uk life, driving value through excellence€¦ · uk life, driving value through excellence. andrew...

Andrew Moss NUL18.11.08

Investor and Analyst Event, Wednesday 6th May 2009UK Life, Driving value through excellence


Disclaimer

This presentation may include oral and written “forward-looking statements” with respect to certain of Aviva’s plans and its current goals and expectations relating to its future financial condition, performance and results. These forward-looking statements sometimes use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’ or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which may be beyond Aviva’s control, including, among other things, UK domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, the possible effects of inflation or deflation, the timing impact and other uncertainties relating to acquisitions by the Aviva Group and relating to other future acquisitions or combinations within relevant industries, the impact of tax and other legislation and regulations in the jurisdictions in which Aviva and its affiliates operate, as well as the other risks and uncertainties set forth in our 2008 Annual Report to Shareholders. As a result, Aviva’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Aviva’s forward-looking statements, and persons receiving this presentation should not place undue reliance on forward-looking statements.

Aviva undertakes no obligation to update the forward-looking statements made in this presentation or any other forward-looking statements we may make. Forward-looking statements made in this presentation are current only as of the date on which such statements are made.

3

Today

• UK Life is in excellent shape

• Delivering a consistent and compelling strategy

• Transforming the business to a modern, low cost and dynamic organisation

• Delivering previous promises

• Well positioned for growth, profit and value

• Clear plans and priorities for the future

UK Life, well positioned to drive further value

4

Agenda

• UK Life in excellent shape Mark Hodges, Chief Executive Officer

• Driving up profitability & generating capital John Lister, Finance Director

• Delivering operational excellence Toby Strauss, Chief Operating Officer

• Break and innovation demonstrations UK Life Management Team

• Strategic outlook Mark Hodges, Chief Executive Officer

• Strategic focus David Barral, Marketing Director

Questions & answers

Lunch

5

An experienced and proven team

Mark Hodges Chief Executive Officer

Toby Strauss Chief Operating Officer

Ian Butterworth Chief Information Officer

Graham BoffeyDistribution Director, Corporate & Consumer

Angela Seymour JacksonDistribution Director,

Intermediaries & Partners

David BarralMarketing Director

Rita Agati HR Director

John Lister Finance Director

6

UK Life within Aviva

On all measures, UK Life is a key component of the Group result

Source: 2008 data for new business sales (PVNBP), IFRS and MCEV operating profit and 31 December 2008 life and related business embedded value.

Life New Business Sales

MCEV Life Operating Profit Embedded Value

Rest of Group67%

UK Life33%

Rest of Group65%

UK Life35%

Rest of Group67%

UK Life33%

Rest of Group68%

UK Life32%

IFRS Life Operating Profit

7

One Aviva

UK Life, fundamental to delivering One Aviva, twice the value

Purpose

Prosperity & peace of mind

Vision

One Aviva, twice the value

• Manage composite portfolio

• Build global Asset Management

• Allocate capital rigorously

• Increase customer reach

• Boost productivity

• 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

Aviva Investors• Globally integrated business • Transform the investment model • Increase third party business

UKMarket leadership• Address legacy• Transform business

model• Exploit UK synergies• Generate capital

EuropeScale, growth, capital• Seize unique growth

opportunities• Leverage scale• Generate capital

N. America• Optimise business

mix, growth & margin• Generate net capital

returns• Contribute to doubling

IFRS EPS by 2012

Asia PacificScale, growth• Prioritised portfolio• Regional operating

model• Investment required

Strategic priorities

Targets

UK LifeMarket leadership

Drive up profitabilityGenerate capital

Operational excellenceCompetitive advantage

8

Agenda







Questions & answers

Lunch

9

Driving up profitability

14.0%10.6%New business IRR

3.5%2.9%Life & Pensions margin1,2

£40m£140mCost overrun

+/-

£751m£382mIFRS operating profit

£883m£589mEV operating profit

£679m£372mExisting Business operating return

£11,669m£9,185mLife & Pensions sales (PVNBP)1

20082005

+27%

+60bp

+83%

+50%

+97%

2005 shown on an EEV basis, 2008 on a MCEV basis. 1Data shown on an EEV basis. 2Margin pre cost of capital and taxation, 2008 margin unaudited, published MCEV margin 1.7%.

71%

Significant progress on delivering the One Aviva, twice the value agenda

+340bp

10

Widening the income and expense ‘jaws’

• Increasing sales while growing margin

• Targeted cost reductions, driving out inefficiencies and reducing operating expenses

• Lower, more flexible and variable cost base

Expense over-run eliminated in 2009

Life & Pensions Sales and Operating Expenses

Growth

Life & Pension sales calculated on an EEV basis for comparative basis.

Operating Expenses

L&P Sales

-25%

-15%

-5%

5%

15%

25%

35%

2005 2006 2007 2008 2009

11





+/-





20082005

+27%

+60bp

+83%

+50%

+97%


71%


+340bp

12

Generating capital

+/-

£704m£365mFree surplus generation

2.5%5.3%Strain % of L&P sales (PVNBP)(2)

£293m£488mNew business capital strain(1)

20082005

-2.8pps

+93%

Delivering value to group

-40%

(1) New business strain includes initial capital strain and changes in required capital. (2) Life & Pensions sales calculated on an EEV basis for comparative basis.

£500m dividend paid over the last three years

13

Delivering operational excellence

9,20012,500UK headcount

4 star1 starDistributor service rating

+/-

68%49%Employee morale score

75%60%Value on scale platforms

68%38%Customer recommendation score

420Core admin systems

1,4851,032Policies per headcount

2009 Q12005

+44%

+15pps

+19pps

-80%

+3

+30pps

We have transformed our operating model

-26%

14

We have delivered our promises

• Rationalise costs

• Simplify the legacy

• Value out of service

• Manage retention

UK Life is in excellent shape

• Develop the business

• Strong balance sheet

• Capital efficiency

15

Hot topics

Trading through the

recession

Brand re-launch

Commercial mortgages

Re-attribution of the

inherited estate

16

Trading through the recession – our progress

Thriving in challenging markets

• Sales slow but within forecast• Market share increase at higher margin• Q1 net outflow only £0.1bn (excluding expected endowment maturities)• No unusual lapse experience

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09

PVNBP £m

Pension Bonds & other Annuities Protection

8%

9%

10%

11%

12%

13%

14%

15%

Q1 08 Q2 08 Q3 08 Q4 08

%Quarterly Market ShareQuarterly Sales

Quarterly sales (PVNBP) calculated on an MCEV basis. Market share based on ABI data.

17

Trading through the recession – our focus

• Holding tight financial discipline for value– Rigorous hurdle rates – e.g. bulk purchase annuities– Re-pricing – group personal pensions, protection and annuities– Commission reduction – bonds and pensions– Withdraw unprofitable products – Inflation Protected Guarantee bond

• Benefit from ongoing innovation through 2009– Customer portal– Adviser portal– Pensions tracker– Customer data e.g. Protection postcode rating

Focus on profitable growth

18

Commercial mortgage portfolio

A portfolio to support profitable growth in our annuity business

• Portfolio developed to support profitable growth in our annuity business

• Producing higher yielding fixed rate assets (average 164bps above gilts since 2000)

Commercial Mortgage Portfolio Growth 1992-2008£bn

0

2

4

6

8

10

12

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

2

4

6

8

10

12

14

16

18

20

Commercial UK NHS Healthcare Annuity Book (RH Scale)

£bn

19

A high quality portfolio

£857mAnnual rental income

£650mAnnual interest income

6,110Number of tenants

15 yrsAverage remaining loan term

12.5 yrsAverage lease term

3,473Number of properties

536Number of borrowers

31 Mar 2009Portfolio Data

• No high risk lending such as interest only loans with high LTVs

• All loans secured by first charge on properties

• Strong matching of lease terms to remaining loan terms

• Business written with experienced property professionals with strong track records

Cautiously constructed portfolio

Remaining UK commercial loans

£8.6bn

NHS Healthcare £2.5bn

Gov’t Tenants£0.3bn

Total UK commercial mortgage portfolio £11.4bn

Commercial property portfolio £8.9bn

31 Mar 2009

20

A well constructed and highly diversified portfolio

12%

6%

24%

8%

50%

15%

35%

3%

47%

0%

10%

20%

30%

40%

50%

60%

Industrial Leisure Office Other Retail

% o

f Por

tfolio

Portfolio well diversified geographically, by sector, borrower and tenant

• Underweight in the office sector (most volatile) and slightly overweight in retail (less volatile)

• Underweight in London (most volatile) when compared to the IPD Commercial Property Universe

• c6,500 commercial tenants, our biggest with a 5% share and 10 others with around 1%

21%

5%

14%

26% 25%

6%3%

37%

8%10%

22%

15%

6%2%

0%

10%

20%

30%

40%

50%

60%

London East Anglia Midlands South North Scotland Wales

% o

f Por

tfolio

Portfolio by Sector(compared to industry benchmark)

Portfolio by Region(compared to industry benchmark)

UK commercial property loans portfolio as at 31 March 2009

UK Life Benchmark

21

Portfolio developed on sound lending principles

Strong interest service cover, low vacancy rates and interest arrears

• Primary focus on income quality and longevity to support loan service and debt reduction

• Strong loan and interest service cover

• Minimal interest arrears at ¼ of 1 per cent of annual interest

• Provisions of c£700m established (c7.9% of commercial property loans)

4.8%4.1%3.7%3.8%Vacancy rates

£2.2m£0.2m£0.1m£0.1mInterest arrears

0.01%

76%

1.29

30 Dec2007

0.25%0.02%0.01%Interest arrears

105%103%81%Average loan to value

1.311.301.28Interest service cover

31 Mar2009

31 Dec2008

30 Jun2008

22

Commercial mortgages summary

A high quality commercial mortgage portfolio

• Developed to support annuity business

• Well constructed and diversified portfolio

• Strong loan and interest service cover

• Primarily long-term with limited short term maturities

• Minimal arrears

• Provisions of c£700m established (c7.9% of commercial property loans)

• Proven and effective loss mitigation process

• No new defaults year-to-date

23

Inherited estate reattribution – customer perspective

A deal that flexes the incentive payment to the size of the estate

• Strong customer story – 1million customers benefit

• Policyholder Advocate supportive

• Incentive payment of £400m(1) that increase with the value of estate

• Average payment per electing customer of £500(1) (minimum of £200)

• 1st June election commences - Individual choice- No majority vote

• 1st October effective date

(1) Based on estate value of £1.2bn and 80% take-up

24

Inherited estate reattribution – shareholder perspective

A good deal for shareholders

• New deal reduces incentive payment, flexes with size of estate– Revalued at the average of 1 June, 1 July and 1 August

• Plans in place to offset IGD impact in 2009– Payment in Q4– UK Life actions to contribute a further £200m

• Policyholder incentive payment acquires:– Assets backing the estate (£1.5bn at 31.12.08)*– Assets and Liabilities backing the cost of guarantees (£3bn at 31.12.08)*

* Based on 100% policyholder take-up

25


Significant capital and return benefits

• Significant capital and earnings benefits:– Provides £600m of new business capital strain funded from reattributed

estate in first 5 years– 3 year cash payback – One off £156 million MCEV profit– One off £58 million IFRS profit– Ongoing IFRS profit c£50m per annum

26


A good deal for shareholders with significant upside potential

Significant potential upside:

• Post reattribution lapse increase of 1% would increase IFRS and MCEV results by £20m

• 1% decrease in equity volatility would increase IFRS and MCEV results by £15m

• 1% recovery in property values would increase IFRS and MCEV results by £8m

• 50bps narrowing of credit spreads would increase IFRS and MCEV results by £16m

27

Maximising the re-brand opportunity

Intensive activity provides a real opportunity to re-position UK Life

• Aviva from 1st June

• Awareness of name change 76%

• Consideration trebled to 32% in just 3 months

• World’s 4th most valuable insurance brand (c$6.1bn, Brand Finance global 500 report April 2009)

• Individual recognition at core

28

Agenda







Questions & answers

Lunch

29

Purpose


Vision

One Aviva, twice the

value















N. America• Optimise business mix,

growth & margin• Generate net capital


IFRS EPS by 2012




Targets

UK Life, Driving Value Through Excellence

Drive up profitability

• Improve quality of earnings

• Grow market position

• Reshape business mix

• Drive margin and IRR improvements

• Reduce new business strain

• Greater value from large back book




30





+/-





20082005

+27%

+60bp

+83%

+50%

+97%


71%

+340bp


31

0

2

4

6

8

10

12

14

16

18

Annuities Protection Pension Bonds

Sustaining our market share….

• 11.3% overall L&P market share in 2008 benefiting from:

– Launch of Simplified Life proposition in 2006

– Income Drawdown launch 2007

– Flight to quality Q3/Q4 2008

– Growth in bulk purchase annuity business with 39 schemes won in 2008

• Top 3 ranking in all L&P product lines

(1) Excluding all BPAs: Aviva UK Life share of BPA market 9%, Market share and position based on FY08 ABI returns

Richer mix and overweight in risk business

Mar

ket s

hare

Overall market share

14% 16% 10% 9%

Market Share 2008

(1)

32

… while enhancing returns …

• Commission bill maintained at c£550m as PVNBP grew by 27% by:

– Reducing individual pension, group pension and bonds commissions

– Greater proportion of bond commission fund-based versus initial commission for IFAs

– Growth of fee-based Employee Benefit Consultant business

• New business expenses reduced by £27m despite volume growth by

– Customer service efficiencies,

– e-Commerce and

– Improved mix

Significantly leveraging pricing, commission and expenses

2005 – 2008 New Business

Margin Improvement

% P

VN

BP

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2005 2006 2007 2008

Margin % Commission Paid % NB Expenses %

33

…and moving our mix towards higher margin risk products

Driving profitability, driving value

• Good growth in annuities through:

– Innovative pricing using rating factors and

– Compelling BPA proposition to 50 EBCs

• Protection down only 19% despite collapse in mortgage market

– Excellent growth of Simplified Life product

• Individual Pension growth supported by market leading e-Commerce

• Group and corporate pensions secured 18 schemes in Q4 2008, £788m PVNBP

• Bonds impacted by market conditions and CGT changes

Group life business moved from protection to GP in 2008 for comparative growth purposes

PVNBP share of 2008 portfolio

Bonds, 28%

Corporate & Group Pensions, 21%

Annuit ies, 21%

Individual pensions, 18%

Protect ion, 9%

Other, 4%

1

+49%

2005 – 2008

Sales Growth

(33)%

+53%

+41%

+26%

(19)%

34

Our focus on annuities is delivering benefits

• Extra rating factors (size/postcode/marital status & smoker status) delivering underwriting profit

• Increase speed to market and flexibility of rating changes

• Established strong BPA proposition

• Reduced capital in market place drives increased returns

New business margin shown on an EEV basis.

2.8%6.1%Capital strain %

6796Capital strain £m

812Payback (years)

16.7%9.5%IRR

9.1%5.2%Margin

+/-20082005New Business

+3.9pps

+7.2pps

4 yrs

-30%

-3.3pps

IRR benefits from improved pricing, lower expenses and capital efficiency

35

Our focus on protection is delivering benefits

• Highly competitive market with downward pressure on core mortgage and term products

• Improved re-insurance structures & reduced re-insurance costs

• Differentiated pricing by Channel / Distributor

• Implementation of enhanced rating factors

• IRR benefits from lower capital requirements from PS06/14



46Payback (years)

23.5%16.5%IRR

7.8%9.2%Margin


+7.0pps

2 yrs

-62%

-7.4pps

-1.4pps



36

Key actions to improve margins in pensions

• Increased operational efficiency reducing new business costs

• Commission levels reduced in 2008 and 2009 to date. Key actions include:

– GPP 3% reduction in initial commission, 0.05% increase in FOC charge Q4 08

– IPP single premium commission reduced by 0.5% to 6.0% Q1 09

• Implementation of customer agreed remuneration



912Payback (years)

12.4%8.2%IRR

1.6%1.2%Margin


+0.4pps

+4.2pps

3 yrs

-1%

-1.7pps



37

Key action in place to improve margins in bonds

• Persistency assumptions strengthened

• IFA commission rates reduced by 1% Q4 08

• Allocation rate reductions by up to 2% Q1 09

• Guaranteed Fund Commission reduction Q2 09

• IPG profit impacted by market volatility and withdrawn from 17th April 2009




149Payback (years)

7.7%9.7%IRR

0.1%0.8%Margin


66%

2.1pps

-0.7pps

-2.0pps

5 yrs

38

Key action in place to improve margins in bonds

• Unit linked bonds managed for value via commission and allocation changes

• With Profits will reduce as IPG withdrawn

• Offshore bond business under review

Bonds PVNBP 2005 - 2008

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007 2008

PVN

BP

Unit Linked Unitised With Profits Offshore Other

Continuing participation in this market dependent on favourable returns

39

Generating superior returns through channel mix

Bubble size represents 2008 sales calculated on a PVNBP basis (EEV)

Corporate

B Soc

Retail

IFA

0

1

2

3

4

5

6

7

-50 0 50 100 150 200Channel growth %

Cha

nnel

mar

gin

%

Increased focus on corporate channel

• BPA with pricing discipline

• Innovative GPP e-commerce proposition

• Actively promoted by 30 out of 40 target accounts

Excellent RBS JV growth

• 80% growth in Bancassurance market share

• 50% increase in sales consultants

RBS JV

Life & Pensions New Business Channel and Margin Growth 2005-08

High growth in richer margin channels

40

Driving value from sizeable back-book

• Maturity of back book generating increased absolute returns

• Reduced expense over-run through operational initiatives, on target to eliminate in 2009

• Improved focus on retention - keeping an existing customer generates 3 times as much value as attracting a new customer

In-Force Operating Profits 2005-2008

Expected

Experience

679

ROEV 4.9%

ROEV 7.1%

Rigorous focus on eliminating experience variances

0

100

200

300

400

500

600

700

800

2005 2005 2008 2008

372

£m

41

With profit fund persistency

WP Persistency • 2005 and 2006 experience adversely impacted:

– With profit pensions, bonds, low cost endowment exits

– MVR removal in 2006 saw increase in level of bond surrenders

• Persistency profits made in the last 2 years

• Likely to reverse following reattribution

– 1% lapse results in £20m additional IFRS profit

With profit persistency is better than our allowances

-30

-20

-10

0

10

20

30

2005 2006 2007 2008

£m

42

Growing IFRS operating earnings

(1) Share of historic pension scheme deficit funding borne by shareholders charged to with-profit fund DAC write down following increases to lapse assumptions

• 2nd & 3rd tranche of special distribution will benefit 2009 & 2010

• 64% higher underlying profit driven by:

– £225m of expense saving initiatives (£200m delivered)

– Lower new business strain– Higher annual

management charges and WP bonus as markets rose

• Reattribution will further enhance future earnings

--(85)-• Other

124---• Special distribution

751723629382Reported for the year

--130-• Pension Scheme deficit funding by WP

-167149-• PS06/14

One-off items:

627556435382Underlying business profitability

2008£m

2007£m

2006£m

2005£m

Sustainable drivers of IFRS growth in plan

43

Purpose


Vision


value


















IFRS EPS by 2012




Targets


Generating capital

• Strong and resilient capital position

• Self-financing capital model

• Well capitalised with-profit business


Drive up profitabilityGenerate capitalOperational excellenceCompetitive advantage

44

Generating capital

+/-

£704m£365mFree surplus generation

2.5%5.3%Strain % of L&P sales (PVNBP)2

£293m£488mNew business capital strain1

20082005

-2.8pps

+93%

Delivering value to group

-40%

1 New business strain includes initial capital strain and changes in required capital.2 Life & Pensions sales calculated on an EEV basis for comparative basis.

£500m dividend paid over the last three years

45

Actively managing the capital position

With Profit funds

• Dynamically hedging impact on cost of guarantees of equity market and interest rate risk

• Managing funds in line with their Principles and Practices of Financial Management

– Changing asset mix

– Reducing bonus rates

Non Profit funds

• Hedging market risk associated with AMCs

• Raising regulatory capital

• Tightening our underwriting criteria further on commercial mortgages

Maintaining and managing our credit risk exposure

Experts at managing capital risks

46

UK Life, a strong capital position

Note: NUL&P shareholder fund included in NUL&P NP section

Capital Position by Fund 31 December 2008

500

1,000

1,500

2,000

2,500

3,000

3,500

CGNU CULAC NUL&P WP NUA NUL&P NP

£m

Shareholder fund Long-term fund Required capital

Well capitalised and managed funds, in excess of required capital

47

2827

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2005 Existingbook surplus

Capitaltransactions

One offbenefits

Newbusiness

strain

Dividends toGroup

Other 2008

£m

UK Life driving up net worth

Net worth Surplus Generation

• £1.2bn increase in net worth over three years:

– Existing book surplus of £1.6bn

– Capital transactions releasing VIF of £0.8bn

– One off benefits from PS06/14 of £0.3bn

– Exceptional market falls £0.3m

• This has allowed us to fund:

– New business strain of £0.7bn

– Dividends to group of £0.5bn

In tough financial markets, increasing capital strength while growing the business

48

With-profit business well capitalised

• With-profit funds all show significant surpluses

• No burn-through risk pre or post reattribution

Strong capital position

Realistic Excess Capital in

With Profit Funds 2005-2008

(Pillar 1 Peak 2)

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

CGNU CULAC NUL&P

£m

49

Driving up profitability and generating capital

Driving value through financial and capital excellence

• Good market share, strong presence in growth areas

• Driving portfolio to more profitable product and channel mix, decisive pricing and commission action

• Eliminating the expense over-run and extracting value from the back book

• Sustainable underlying earnings

• Strong capital position, self-financing business model delivering returns

• An inherited estate reattribution deal that creates capital opportunities

50

Agenda







Questions & answers

Lunch

51

Purpose


Vision


value


















IFRS EPS by 2012




Targets


Operational excellence

• Offshoring and outsourcing

• Simplification

• Service

• RBS Joint Venture

• Retention

• Culture and leadership




52

The start of the journey

• Labour intensive organisation

• High cost base

• Complex inflexible IT & processes

• Poor service levels

• Product complexity

• Minimal retention activity

• Lack of employee engagement

2005

Offshoring and outsourcing

A strategic opportunity to drive value

Simplification

Service

RBS Joint Venture

Culture and leadership

Retention

53

98% In-house

Offshoring and outsourcing

Customer Operations2005

Customer Operations2009

Increased flexibility and efficiency of operations

36%Outsourced

18% offshore

46% In-house98%

In-house

54

Simplification

2005 2009

System decommissioning

‘Fix’ or migrate strategy

20 core admin systems 4 admin systems

Simplified operating environment

550 systems Closed over 300 systems

12,500 UK headcount

9,200 UK headcount

Site rationalisation

eCommerce & self-serve

Limited eComm 7 million policies on-line

Mandatory change £9m

Mandatory change £4m

55

Site rationalisation

Life Customer Operations2005 Footprint

Life Customer Operations2009 Footprint

Bristol

Eastleigh

Glasgow

Sheffield

Southampton

Newcastle

Norwich

Stevenage

York

Bristol

Eastleigh

Norwich

Sheffield

York

Reduction in fixed costs; nine key sites to five

Bangalore

PuneChennai

Bangalore

56

Simplification

Driving efficiency into the business

1,032 1,0691,148

1,485

800

1,000

1,200

1,400

1,600

2006 2007 2008 2009

Polic

ies

Scale OperationsIn-force Policies per Headcount

Managing 44% more policies per head in 2009

57

RBS Joint Venture

• 119% sales growth

• 80% growth in Bancassurance market share

• Promotion of Life, Pensions and Investment products

• 50% increase in sales consultants

• Well positioned to benefit from RDR

Driving growth in strategic distribution channels

Long-term Savings sales (PVNBP £m)

Life & Pensions sales (PVNBP) calculated on an EEV basis.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2005 2006 2007 2008

58

Service

1 Financial Advisor awards

2005Service Promises

for all products

£6m invested in our Communications

61% reduction in complaints

Listening to 56k customers & 17k distributors

4 Financial Advisor awards

Operating model driving service improvements across the board

85% distributor interactions ‘One & Done’

Q1 2009

Distributor satisfaction

Customer satisfaction

Customers recommend us

Distributors recommend us

Distributor satisfaction

Customer satisfaction

Customers recommend us

Distributors recommend us

57%

57%

38%

41%

86%

77%

68%

76%

59

Retention

30 experts retaining 11,000 customers

3,000 customers without advisers receiving financial

advice

55,000 customers retained this year within BAU

Specialist team of retention experts

Transactional customer service

No financial advice on existing products

No proactive retention

500 accounts engagedover 100 closedZero engagement Active distributor

management

Trained financial advisors

Retention training ‘in the line’

2005 2009

Focused strategy driving retention activity across the business

60

Culture and leadership

Investment in leadership, capability and engagement

Talking Talent 7,900 employees

Leadership Capability63% new Directors

CII accredited Service Academy 3,000 graduates

Bonuses aligned to IFRS profit

Brand Engagement£2.6m investment in our people

2005 2009

Employee Engagement

49%68%

61

Customer Driven Design

Removing waste, improving efficiency

IPP New Business ProcessingReduction from an average of 39 days to 14 days

No.

of c

usto

mer

day

s

Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr09

62

Customer Driven Design

Removing waste, improving efficiency

GPP Valuations Processing Reduction from an average of 52 days to 3 days

No.

of c

usto

mer

day

s

Dec 08 Jan 09 Feb 09 Mar 09 Apr09

63

Operational excellence: The journey does not stop here

Customer Portal

On-line Pensions

Adviser Portal

Significant investment in eCommerce

64


Customer Portal

Significant investment in eCommerce64

65


Adviser Portal


66


On-line Pensions


67

Expectations

• 80% Protection NB on-line• 90% Bonds NB on-line• Over 7 million policies on-line• 70k customers using pensions tracker by 2010

• £5m investment • Redesign across all products• 85% distributor transactions One & Done• 40% reduction in waste

Operational Leverage

eCommerce

Brand and People

Customer-driven design

• 55% outsourced or offshored• 2.7m policies migrated• Flexible & efficient• Continuing to reduce fixed costs

• 68% Employee Engagement• 86% Distributor Satisfaction• 77% Customer Satisfaction• 5 Star Service

The business is now engineered to deliver sustainable operational effectiveness

68

Agenda







Questions & answers

Lunch

69

Innovation Demonstrations

Unlocking Value from Customer Data On-line Pensions

Adviser Portal Customer Portal

Clive Bolton, Director of Annuity Business Pricing and Retention Brian Bussell, Director of Marketing, Pensions

Billy Burnside, Head of Distribution, E-business Chris Abrathat, Head of Marketing, E-commerce


Investor and Analyst Event, Wednesday 6th May 2009UK Life, Driving value through excellence

uk life, driving value through excellence€¦ · uk life, driving value through excellence. andrew...

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