Aviva Plc · LSE:AV.
Aviva — FY2012 Earnings Presentation
32 slides from Aviva's earnings presentation, March 2013
Slide 1: 2012 Results
AVIVA 2012 Results
Slide 2: Disclaimer
Disclaimer Cautionary statements: This 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 announcement contains, and we may make other verbal or written “forward-looking statements” wi
Slide 3: 2012 Results – Mark Wilson, Group CEO
2012 Results Mark Wilson G Group Chief Chi f E Executive ti Offi Officer 3
Slide 4: 2012 delivery
2012 delivery Progress • Significant red cell disposals announced, including Delta Lloyd, USA, Sri Lanka, Narrowed Malaysia, Aseval and Russia Focus • Capital inefficient products stopped e.g. large Bulk Purchase Annuities • Pro-forma Pro forma economic capital surplus surplus* 172%, 172% within tar
Slide 5: Investment Thesis – Cash flow plus growth
Investment Thesis – “Cash flow plus growth” 1. Three core business lines with scale – Life, General Insurance and Aviva Investors 2. Progressive cash flow focus Cash flow 3. Significant diversification benefits 4 Robust 4. R b t balance b l sheet h t with ith llower lleverage 5. Financial simplicity
Slide 6: Significant diversification benefits
Significant diversification benefits European insurance operating profit by business line Earnings stability £bn 16 • Earnings g streams from Life and general insurance have low Life correlation, giving earnings stability 8 • Fund management can provide steady General insurance cash flows Fund manag
Slide 7: Financial simplicity
Financial simplicity Simplified corporate structure A i a plc Aviva Aviva Group Holdings Aviva UK Life Insurance Ltd Aviva Investors Asia France Poland Spain Italy Turkey (UK GI) Canada Ireland Life Old structure New structure • Aviva Insurance Ltd acted as both UK GI underwriter and • A simpler str
Slide 8: Group cash flows – historic position
Group cash flows – historic position £bn 2011 2012 Outlook Operational Capital Generation (OCG) 2.1 2.0 • Remittances improved £bn 2011 2012 • Expenses reduced External dividend (paid basis) (0.7) (0.8) External debt costs (0.4) (0.4) • Restructuring costs reduced Central costs ((0.3)) ((0.2)) • Div
Slide 9: Dividend
Dividend Aviva plc dividend policy Rebasing the dividend A progressive dividend policy, with reference to • Full year dividend from 26p to 19p and final growth in cash flows and earnings dividend from 16p to 9p • Expect 2013 interim dividend reduction to be 2012 final dividend per share similar to t
Slide 10: Cash flow and value tree
Cash flow and value tree 2012 Cash flow Tree 2012 Value Tree Aviva plc Aviva plc Aviva Group Aviva Group Holdings** Holdings Holdings Div £904m VNB £746m OCG £1,836m COR 97% Aviva Insurance Aviva Aviva Aviva UK Life Asia Aviva Aviva Ltd (AIL)* Investors Europe SE* UK Life Investors Asia Div £150m Di
Slide 11: Matrix of metrics – Clear financial priorities
Matrix of metrics – Clear financial priorities IFRS Op Key Cash flow Profit Expenses VNB COR Critical Group z z z z z Significant Important UK&I Life z z z z - UK&I General Insurance z z z - z France z z z z z Canada z z z - z Aviva Investors z z z - - Italy z z z z z Spain z z z z - Poland z z z z
Slide 12: 2013 priorities
2013 priorities • Focus the businesses on cash flow to Group • Improve remittance ratios from OCG to dividends Cash flow • Deliver in excess of £400 million cost savings target • Operational execution – improve amber cells to green • Grow the value of new business and improve COR • Simple, clear met
Slide 13: 2012 Results – Patrick Regan, CFO
2012 Results Patrick Regan Chief Financial Officer 13
Slide 14: Results summary
Results summary After tax loss of £3,050 million due primarily to the previously announced sale of the US business • Underl ing operating profit1 down Underlying do n 4% to £1£1,776 776 million (2011 (2011: £1,857 £1 857 million) due d e to foreign e exchange change mo movements ements • Underlying
Slide 15: Operating profit marginally lower with higher restructuring costs
Operating profit marginally lower with higher restructuring costs Operating profit IFRS Operating profit reconciliation £ million 2011 2012 Change Underlying operating profit 2011 1,857 Life 1,926 1,831 (5)% General Insurance & Health 860 893 4% Profit growth 109 Fund Management 61 51 (16)% Ireland
Slide 16: Resilient Life profits
Resilient Life profits Operating p g profit p Life IFRS Operating profit reconciliation £ million £1,926m £1,814m £1,831m 111 Underlying operating profit 2011 1,926 Other 52 65 149 Singapore 140 159 41 UK&I new business income 53 Italy 119 216 215 Spain 179 Mainland European new business income (93)
Slide 17: Resilient Life profits
Resilient Life profits IFRS AUM Capital UK VNB operating ROCE Dividend (£bn) generation profit Operating p g profit p 2011 380 122 917 17 3% 17.3% 544 200 2012 420 124 887 18.0% 647 150 £1,926m £1,814m £1,831m IFRS 111 AUM Capital 52 65 France VNB operating ROCE Dividend Other 149 (£bn) generation 1
Slide 18: UK Life
UK Life Operating profit Operating expenses Value of new business £ million 2011 2012 £917m £729m £887m £675m Pensions 84 72 (14%) Protection 61 67 10% £827*m Individual annuities 172 232 35% Other 63 49 (22%) Total 380 420 11% 2011 2012 2011 2012 Dividends to Group Dividend will increase through a
Slide 19: France Life
France Life Operating profit Operating expenses* Value of new business £323m £335m £ million 2011 2012 £465m £411m Protection 26 32 23% Unit linked savings 41 32 (22)% Other savings 75 55 (27)% Total 142 119 (16)% 2011 2012 2011 2012 Dividends to Group* • c.50% of sales through AFER (a savings assoc
Slide 20: Resilient GI & Health profits
Resilient GI & Health profits Operating profit Headline results £893m £860m £819m 17 60 GI IFRS Operating profit reconciliation £ million 144 95 Other 118 Underlying operating profit 2011 860 France 76 Profit growth 139 276 254 Canada 222 Weather (compared with 2011) (64) LTIR (42) Underlying operat
Slide 21: UK GI
UK GI Net Written Premium COR Claims ratio Operating profit 2011 2012 % 2011 2012 Personal Motor 1,126 1,164 3% 101% 97% 62.1% 63.3% £462m Home 797 775 (3%) 89% 93% £445m Commercial 618 617 - 113% 106% Motor Commercial 640 615 (4%) 99% 101% Property Other 929 891 (4%) 95% 99% Total 4,110 4,062 (1%)
Slide 22: Canada GI
Canada GI Net Written Premium COR Claims ratio Operating profit 2011 2012 % 2011 2012 64.1% £276m Personal Motor 869 911 5% 92% 90% Home 424 441 4% 97% 92% 61.0% £254m Commercial 261 265 2% 90% 100% Motor Commercial 277 294 6% 111% 105% Property Other 252 265 5% 90% 88% commercial Total 2,083 2,176
Slide 23: Operational capital generation
Operational capital generation O Operating i profit fi 2012 2012 Post tax Total by country 2012 Capital Operational profit £ million 2011 2012 usage & other capital (net of MI) generation UK Life 931 906 634 28 662 UK GI 403 416 289 52 341 France 471 422 277 53 330 Canada 254 276 193 (3) 190 Poland
Slide 24: Increased cash remittance to Group Centre
Increased cash remittance to Group Centre Total by country Received in 2011 Received in 2012 Operational Operational % remitted to % remitted £ million capital Remittance capital Remittance Group to Group generation generation UK Life & Health 551 200 36% 662 150 23% UK GI 421 184 44% 341 150 44% Fr
Slide 25: Earnings per share
Earnings per share Continuing basis £ millions 2011 2012 Restructuring costs 2012 Operating profit 1,857 1,776 Reorganisation (165) Restructuring costs (172) (344) Ireland and Aviva Investors ((154)) S l Solvency II (89) (117) Operating profit after restructuring costs 1,596 1,315 Other (25) Investm
Slide 26: Net asset value
Net asset value Net Asset Value per share IFRS MCEV IFRS investment variances 2012 UK commercial mortgages (10)p Opening NAV per share at December 2011 435p 441p y Delta Lloyd ((19)p )p Profit 26p (21)p Other 2p Investment variances (27)p 47p Total (27)p US disposal (79)p 37p Dividends net of scrip
Slide 27: Strengthened economic capital surplus
Strengthened economic capital surplus Economic capital surplus* Key economic capital* movements in 2012 £7.1bn1 Economic Capital Capital* Market Pro movements Management forma 172% £bn 2011 and other actions 2012¹ £5.3bn Available capital 15.7 0.7 0.6 17.0 £3.6bn Required capital (12 1) (12.1) 04 0.
Slide 28: External leverage
External leverage External leverage movements in 2012 Group capital £ millions 2011 2012 • IFRS leverageg increased following the US sale Subordinated debt 4,550 4,337 • Compares to c37% industry External debt (debentures & CP) 705 802 average* a s for • Plans o reduction educt o in tthe e Preferenc
Slide 29: Old structure
Old structure Old structure Aviva plc • Aviva Insurance Ltd acted as both underwriter and holding company for the Aviva – COFCO majority of overseas businesses Aviva Group General Accident Life Insurance Company Ltd Holdings Limited plc • Lacked transparency • Governance was complex • Inconsistent w
Slide 30: Financial simplicity – new structure
Financial simplicity – new structure Aviva Insurance Limited Holding Company UKGI Capital & Loans Receivable from HoldCo: £5bn Investments New structure Investment in subsidiaries Payable to UKGI: £5bn Insurance liabilities • Restructure separates Aviva Insurance Limited (“AIL”) from the holding com
Slide 31: Financial simplicity – new structure
Financial simplicity – new structure A i a plc Aviva Aviva Group Holdings Aviva UK Life Insurance Ltd Aviva Investors Asia France Poland Spain Italy Turkey (UK GI) Canada Ireland Life New structure • A more straightforward structure, retrospectively implemented p from 1 Januaryy 2013 • Better aligne
Slide 32: 2012 Results Q&A
AVIVA 2012 Results Q&A 32