European investment bank Berenberg has come out bullish on Aviva, arguing that the UK insurer's Wealth division is poised to become a more significant growth engine. After attending Aviva's investor session on October 16, Berenberg reiterated its buy rating and set a price target of £8.20 per share. The bank's core thesis: Aviva has the scale and distribution to capture a larger slice of the UK's retirement and savings market, and that shift could gradually reshape how investors value the company.
The opportunity: a £2.7 trillion prize
Berenberg estimates that more than £2.7 trillion of UK wealth assets are "up for the taking," and it believes the market could nearly triple over the next decade. That's a massive pool of money flowing into pensions, ISAs, and other investment vehicles as Britons save for retirement. The bank argues that Aviva, with its established insurance customer base and growing platform business, is well-positioned to grab a meaningful share.
Currently, Aviva's Wealth unit contributes about 7.7% of the group's core profit. Berenberg thinks that share can rise by roughly 1 percentage point per year in the medium term. That may sound modest, but for a company of Aviva's size, a steady increase in the profit mix toward wealth management could be a significant driver of valuation.
Why wealth is different from insurance
The key reason analysts pay attention to the mix of profits is that wealth management is a different kind of business than traditional insurance. Insurance underwriting is cyclical and can be hit by unexpected claims or natural disasters. Wealth platforms, by contrast, typically earn ongoing fees based on assets under management—the money clients keep on the platform. These fees tend to be more predictable and "capital-light," meaning the company doesn't need to hold large reserves against them.
Once the technology and advice network are in place, revenues from platforms can grow faster than costs. That's why Berenberg and other analysts often view wealth businesses as higher-quality earnings. If Aviva's profit mix shifts toward wealth, its overall earnings could become less tied to the ups and downs of insurance underwriting and more like the steadier profile of UK-listed asset gatherers and platform companies.
That kind of shift can influence how investors judge earnings quality and, in turn, what valuation multiple the market is willing to pay for the same level of core profit. A company with more recurring, fee-based income often commands a higher price-to-earnings ratio than one reliant on cyclical underwriting.
Advisory platforms lead the way
Berenberg highlights advisory platforms as a particular strength for Aviva. These platforms already represent nearly 30% of Aviva's wealth assets, as the company partners with large independent financial advisers (IFAs). IFAs use these platforms to manage their clients' investments, and Aviva earns fees for providing the infrastructure.
The bank notes that Aviva's direct-to-consumer channel is weaker by comparison. But Aviva still wants to compete there because that part of the market is growing quickly. Direct-to-consumer platforms, where individuals manage their own investments online, have become increasingly popular, especially among younger savers. Aviva's push into this area could help it capture new customers who might later buy other products.
Cross-selling to existing customers
Another lever Berenberg sees is cross-selling to Aviva's existing insurance customers. The company has millions of policyholders across life, general, and health insurance. Many of these customers already trust Aviva with their protection needs, and the company can offer them retirement savings and investment products as well. This is a classic strategy for insurers: use the existing customer base to grow higher-margin wealth businesses without having to acquire new customers at high cost.
If Aviva can successfully cross-sell, it could accelerate the growth of its Wealth arm and push the profit share higher than the 1 percentage point annual increase Berenberg estimates.
What it means for investors
For shareholders, the key takeaway is that Aviva's Wealth business could become a more important part of the story. If the profit share keeps rising by about 1 percentage point a year, that could be a valuation lever. Investors may start to view Aviva less as a traditional insurer and more as a hybrid—part insurer, part asset gatherer.
That could lead to a re-rating, meaning the market might be willing to pay a higher multiple for Aviva's earnings. It also suggests that Aviva's profits could become more resilient over time, as fee-based income is less volatile than underwriting results.
Of course, there are risks. The wealth management market is competitive, with players like Man Group and others vying for assets. Regulatory changes could also affect how platforms operate. But Berenberg's analysis suggests that Aviva's scale and distribution give it a competitive edge.
For everyday investors, this is a reminder that a company's profit mix matters. A business that shifts toward recurring, fee-based income can be more valuable than one that relies on one-off transactions or cyclical underwriting. As Aviva continues to build out its Wealth arm, it's worth watching whether the profit share indeed climbs as Berenberg predicts.
Berenberg's price target of £8.20 implies upside from current levels, but as always, investors should do their own research and consider their own financial goals before making any decisions.
