aviva uk: analyst day part 1
DESCRIPTION
Aviva UK analyst day business overviewTRANSCRIPT
page 1
Aviva EuropeMaking a Quantum Leap
Aviva Europe – Making a Quantum Leap22 October 2009 Page 2
2
This presentation is for information purposes only. It should be read in conjunction with the documents filed by Aviva plc (the “Company” or “Aviva”) with the United States Securities and Exchange Commission (“SEC”).
This presentation contains certain “forward-looking statements” with respect to certain of Aviva’s plans and current goals and expectations relating to future financial condition, performance, results, strategic initiatives and objectives. Statements containing the words “believes”, “intends”, “expects”, “plans”, “seeks”, “aims”, “may”, “could”, “outlook”, “estimates” and “anticipates”, and words of similar meaning, are forward-looking. By their nature, all forward-looking statements involve risk and uncertainty. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements. Aviva believes these factors include, but are not limited to: the impact of difficult conditions in the global capital markets and the economy generally; the impact of new government initiatives related to the financial crisis; defaults in our bond, mortgage and structured credit portfolios; the impact of volatility in the equity, capital and credit markets on our profitability and ability to access capital and credit; changes in general economic conditions, including foreign currency exchange rates, interest rates and other factors that could affect our profitability; risks associated with arrangements with third parties, including joint ventures; inability of reinsurers to meet obligations or inavailability of reinsurance coverage; a decline in our ratings with Standard & Poor’s, Moody’s, Fitch and A.M. Best; increased competition in the U.K. and in other countries where we have significant operations; changes in assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, lapse rates and policy renewal rates), longevity and endowments; a cyclical downturn of the insurance industry; changes in local political, regulatory and economic conditions, business risks and challenges which may impact demand for our products, our investment portfolio and credit quality of counterparties; the impact of actual experience differing from estimates on amortisation of deferred acquisition costs and acquired value of in-force business; the impact of recognising an impairment of our goodwill or intangibles with indefinite lives; changes in valuation methodologies, estimates and assumptions used in the valuation of investment securities; the effect of various legal proceedings and regulatory investigations; the impact of operational risks; the loss of key personnel; the impact of catastrophic events on our results; changes in government regulations or tax laws in jurisdictions where we conduct business; funding risks associated with our pension schemes; the effect of undisclosed liabilities, integration issues and other risks associated with our acquisitions; and the timing impact and other uncertainties relating to acquisitions and disposals and relating to other future acquisitions, combinations or disposals within relevant industries.
For a more detailed description of these risks, uncertainties and other factors, please see Item 3, “Risk Factors”, and Item 5, “Operating and Financial Review and Prospects” in Aviva’s registration statement on Form 20-F as filed with the SEC on 7 October 2009. Aviva undertakes no obligation to update the forward-looking statements in this presentation or any other forward-looking statements we may make. Forward-looking statements in this presentation are current only as of the date on which such statements are made.
Disclaimer
Aviva Europe – Making a Quantum Leap22 October 2009 Page 3
3
Andrew Moss
Aviva Group CEO
Aviva Europe – Making a Quantum Leap22 October 2009 Page 4
Purpose
Prosperity &peace of mind
Strategic priorities
• Manage composite portfolio
• Build global Asset Management
• Allocate capital rigorously
• Multi-channel customer reach
• Boost productivity
Targets
Vision
One Aviva,twice the value
• 98% meet or beat COR• £500m cost savings by 2010• Double IFRS EPS by 2012 at
the latest• 1.5 – 2 x dividend cover on
IFRS post tax operating earnings
UKMarket leadership● Drive up profitability● Generate capital● Insurance excellence● Operational excellence
N. AmericaProfitable growth● Optimise business mix,
growth & margin● Diversify distribution and
products● Generate net capital
returns
EuropeScale, growth, capital● Seize unique growth
opportunities● ‘One Europe’ operating
model ● Generate capital
Asia PacificScale, growth● Prioritised portfolio● Regional operating
model● Investment required
Asset ManagementAsset ManagementAviva Investors
• Globally integrated business • Transform the investment model • Increase third party business
Purpose
Prosperity &peace of mind
Strategic priorities
• Manage composite portfolio
• Build global Asset Management
• Allocate capital rigorously
• Multi-channel customer reach
• Boost productivity
Targets
Vision
One Aviva,twice the value
• 98% meet or beat COR• £500m cost savings by 2010• Double IFRS EPS by 2012 at
the latest• 1.5 – 2 x dividend cover on
IFRS post tax operating earnings
UKMarket leadership● Drive up profitability● Generate capital● Insurance excellence● Operational excellence
N. AmericaProfitable growth● Optimise business mix,
growth & margin● Diversify distribution and
products● Generate net capital
returns
EuropeScale, growth, capital● Seize unique growth
opportunities● ‘One Europe’ operating
model ● Generate capital
Asia PacificScale, growth● Prioritised portfolio● Regional operating
model● Investment required
Asset ManagementAsset ManagementAviva Investors
• Globally integrated business • Transform the investment model • Increase third party business
Source: UN (2009), CEA (2009), Aviva PFA Model (2008)
Aviva Europe Investor and Analyst Event
• Two years into the five year “One Aviva, twice the value” strategy
• We have communicated plans and progress in UK Life, UK GI, North
America and Aviva Investors
• Evidence of delivery with improving IRRs, cost savings and reallocation
of capital to improve returns
• Progress with the partial IPO of Delta Lloyd
Aviva Europe – Making a Quantum Leap22 October 2009 Page 5
Europe in context
General Insurance
Long Term savings
Composite
Significant part of the Aviva group
• Strong historic foundations
• Unique opportunity to establish a leadership position
• Clear execution strategies are already beginning to make a difference
• Poised to make a ‘Quantum Leap’
Long-term savings sales
GI and Health sales IFRS Operating profit
HY1 2009 for long-term savings sales (present value of new business premiums and investment sales), GI and health sales (net written premiums) and IFRS operating profit (before group debt and interest costs)
DL 11%
DL 14%
DL 14%
UK 26%
UK 47%
Europe Europe Europe50% 35% 44%
Other regions 24%
Other regions 18%
UK 44%
Other regions 12%
Aviva Europe – Making a Quantum Leap22 October 2009 Page 6
6
Andrea Moneta
Aviva Europe CEO
Aviva Europe – Making a Quantum Leap22 October 2009 Page 7
Source: UN (2009), CEA (2009), Aviva PFA Model (2008)
The three key things I want you to take away today
Quantum Leap to become the
undisputed leader
‘One Aviva, twice the value’ delivered
by 2012
Great franchise in the world’s largest
market
Aviva Europe – Making a Quantum Leap22 October 2009 Page 8
8
Our Quantum
Leap
Making money and creating
value
Conclusions and
Q & A
Focussessions
Our opportunity in Europe
Aviva Europe – Making a Quantum Leap22 October 2009 Page 9
800m+ population
€40tr personal financial assets
€4tr L&P assets
Source: UN (2009), CEA (2009), Aviva PFA Model (2008)
A huge market with significant growth potential
€4tr premiums innext five years
Life & pensionsLife & pensions
CompositeComposite
Large mature markets Emerging markets withsignificant potential
Source: CEA, AXCOAviva Analysis 2009
Aviva’spresence
Aviva Europe – Making a Quantum Leap22 October 2009 Page 10
Leadership is there to be grasped
• Highly fragmented market
• Macro, micro and industry trends
• Opportunity in adversity
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Notes:• Market size, taken from 2007 CEA data, deflated to account for business written outside of Europe and other non-primary insurance
income • Source: CEA, ABI, AEGON Reports and Accounts• Includes UK
Making moneyand creating
value
European Insurance Market Shares(Life and Non-Life GWP)
European Market Shares, 2007(Life and Non-Life GWP)
7.3%
6.3%5.8%
4.8%
3.0%2.4% 2.4%
1.7% 1.7% 1.6%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Allianz
Genera
li
Axa
Aviva
CNP
Zurich
Crédit A
grico
le
Ergo
AEGON
Fortis
Mar
ket S
hare
Aviva Europe – Making a Quantum Leap22 October 2009 Page 11
Aviva is uniquely positioned
Strengths in 15 markets
Covering 80% of GDP and premium
Share of GDP L&P PVNBP GI NWPH1 09 €m H1 09 €m
France 14.5% Top 10 2,733 631
Ireland 1.4% Top 5 478 Top 5 294
Italy 11.7% Top 10 2,461 190
Lithuania 0.2% Top 5 49 -
Poland 2.7% Top 5 572 20
Russia 8.5% Top 5 14 -
Spain 8.1% Top 5 1,394 -
Turkey 3.7% Top 5 134 53
Czech Rep 1.1% 17 -
Hungary 0.8% Top 10 26 -
Slovakia 0.5% 1 -
Romania 1.0% Top 5 41 -
Belgium 2.6% Top 10 465 -
Germany 18.6% 177 -
Netherlands 4.4% Top 5 1,351 Top 5 758
79.8% 9,913 1,946
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Source: IMF
AvivaRegion
Aviva Europe – Making a Quantum Leap22 October 2009 Page 12
Aviva is uniquely positioned
In different stages of development
Strengths in 15 markets
Covering 80% of GDP and premium
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Developed markets
Source: AXCO
High potentialmarkets
0
2
4
6
8
10
- 10,000 20,000 30,000 40,000 50,000
GDP per Capita (PPP) (€)
Life
Insu
ranc
e Pe
netra
tion
(GW
P/G
DP)
%
IrelandFrance
Italy
SpainPoland
Czech Rep
Hungary
Romania
Turkey Russia
Belgium
Netherlands
Germany
LithuaniaSlovakia
Market bubble size proportionate to premiums
Aviva Europe – Making a Quantum Leap22 October 2009 Page 13
Aviva is uniquely positioned
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
0%
10%
20%
30%
40%
50%
60%
70%
80%
0 5 10 15 20 25
Allianz
Generali
Zurich
AXA
AEGONING
Groupama
Credit AgricoleCNP
Source: CEA, Aviva Analysis2009
In different stages of development
Strengths in 15 markets
Covering 80% of GDP and premium
With an enviable competitive footprint
Number of markets
Reg
iona
lisat
ion*
* Regionalisation (Continental Europe) defined as premium generated outside home market and UK as a percentage of total premium generated in Europe
Bubble size proportionate to premiums
Aviva Europe – Making a Quantum Leap22 October 2009 Page 14
Aviva is uniquely positioned
Capabilities across all product lines and distribution channels
In different stages of development
Strengths in 15 markets
Covering 80% of GDP and premium
With an enviable competitive footprint
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Source: CEA, 2009
Life Distribution Models
Aviva Europe – Making a Quantum Leap22 October 2009 Page 15
Aviva is uniquely positioned
Two clear leading brands
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Capabilities across all product lines and distribution channels
In different stages of development
Strengths in 15 markets
Covering 80% of GDP and premium
With an enviable competitive footprint
Aviva Europe – Making a Quantum Leap22 October 2009 Page 16
A clear strategy to exploit the European opportunity
Quantum Leap – ‘game changing’ for the industry
Aviva Europe
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Delta Lloyd
IPO – ‘strategic management’
Aviva Europe – Making a Quantum Leap22 October 2009 Page 17
Our Quantum
Leap
Making money and creating
value
Conclusions and
Q & A
Focussessions
Our opportunity in Europe
All data in the following sections refers to Aviva Europe excluding Delta Lloyd
Aviva Europe – Making a Quantum Leap22 October 2009 Page 18
Our Quantum Leap is transforming our business
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
From twelve businesses to one
From the packto undisputed
leader
Aviva Europe – Making a Quantum Leap22 October 2009 Page 19
19
We set the vision and defined the journey
By extracting value and building capabilities
Which will deliver our ‘Twice the value’ commitment by 2012
Today we focus on the first phase
Thanks to our QUANTUM LEAP in the industry
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Time
2X
2008
Consolidation and reorganisation
of existing businesses
Value
today
Integration of new businesses
Repositioning and new growth
Aviva Europe – Making a Quantum Leap22 October 2009 Page 20
Our Quantum Leap is built on three pillars
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 21
Single operating model
• Markets focused on distribution with a strong centralised support
• Synergies in IT, operations, customer service with pan European sharing of services
• Centralisation of production, keeping strong “radar” for each market/segment
• State of the art governance
Customer management& Marketing
Governance
IT, O
pera
tions
& S
hare
d S
ervi
cesDistribution
Product
In markets
Pooled
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 22
CathrynRiley
IT and Operations
AndrewMoffat
Human Resources
TimHarris
Finance
StephenMarini
ProductsCustomer
Management and Marketing
Alfredo Montalbano
22
• A winning team united by one bold vision and very clear accountability
• 377 years of experience
• Pan European leadership… local market knowledge
Strong management and clear accountability
Bancassurance Retail
DavidAngulo
Adam Uszpolewicz
7
Markets
Markets
Mar
kets
Jean Pierre Menanteau
Stuart Purdy
IgnacioIzquierdo
Andrea Battista
Maciej Jankowski
Andrey Dubinin
Janos Bartok
GIErtan Firat
Life*Meral Egemen
Pan-European governance
ShahRouf
AstaUngulaitiene
KarelVesely
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
*Joint venture with Sabanci Holding
Aviva Europe – Making a Quantum Leap22 October 2009 Page 23
Seven key strands that impact all aspects of our business
…. being executed ruthlessly
Executing a clear and bold master plan
Retail ProductsCustomerManagement & Marketing
IT & Operations
FinanceHuman Resources
Banca Retail ProductsCMM IT & Ops FinanceHR
Customer ManagementGrow revenue and profitability – making sales and marketing as effective and efficient as possible
Products and Investment ManagementCentralised product development and investment management – single product catalogue
Cost & ProductivityRight size the cost base to deliver sustainable savings from 2009 and beyond
GI Claims ManagementLeverage Aviva best practice to reduce claims unit costs
Shared ServicesCentres of excellence and shared processes to reduce costs and support our vision
DataSingle database to facilitate CRM and provide insightful real time MI
GovernanceSingle legal entity – state of the art capital and risk management
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 24
From To
This is our Quantum Leap
Multiple, complex products
Twelve federated businesses
Multiple systemsand processes
Complex legal entity structure
Sub optimal capital allocationand risk management
Fungible capital, state of the art capital and risk processes
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Simplified structure under single holding company
Shared systems and processes
Customer centric product catalogue and shorter time to market
One Pan European Business
One Head Office
Pan European distributionorganisation
Aviva Europe – Making a Quantum Leap22 October 2009 Page 25
Our journey has started
New management & accountability in place
Pan European capital allocation & risk management
PLC Board approve vision & strategy
Launch of Quantum Leap
30 Sep 08
01 Apr 09
01 Jan 09
21 Nov 08
… and it’s already delivering …
continued …
Centralised procurement 30 Apr 09
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 26
Our journey has started
Pan European retention initiative
Single change portfolio
Pan European GI claims laboratory
Delta Lloyd strategy and relationship clarified
1 May 09
6 Aug 09
5 Jul 09
12 May 09
… and it’s already delivering …
continued …
Pan European holding company 12 Oct 09
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 27
Our journey has started
Robust set of financial results
… and it’s already delivering …
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 28
Robust set of financial results
Life- sales flat in difficult market - margins improved due to action on
product mix, partly offset by customer preference for guarantees
GI- COR improving due to rate- leading the market in Ireland and
France on pricing action
Expenses- 7% improvement after absorbing
wage cost inflation
IFRS Operating Profit- lower asset values and expected
return rates
HY1 08 HY1 09 Local Currency Growth
Life and pension sales €8,039m(1) €7,920m Adv 1%
Margin 3.7%(1) 3.8% Fav 0.1pp
GI and health volumes €1,249m(2) €1,188m Adv 5%
GI COR 97% 96% Fav 1pp
Expenses(3) €606m €578m Fav 7%
IFRS operating profit €524m €464m Adv 11%
(1) Restated to show underlying position; 4.0% including one-off CajaMurcia transfer and Pillar II pension legislation change in Romania(2) HY 08 restated on a like-for-like basis reflecting the acquisition of the Irish health business in May 2008(3) After adjusting for FX, acquisitions, inflation and restructuring
Achieved in tough times
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 29
606578 593
1516 44
300
350
400
450
500
550
600
650
Cost base falls 7% in real terms after absorbing wage cost inflation
7% reduction
Robust set of financial results
€m
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
HY 2008 Inflation Cost savings BaU cost baseHY 2009
Published cost base HY 2009
Rebranding and
restructuring costs
Aviva Europe – Making a Quantum Leap22 October 2009 Page 30
• 98% of assets classified as FV1 or 2
• 99% of total investments carried at FV
• €67bn debt securities of which 95% are investment rated including 35% AAA - rated
Robust set of financial results
Supported by a high quality balance sheet
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Total investments€bn Total Fair
value 1Fair
value 2 Other
Debt Securities - Government 25 23 2 -Debt Securities - Corporate bonds 39 25 14 -Debt Securities - Other 3 1 2 -Total Debt Securities 67 49 18 -
Equity 4 3 - 1Property (including investment property) 2 - 2 -Other (including unit trusts) 26 24 2 -Loans 1 - - 1Cash 13 13 - -TOTAL 113 89 22 2
Aviva Europe – Making a Quantum Leap22 October 2009 Page 31Page 31
Aviva Europe – Making a Quantum Leap22 October 2009 Page 32Page 32
Aviva Europe – Making a Quantum Leap22 October 2009 Page 33Page 33
Aviva Europe – Making a Quantum Leap22 October 2009 Page 34
Channel View – a well balanced mix
Bancassurance
Retail
€173m Life EBat 98bps*
€(36)m Life NBat 4.3% margin
€3m GIat COR 91%
€275m Life EBat 66bps*
€(42)m Life NBat 3.0% margin
€118m GIat 96% COR
• Significant retail franchise with cash generative back book
Life EB €275 m
GI profit €118 m
Life NB €(42)m
Total retail profit €351 m
• Profitable bancassurance life business, with exciting GI opportunity
Life EB €173 m
GI profit €3 m
Life NB €(36)m
Total retail profit €140 m
€4.5bn
€4.6bn
€82bn
€31bn
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
(100)
(50)
-
50
100
150
200
250
300
350
400
1H 0
9 €m
IFR
S O
pera
ting
Prof
it
Notes:• EB & NB denote net IFRS operating profit or loss on Life existing business and new business respectively• Return on assets bps calculated as annualised Life EB IFRS Operating Profit divided by average assets under management, expressed as basis points
H1 09 salesH1 09 sales
H1 09 Investments
Aviva Europe – Making a Quantum Leap22 October 2009 Page 35
Product view - a diverse product portfolio
• Life IRR 13%, impacted by tough market conditions (17% in FY08)
• Highly profitable protection business currently less than 10% of sales – significant opportunity
H1 09 IFRS Operating Profit
€370m Life3.8% margin13 % IRR
€121m GI96% COR12.4% ROE
RetailBanca
MainlyRetail
GI & Health COR
Personal 99%Commercial 90%
General Insurance 96%Health 98%Aviva Europe 96%
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
• GI COR improving and 96% for first half 2009
Payback PeriodLIFE & PENSIONS Margin IRR (Years)
Savings and pensions 2.0% 9% 8.2Protection 22.0% 31% 5.7Annuity 3.7% 9% 8.4
Aviva Europe 3.8% 13% 7.8
Aviva Europe – Making a Quantum Leap22 October 2009 Page 36
Bancassurance: committed and growing
GI Bancassurance Growth (2004-08)Life Bancassurance Market Shares (2000–08)
Source: CEA, ANIA, ICEA, 2009
• Consistently dominated life distribution in key markets- before, during and after the financial crisis
• Significant GI growth opportunity
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Italy FranceSpain
Italy
2000
2001
2002
2003
2004
2005
2006
2007
2008
2000
2001
2002
2003
2004
2005
2006
2007
2008
n.a. n.a.0%
10%
20%
30%
40%
50%
60%
70%
80%
2000
2001
2002
2003
2004
2005
2006
2007
2008
Ban
cass
uran
ce s
hare
of L
ife M
arke
t (%
)
6.1%7.1% 7.3%
7.9%
10.2%
1.1%1.6% 1.7% 1.8% 2.10%
0%
2%
4%
6%
8%
10%
12%
2004 2005 2006 2007 2008
Ban
cass
uran
ce S
hare
of G
I Mar
ket (
%)
Spain
Italy
Aviva Europe – Making a Quantum Leap22 October 2009 Page 37
Bancassurance: our leading position
• 46 agreements• Over 20,000 branches• Access to over 30m bank customers
Other insurersAviva
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Source: The Banker, 2008
0
5
10
15
20
25
30
35
40
45
50
No.
of p
artn
ers
• Successfully executing our strategy
• Increasing number of high quality partners
Aviva Europe – Making a Quantum Leap22 October 2009 Page 38
Bancassurance: mutually compelling agreements
• Perpetual agreements with robust exit clauses
• Growth at marginal cost
• Aviva retains management control
• Alignment of partner interests• Single distribution platform drives cost
effectiveness
Deliver high value through a state of the art business model
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
• New business margin 4.3%
• New business IRR 15%
Aviva Europe – Making a Quantum Leap22 October 2009 Page 39
Bancassurance – an exciting opportunity
Undisputed leading partner of choice
Significant mix & growthopportunities
• Leverage unique business model • Aviva in a box - scalable bancassurance
platform• Managed through multiple points of contact
• Focus on protection• GI growth opportunity• Leverage low cost per policy• Grow at marginal cost
Common channelapproach
• Improve customer retention by 10%• Grow protection sales by 30%,
increasing margin• Triple current GI contribution
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 40
European Retail Market
• €620bn market(€260bn Life, €360bn GI)
• Aviva Retail share 4.3%*– Life 7.8%– GI 1.8%
• Retail market growth (2005–08) 3.5% p.a.
Source: CEA, AXCOAviva Analysis 2009
European Retail Market(Life and GI)
Total Life and GI GWP
Aviva Life Retail Market Share
Aviva GI Retail Market Share
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
France Italy Spain Ireland Poland CEE AvivaEuropeMarkets
Shar
e of
Mar
ket
Retail Life Retail GI
€105bn €58bn €35bn €15bn €10bn €23bn
2.5% 1.0% 0% 20.0% 0.4% 0.8%
€246bn
10.1% 0.7% 2.7% 11.1% 8.4% 6.0%
1.8%
7.8%
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
* Retail premiums in Aviva Europe markets total €246bn
Aviva Europe – Making a Quantum Leap22 October 2009 Page 41
0
2,000
4,000
6,000
8,000
10,000
12,000
2005 2006 2007 2008
Retail – a great and growing franchise
• 9 million customers
• Diverse distribution
- IFAs/Brokers (8,000)
- DSF (10,000)
- Phone/Web
• Captive networks generate 75% of new business
• Large and profitable life back-book
• Profitable GI business with growth potential
Retail – steady growth builds significant franchise
€m
GI NWP
Life PVNBP (2008 & 2007 MCEV, 2006 & 2005 EEV)
Aviva Europe Retail sales
CAGR +6%
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Aviva Europe – Making a Quantum Leap22 October 2009 Page 42
Retail – an exciting opportunity
New tools
• Single channel ownership• Performance benchmarking • De-couple distribution from production
• Innovative front end • Product bundling and dynamic pricing• Remunerate for value
New governance
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value
Improve performance2009-2012
• Increase productivity by 30%• Increase customer retention by 10%• Lower network costs by 10%
Aviva Europe – Making a Quantum Leap22 October 2009 Page 43
Our Quantum
Leap
Making money and creating
value
Conclusions and
Q & A
Focussessions
Our opportunity in Europe
Aviva Europe – Making a Quantum Leap22 October 2009 Page 44
Now let's look in detail
OurQuantum
Leap
Focussessions
Conclusions andQ&A
Our opportunity in
Europe
Making moneyand creating
value