Aviva Plc · LSE:AV.
Aviva — H1 2011 Earnings Presentation
29 slides from Aviva's earnings presentation, 2011
Slide 1: 2011 Half Year Results: Fitter, Stronger
2011 Half Year Results Fitter Stronger 1
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 verbal statements containing, “forward-looking statemen
Slide 3: Agenda
Agenda HY 2011 headlines Strategic progress HY 2011 financial results Q&A 3
Slide 4: HY11: further success in all key areas
HY11: further success in all key areas IFRS operating profit Net operating Interim dividend capital generated £1,337m 10.0p £1,270m £0.9bn 5% £0.8bn 9.5p £84m special 5% distribution £0.2bn non- 13% recurring 14% underlying growth £0.7bn recurring HY10 HY11 HY10 HY11 HY10 HY11 Funds under management
Slide 5: A strong company across the board
A strong company across the board Customer and reputation People Regulation and Solvency II Risk management in uncertain times 5
Slide 6: HY11: excellence in Life
HY11: excellence in Life Life operating profit IRR target: 12% 14.3% £1,009m £1,082m 12.9% £84m special £770m distribution 10.0% £86m special distribution HY09 HY10 HY11 HY09 HY10 HY11 Sales (PVNBP) Average life in-force reserves £16.3bn £271bn £15.5bn £253bn £14.3bn £237bn HY09 HY10 HY11 FY09 FY10
Slide 7: HY11: excellence in GI
HY11: excellence in GI GI & Health operating profit COR target: 97% £455m £444m 97% Underwriting 96% profit LTIR £383m LTIR £336m HY10 HY11 HY10 HY11 GI & Health sales (NWP) Expense ratio £4.7bn 12.0% £4.3bn 11.0% HY10 HY11 HY10 HY11 All numbers based on continuing business – excluding Delta Lloyd *
Slide 8: UK: building a dominant UK franchise
UK: building a dominant UK franchise Life IFRS operating profits L&P sales New business IRR £5.5bn £463m £462m £5.2bn 5% 16% £84m special distribution 22% 15% 22% £379m £3.5bn GPP, £2.9bn annuities, protection HY10 HY11 HY10 HY11 HY10 HY11 GI GI operating profits* GI NWP* GI COR* £2,222m £242m £1,94
Slide 9: Europe: 21% increase in profits
Europe: 21% increase in profits Life IFRS operating profits L&P sales New business IRR £8.0bn £473m £6.3bn 14% Pensions, 12% £425m 11% WP £6.0bn savings £4.3bn £2.0bn Unit linked, £2.0bn Protection HY10 HY11 HY10 HY11 HY10 HY11 GI IFRS operating profits GI & Health NWP GI COR £1,123m £80m 102% £1,06
Slide 10: North America, Asia Pacific and Aviva Investors
North America, Asia Pacific and Aviva Investors North America Asia Pacific Aviva Investors Life IFRS operating profit Life IFRS operating profit IFRS operating profits £109m £42m £38m £41m £86m 27% £35m 9% 14% 14% IRR IRR HY10 HY11 HY10 HY11 HY10 HY11 GI IFRS operating profit L&P sales Net funded ex
Slide 11: Beating targets
Beating targets 14% life insurance new business IRR against a target of 12% 96% group COR against a target of 97% £0.8 billion capital generation in H1 towards the £1.5 billion FY11 target Aiming to generate £1.5 billion - £1.8 billion in 2011 On track to deliver £400 million cost and efficiency sav
Slide 12: The new Aviva: fitter, stronger & positioned for growth
The new Aviva: fitter, stronger & positioned for growth FY 2008 HY 2011 Life IRR 11% Life IRR 14% Profitability GI COR 98% GI COR 96% In-force VIF £5.0 billion VIF £6.6 billion book Cost base £5.7 billion Cost base £3.9 billion2 Efficiency Headcount 54,700 Headcount 36,1002 Economic capital surplus
Slide 13: Strategic delivery will finance growth in chosen markets
Strategic delivery will finance growth in chosen markets Value optimised by good planning and execution £380 million £450 million sale of £1 billion initial IPO of £1 billion Continuing from sale of additional Delta Lloyd sale of RAC focus Australia 15% of Delta Lloyd Current position £470 million £
Slide 14: Momentum for growth
Momentum for growth IFRS operating profit GI sales and COR £7.4bn £1.9bn £7.0bn £1.5bn £1.1bn £4.1bn 99% 97% COR 96% COR COR FY09 FY10 HY11 FY09 FY10 HY11 Life cost / income ratio Life cost / income ratio vs peers 60% 80% 2009 2010 HY11 56% 52% 60% 48% 44% 40% 2009 2010 HY11 Co. 1 Co. 2 Co. 3 Co. 4
Slide 15: Financial results
Patrick Regan Financial results 1. Growing the franchise 2. Sustainable and growing capital generation 3. Maintaining a strong balance sheet 15
Slide 16: Increased operating profit
Increased operating profit HY10 HY11 IFRS operating profits Life GI Life GI £m UK 463 268 462 261 £11m £(19)m 1,350 £73m £2m £1,337m Europe 425 46 473 80 North America 86 132 109 118 Asia Pacific 35 (2) 38 (4) 1,300 Total Life / GI 1,009 444 1,082 455 £1,270m Fund Management 39 42 Other, non-insuran
Slide 17: Life profit growth
Life profit growth £m HY10 HY11 Key: UK Driver underlying 379 462 special distribution 84 - HY10 HY11 Variance Aviva Europe 425 473 Pre-tax North America 86 109 operating profit Asia Pacific 35 38 1,009 1,082 7% Operating profit 1,009 1,082 4% growth in underlying Income DAC/AVIF Expenses and income
Slide 18: Total IFRS life investment return
Total IFRS life investment return Key: Driver Investment return HY10 HY11 Variance 1,338 1,319 (1)% Unit linked margin Participating business Spread margin Expected return on shareholder assets 461 486 5% 313 266 (15)% 362 348 (4)% 202 219 8% AMC Bonus Spread (0.3) 114 106 (8) 59 48 (11) 117 101 (16
Slide 19: GI profit growth
GI profit growth GI & Health underwriting result GI & Health operating profits £119m £455m £444m £61m HY10 HY11 HY10 HY11 GI & Health NWP GI COR GI & Health LTIR* £m % £383m HY10 HY11 HY10 HY11 £336m Total 4,337 4,708 97% 96% Of which: UK 2,241 2,510 98% 96% Aviva Europe 1,068 1,123 102% 97% North A
Slide 20: Delta Lloyd
Delta Lloyd Total IFRS operating profit (100% basis) Analysis of operating profit £272m £m Life GI FM Other1 Total2 £224m HY10 119 81 17 7 224 Up to May 6 185 1 11 (6) 191 After May 6 35 HY11 – Aviva share 226 After May 6 non-Aviva share 46 Total HY11 272 HY10 HY11 1Operating profit “other” segment
Slide 21: IFRS profit after tax
IFRS profit after tax Group £m ex Delta Lloyd Delta Lloyd Total HY10 HY11 HY10 HY11 HY10 HY11 Operating profit 1,046 1,111 224 226 1,270 1,337 Integration & restructuring costs (72) (111) - - (72) (111) Other exceptional items (10) - (107) - (117) - Investment variances & assumption 73 (275) 931 (88
Slide 22: Net Asset Values
Net Asset Values 636p 575p 542p Pence per share IFRS MCEV EEV NAV at December 2010 454p 542p 621p EEV Profit and investment MCEV 18p 25p MCEV variances Delta Lloyd life investment (13)p - variances (6)p Dividends (net of scrip) (9)p (9)p FY10 HY11 HY11 pro forma pro forma Delta Lloyd sell down (22)p
Slide 23: Increase in underlying capital generation
Increase in underlying capital generation £m 1200 Capital generation and allocation 800 400 Life HY10 allocation HY11 0 Life Non-life Non-life Life total Non-life Group generation generation allocation* total Total -400 * HY10 non-life allocation reduced by £0.2bn GI capital release -800 Capital gen
Slide 24: Reduced balance sheet asset risk after Delta Lloyd sell down
Reduced balance sheet asset risk after Delta Lloyd sell down £148bn £113bn Total shareholder assets Mortgages and loans Annualised include £8bn UK Dec Dec June mortgage book 2009 2010 2011 FY10 HY11 Annual interest income £641m £621m £631m £35bn £19bn Annual rental income £842m £822m £831m Mortgages
Slide 25: Good corporate and government debt track record
Good corporate and government debt track record Limited default experience UK Corporate bonds US debt securities 40bps 31bps 10bps < 5bps < 5bps zero 2009 2010 HY11 2009 2010 HY11 Limited exposure to higher risk European debt Direct Total Direct shareholder exposure to Greece, shareholder participat
Slide 26: Increased economic capital surplus
Increased economic capital surplus Economic capital surplus* 2010 increase primarily due to benefit of retained profits £6.9bn adjustment for RAC £6.6bn 2011 increase due to retained profits, issuance of subordinated debt, further sell down of Delta Lloyd and £5.6bn sale of RAC £4.8bn IGD solvency a
Slide 27: Drivers of growth in profit
Drivers of growth in profit Average life in-force reserves Admin cost ratio on life reserves £271bn 46bps £253bn 42bps £237bn 38bps FY09 FY10 HY11 FY09 FY10 HY11 GI & Health NWP GI COR £4,708m 97% 97% £4,337m £4,270m 96% HY09 HY10 HY11 HY09 HY10 HY11 All numbers based on continuing business – exclud
Slide 28: A fitter, stronger Aviva
A fitter, stronger Aviva Operating performance Strong capital Strategic delivery to finance growth Competitive advantage 28
Slide 29: Q&A
Q&A AVIVA