. You guide -- you've guided just this year to £200 million being management actions, and that's been the case for probably 5, 6, 7 years, every -- pretty much every single year, you're at least double or often triple that number. So I'm just wondering with the CMI model, we've got pretty good transparency on that. We know that COVID deaths are going to be weighted in on a sort of gradual scale up to CMI 25. So I'm just wondering, is the £200 million a conservative number? Or is there some other area where you think you might have to add to reserves, which is offsetting that?
Okay. Thank you. I'll pick up the first 1 and Charlotte can pick up the 2 and 3. So on systems, we do have many systems. I'm not going to tell you exactly how many there are. But what we have done on group costs is we've reduced our IT applications by 22%, and the plan is to go much further on that. We're also in the process, as you know, of digitizing our customer journey. So we've -- 57% of those have been digitized to date, and the plan is to get to 75% by 2024. But we're prioritizing those key customer journeys first.
And it's not just about systems rationalization. It's also about the number of products that we have on which make it incredibly complicated for our teams to handle. And we -- in personal lines and Adam's team, we've taken 70% of the personal lines products away. So it's about systems. It's about products. And then it's also about trying to drive as much of the journeys that is more straightforward away from telephone to digital. And we've been very, very successful in doing that. We've implemented a number of bots into -- the chatbot into both GI and Life teams, and we've been hearing this week about how they really successfully taking pressure off the contact center so that the contact centers can really speak to customers about what really matters to them.
So lots of activity in that space. But further to go, you heard me talk about Doug's next -- the next stage of Doug's development is really looking at the number of platforms in the life company, and he will reduce those number of platforms even further. So more to follow, but we're really, really focused on that to simplify the IT estate. Charlotte?
Yes. So the pension schemes are well funded. And to the extent there is surplus, it's with the trustees. So I think that's the answer to that question. In terms of longevity and management actions, I mean, first of all, let's not forget it's a great underlying result regardless of the levels management actions. So underlying OFG up 15%, underlying profit up 24%, just to remind you. I mean I think when we look at the longevity outlook, the tables that we view, CMI 21, as you know, and said placed no weighting on excess debt in 2021. And there's evidence that population mortality in '22 was also higher than the pre-COVID levels.
And so when we -- what we will expect to do is adjust CMI 22 when it comes through in June. We'll consider our own experience as well as population data and how the models that CMI have used are operating and decide how to deal with things. We usually do that in the second half of the year. I don't want to make any prediction because we need to see all of that. It's likely though that there'll be some reduction in longevity, which would have some positive impacts. But from our perspective, we run the business for the underlying. And so therefore, keeping that sort of 200 sort of suggested view of normalized management actions still is how we look at it.
Okay. Thank you. William?
I'm William Hawkins from KBW. Thank you for the detail you've already given us on non-life personal lines. I wonder if you could just go up a higher level and talk about your optimism of whether being able to beat the 94% combined ratio over time. And also interestingly, the components on that, please, because again, what was is great, you hit your guidance for this year. The attritional ratio -- loss ratio did take a big step up. Interestingly, your commission ratio took a big step down, particularly in U.K. personal lines, and I'm a bit confused about that. So how are we feeling about 94% over time, please?
And then secondly, you've been extremely clear on your capital management framework. No, I'm just kind of wondering, if you want your buyback to be sustainable, why have you not just rebased the dividend?
Okay. Thanks for that. Charlotte, do you want to pick up the first one?
Yes. So look, I think we never time boxed the 94%. It is something that we're working towards. I think what we've seen this year or last year is really the benefit of the diversification between Canada and the U.K., actually, sterling result overall on 94.6 when you think of the inflation and some of the weather particularly here. I mean I think the point to make is that probably in '23, we will see a similar pattern where we would expect Canada to be a bit higher than -- a bit better than the 94% and the U.K. to still be a bit worse. But overall, we're sort of tracking towards that 94%. So it is a real ambition. But we've also got to factor in all of the different things we've covered but ahead of inflation, good pricing and really disciplined risk selection. I think the other thing on the cost, we talked a little bit about being already at the ambition on cost income ratio terms for the GI businesses. But the bar always moves. And so actually continuing to look at efficiency makes sense and all of that work that we do on claims as well. So very focused, disciplined taking advantage of the different channels that we have still keeps 94% in site.
And on the dividend, I mean, hopefully, you'll recognize the upgrade in today's dividend policy. That's because of the confidence that we've got in the outlook for the business. And we wanted to obviously address the reducing share count question, which we have we've had at various results sessions. So we've given the guidance already for 2023, which is around £950 million. And then obviously, we're anticipating low to mid-single-digit growth in the cash cost thereafter.
What we want to do is to make sure that the dividend policy is to offer attractive but sustainable dividend, which is resilient through the cycle. We think this is a healthy and sustainable payout of the cash generation from the business. And what we've said, and we've been very honest about this, is that we will return more surplus capital, if we can. But I think, hopefully, you'd understand, we also want to retain some flexibility here. So we -- and we do not want to commit to an unsustainable level of regular dividend. So that's why we've made the choice that we have on the capital return and the dividend combination. Thank you. Nasib?
Nasib Ahmed from UBS. So first question on the internal pension schemes again. How close are they to buy out funding? And also given the mark-to-market rise in interest rates, was the pension scheme contribution in Q1 a little bit lower than what you were expecting previously?
Second question on General Insurance. On the back book reserving, are you expecting any inflation loads to come through in 2023? And then finally, on the overall cost save target of EUR 750 million. What is that on a net basis? I think when you said it, it was EUR 400 million, how much more on a net basis have you got to go assuming inflation is 10% or whatever you've got in your assumptions?
Yes. Okay. Charlotte, I feel like 3 questions for you. Got my feet up now.
Your turn. Okay. First one on the pension position. Your question being whether we're close to buy it. We've done a series of transactions with the pension schemes over a period of time, and we will continue to do that. There has been a -- obviously, off the back of the September, rates have risen, which has helped from a funding perspective. But like many other schemes, we're looking through the liquidity. So they're looking through whether there's some sort of needs to just make sure that liquidity is in good shape before they press on. So we would expect that to continue, maybe over a slightly longer period than we originally anticipated, but it is moving forward and through to that. The second question was on -- sorry, sorry. Can you just repeat the second question?
Inflation and GI.
Inflation and GI.
The general insurance and the back book.
But what was the specifics?
On the back book reserving, do you expect to take any inflation loads on the reserving in 2023? Or are you comfortable with the results where they are, given where inflation is on the back book?
So the inflation -- the reserving process is very regular. And so in Q4, for instance, we did another revaluation and we did strengthen a little bit for inflation on some of the historic claims that are still there. But because we were quite well through -- because we got ahead in our pricing, actually, the amount that is sort of subject to that is reducing over time as those claims come to conclusion. But it's something that we've done regularly, and we did it again in Q4.
And then on the cost, the net cost target, it was EUR 400 million that we said net of the £750 million, and I think we're at £327 million now. Okay. Right. Riya, you've had your hand up 1 million times, and I'm sorry, I missed you. I should have come to you before.
I'm Riya Shah, Deutsche Bank. Three questions from me. So I think your interest rate sensitivities in Solvency II have changed from full year '21 to full year '22. What was that down to? Was it a change in hedging?
And then second, 1 of the slides mentioned a dividend deferral or cash remittance deferral in the U.K. Life business. How much was that? And when could that be expected to come through?
And then third, in U.K. Retail, you mentioned that volumes have held up in January and February so far this year. Does that mean that they've not reduced? Or have they grown? And would you push for volume growth the rest of this year whilst also maintaining your margins?
Okay. If you want to pick up the first 2, Charlotte, I'll pick up the third one.
Yes. So look, we -- the interest -- we manage the interest rate risk really around our Solvency II ratio. So we try and keep the Solvency II ratio within certain tolerances. It's not fully hedged. So we do benefit from some rises in rates and we do see some decline in the ratio when they fall. As you say, the disclosure today shows that we are less sensitive than we were before. We've also shown some additional sensitivities to give you 100 basis points. Ultimately, in the higher rate environment we're less sensitive than we were in the lower rate environment. So it's more about where we are in the curve than the specifics of the hedging. So that's really the answer there.
And you can see for a lot of the market variables, it's sort of reduced by about 1/3 to half that's that point. And again, the sort of sensitivities have certain simplifications in them. So it still depends on which part of the curve moves and the sort of long-dated nature of some of the life business also affects that. But in simple terms, it's reduced because we're at a higher rate environment.
The second question was on the cash remittances. Yes, I think you can see in the release that we reduced the U.K. life remittances up and accelerated the GI. I mean, effectively, that was a decision we made looking across the group amid the sort of volatility back in following the mini budget. So as a precautionary measure of managing liquidity across the group, we looked at the timing of the remittances, and we chose to delay U.K. Life one and accelerate the one coming up from GI. I think I would think of that as a timing flexibility that we were able to exercise precautionary.
So you should expect that, that will catch up and normalize sort of across '23, as we would expect the GI remittances to drop back and the U.K. Life want to increase. So just think of it as pure timing. As we looked in the sort of back end of last year, it was flexibility that we had and we exercised it. So again, another benefit of the diversification of the group.
On U.K. retail and our approach to volumes. I mean, I think the first thing to say on U.K. retail is that -- as we did last year, we will make sure that we are pricing appropriately for inflation. And we were able, therefore, to balance volume rather than growth. And I think the -- slight profitability rather than growth. And we will continue to make sure that we manage the still putting through rating increases in the first few months of this year, and we will continue to monitor it. I mean if you went to the personal lines deep dive, you'll know that we are pricing on a hour-by-hour, day-by-day basis in response to the data that we are seeing through. But we do not have an absolute desire to just grow for growth's sake. There is no need for us to do that. We've got plenty of other business lines that we are growing well in. Commercial lines is growing very, very strongly. And so Adam and the team are very, very carefully watching that, particularly the personal lines market to make sure that we price appropriately for inflation.
What you've seen is our announcement this morning on the Barclays home book. And obviously, that gives us the opportunity to own those customers. They've been customers of ours for 17 years, but we now own those customers. So we're achieving a sort of growth and profitability in perhaps a slightly different way. But we're definitely not going to be driven by top line for retail, it's all about profitability. And we're heading towards that 94% combined operating ratio across the piece. Okay. Thank you. Is it Dominic? Yes. Sorry, Dom.
Dominic O'Mahony, BNP Paribas Exane. So 2 sort of relatively detailed questions. Charlotte, I think you mentioned there was a positive experience variance in U.K. retirement. Could you just give us a sense of quantum. And I assume this would be in the underlying model in the management actions, but maybe you could confirm that.
Second question, you published the run-off of the surplus generation, the service emergence over time, and the total has gone up, which is great and exhibits the growth. There's a bit of a tilt. So it seems to be more back-end loaded and the fund tenders have declined a little bit. I was wondering if you can maybe explain that tilt.
The third question is on the £1.5 billion OFG target, which -- and thank you very much for the clarity on the ex management action target, which I think is extremely helpful. Could you just help us get from the sort of the 1.0 today to the 1.3 ex management action. I think I've seen 2 more years of double-digit growth, which would be brilliant. I just want to understand what we have to believe to get there. What do you see as any risk to getting there?
Okay. Do you want to pick up the first 2, Charlotte? And I pick up the third one.
Yes, I might -- so on the one-offs -- sorry, just -- sorry, just repeat it slowly. You talked very quickly there.
So the first question was, you mentioned positive experience variance in retirement. I'm just wondering what the size of that was and whether it's underlying or management action. The second is about the surface emergence overtime, which has grown, which is great. The tilt has become a bit more back-end loaded. I just want to understand the drivers of that. And another third is how we bridge to the 1.3% underlying OFG.
Okay. So the favorable variance was around £100 million. So when we take the BPAs on, we look at the -- all the data comes through and we build our best estimate of the liabilities that are coming through and we effectively were able, after a period of time to improve that. So that's that one. I mean I think just to lift you back a little bit, we -- these are lumpy items that come through from time to time. It's a function of the business and the shape of it that you get these. So again, there are always things like this. So hopefully, that's clear and transparent. And you can see the strength of the underlying regardless of these items. On the...
It was the back-end loaded surplus emergence. We may need to come back to you on that one I think. Yes, we'll come back to that if that's okay. On the underlying -- the growth of OFG, so obviously, we were able to deliver a 15% underlying growth in OFG this year, which hopefully you'll agree is a good result. And we can see now the line of sight through the planning, the work that we have done whether it's the -- in the wealth business, in the general insurance business, in Aviva Investors. So it's not 1 specific area, which I think is positive. You're going to see general improvement in OFG across -- it continued across the BPA business, the wealth business, the health and protection business and the general insurance business, so right across the piece.
I'm not going to break it down for you, though, and you wouldn't expect me to do that anyway. We don't publish our plans.
And I think the answer to your question is on Page 19, but we will definitely come back to you.
Okay. The lady there, sorry.
Here is Bingdi Fan from JPMorgan. So 3 questions from me, please. The first question is you're bullish about exceeding the £5.4 billion of cash remittances over 2022 and 2024. So what are the drivers behind that? And is there a target level of remittancy ratio to your operational capital generation or earnings that you can point to?
The second question is would you be willing to work with asset reinsurance partners to take like larger bulk annuity volumes for very large PRT deals?
And the third question is how confident you are in getting to the below 75% cost/income ratio in your asset manager business and also what the steps that you have to get there?
Okay. So thank you. Yes, Charlotte will do the first, and I'll do the second 2.
Yes. So look, cash remittance is up 11% this year. They're based very much on the surpluses that are generated by the businesses. And we're very careful about making sure that, that's real surplus that's coming through. We set that target of £5.4 billion. And I think we have if you look at that amount and then you look at the progression to £5.4 billion and you look at the strength of the own funds generation, we can clearly see just from the underlying performance that we can repeat that. And therefore, just the math tells you that what £5.4 billion is very much easily in reach. So we think it's totally repeatable. Again, talking back to the sort of mix between the businesses and how we treated it in '22 from a timing perspective, again, should show some of the flexibility that we've got and, therefore, the confidence that we can have in getting to the £5.4 billion.
On the asset reinsurance, we already do some use Somerset reinsurance in the deals that we do. So we're very familiar with using that mechanism. And clearly, we will look at all options for deals as we do them, but you wouldn't expect us to announce that here in terms of the structure of any of those deals.
In terms of the confidence of getting to the 75% cost-to-income ratio in Aviva Investors, I mean, clearly, the market and the way the market has been over the last 12 months makes all of the target -- that target, particularly difficult. But I think what Mark has done, we've taken the cost takeout is actually made -- put the business in the best possible position to be able to get to that 75% over time. And as markets improve. And I think we are confident that is still our target, and we believe that is the right target to aim for. Even some of our targets are incredibly ambitious, but that doesn't mean to say that we drop them. We just keep going. I think these will perhaps be the last 2 questions then.
It's Andy Sinclair from Bank of America. Three for me, please. Firstly, I just wondered how is your IFRS 17 transition guidance change after a strong year for retirement and the experience and assumption elements in there.
Secondly, I was just interested to know a bit more about the Barclays Home acquisition today, home been a pretty tough part of the market over the last year after the FCA changes. Just interested in what's in the book and do you have the opportunity to target new customers as well?
And thirdly, just on real estate and the commercial mortgage book. So the loan-to-value reduced a bit, which is great to see. But what are you seeing on the ground, any marks to be aware of in there and what your thoughts for 2023?
Okay. Do you want to take 1 and 3? And I'll take 2.
Yes. So IFRS 17, we published in the -- if you've not got to it yet, the ISA note in the annual report does show that we have narrowed the range on the NAV impact. So it's 16.4% to 17%. I think it was previously 16% to 17%. So we've narrowed that. Then on top of that, this is a CSM of about £4 billion to £5 billion. So we're still sort of in that £21 million, £22 billion range on the sort of adjusted shareholder. Other than that, no other news, we were just completely -- you'll see good disclosure in the ISA on where we've got to.
On the Barclays Home book, so, it's about 350,000 customers. We obviously know it well as we've been the sole underwriter on this book for the last 15 years. But Obviously, what you would expect here is the dynamic now slightly changes as they become direct Aviva customers, and therefore, the opportunity for us to speak to those customers about other things that we didn't have before, will be there. And I know Adam and the team are very excited about that. And this is a theme of opportunity, which I think has been driven by the FDA's pricing practices review last year. So that we're really, really pleased about that deal. Charlotte?
Yes. So on commercial property, which is 8% of the portfolio, it's high quality in nature. It's largely fixed duration contracts with sort of limited refinancing risk. Loan-to-value ratio is around 49%. No balances and arrears. So I think we've had a long history of being in commercial real estate, the sort of areas, it's quite a lot of really high-quality office property, very little retail, very little in sort of peripheral areas or rural areas. So it's a strong, solid portfolio work on it all the time. And so far, and looking out where the experience is strong and protected by that level of loan-to-value ratio.
Okay. I'm afraid we're going to have to stop it then. I'm very sorry about that. And we know that they are other companies reporting this morning, and we did make a bit of a commitment that we would finish to allow you to get there. Thank you very much. We are around. If there are any questions, we are happy to take them. We just need to bring this to a close. So thank you very much, everybody. Thanks.