Capital, leverage and profit progress Key in the Q1 trading statement was the pro forma solvency II ratio of 253%, better than our FY21E estimate of 244%, pro forma leverage of 26% versus a target of below 30%, and a strong Q1 combined ratio of 90.6%. UK GI GWP growth of 6% was strong against flat in 2020, driven by 13% growth in commercial lines. Flat personal lines GWP was stronger than at DLG, for example, and the company flagged an increased share of PCW new business, from a very low base, as well as Home price increases. Less positive were flat UK & Ireland Life sales, with value of new business down 23%. Savings & Retirement growth was strong at 23%, with annuity volumes halving and margins going to zero, on lower market activity and asset mix below target. No update on size and timing of capital return The pro forma SII ratio implies £6.6bn headroom to top of a 160-180% target solvency range. Management would not be drawn on size, format or timing of capital return, beyond reiterating that it would be substantial. Management stressed that the new outlook for FY COR better than 95% was so that analysts would not assume 90.6% as a guide. Q1 had unquantified claims frequency benefits due to lockdowns, which are expected to unwind through the year, with regulatory actions upcoming in Ontario. This outcome would be better than the 96.6% COR in our current forecast. Management thinks its low BPA volumes in Q1 reflected the market, while in Q2 to date premiums have increased to £0.9bn from £0.6bn in Q1, with last year’s £6bn volume cited as a realistic goal. Margins are expected to improve as sourcing of illiquid assets comes through. Big discount to own funds for growing business Capital strength ahead of expectations and positive trends in Non-life make for a solid update, albeit the market may have hoped for more news on capital return, even at this early stage. We place our forecasts under review, principally for the Non-life COR outlook. Multiples are undemanding, with Aviva trading on a similar discount to own funds as closed life peers, despite a growing Non-life business, for a dividend yield forecast to step up from 2023E after a £4bn share buyback in 2022.