Aviva Plc · LSE:AV.
Aviva — H1 2012 Earnings Presentation
19 slides from Aviva's earnings presentation, Aug 9, 2012
Slide 1: Interim Results 9th August, 2012
Interim Results 9th August, 2012 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: Chairman's opening remarks
Chairman's opening remarks It is just one month since we announced our plans through to 2014, and as you would expect, while there has naturally been a great deal of activity inside Aviva during that period, the consequences of this will find their way into announcements over the coming months, rath
Slide 4: Chairman's opening remarks
Chairman's opening remarks We also began the process of disposing or running down our non-core businesses, have appointed investment banking advisors to the 10 businesses planned to be sold, and are in the process of reducing the capital levels of capital hungry segments. We are also considering pla
Slide 5: Results summary
Results summary Operating profits lower • Operating profit of £1,121 million (HY11: £1,146 million) • Operating profit after restructuring costs of £935 million (HY11: £1,035 million) • Loss after tax of £681 million after £876 million write down of US goodwill and intangibles (HY11 on a continuing
Slide 6: Operating profit impacted by disposals, FX and restructuring costs
Operating profit impacted by disposals, FX and restructuring costs Operating profit from continuing operations £ million HY11 HY12 Change Life 1,082 1,010 (7)% IFRS Operating profit reconciliation General Insurance & Health 455 461 1% Operating profit after restructuring 1,035 costs HY11 Fund Manage
Slide 7: Life: Resilience in the UK offset by FX and lower profits in Ireland & Mainland Europe
Life: Resilience in the UK offset by FX and lower profits in Ireland & Mainland Europe Operating profit £1,082m £1,010m £1,009m £55m £21m £15m £24m Life operating profit reconciliation Other £101m £90m £74m Singapore £21m Operating profit HY11 1,082 £78m £109m Poland £113m UK, USA & Singapore 13 USA
Slide 8: Life: resilience in the UK, lower profits in France, Spain and Italy
Life: resilience in the UK, lower profits in France, Spain and Italy Italy HY10 HY11 HY12 % change Operating profit Operating profit (£m) 49 72 70 (3)% Operating Capital Generation (£m) (41) - 42 - £72m Average reserves (£bn) 18 19 17 (11)% £70m Annualised ROCE* 4.8% 7.9% 7.6% (0.3)ppt Italy £49m £1
Slide 9: Life: higher profits in the US and Singapore, lower profits in Poland
Life: higher profits in the US and Singapore, lower profits in Poland Singapore HY10 HY11 HY12 % change Operating profit Operating profit (£m) 21 21 24 14% Operating Capital Generation (£m) (6) 7 4 (43)% Average reserves (£bn) 1 2 2 - Annualised ROCE* 18.0% 14.3% 18.8% 4.5ppt £21m £24m Poland HY10 H
Slide 10: Life: operating profit down owing to higher DAC amortisation, partly offset by lower expenses
Life: operating profit down owing to higher DAC amortisation, partly offset by lower expenses Key: IFRS Profit Driver Pre-tax HY11 HY12 Variance operating profit 1,082 1,010 (7)% Income DAC/AVIF Expenses and amortisation and other commissions 2,151 2,138 (1)% (31) (119) (x4) (1,038) (1,009) 3% Acqui
Slide 11: Life: Higher investment return due to higher spread margins
Life: Higher investment return due to higher spread margins Key: IFRS Profit Driver Investment return HY11 HY12 Variance 1,299 1,322 2% Unit linked margin Participating business Spread margin Expected return on shareholder assets 486 439 (10)% 266 266 - 348 439 26% 199 178 (11)% (1.1) AMC Bonus Spre
Slide 12: GI & Health: higher profits in the UK and Canada offset by the RAC disposal and weather
GI & Health: higher profits in the UK and Canada offset by the RAC disposal and weather Operating profit £455m £461m £444m £15m £40m GI & Health £43m operating profit reconciliation Other £73m £50m Operating profit HY11 455 France £11m Profit Increase 99 £173m £118m Canada £132m Canada – reserves re
Slide 13: GI & Health profit drivers: higher underwriting results offsets lower investment earnings
GI & Health profit drivers: higher underwriting results offsets lower investment earnings Key: Pre-tax operating profit Driver 455 461 1% HY11 HY12 Variance GI & Health Underwriting result Expected investment return 119 123 3% 358 354 (1)% General insurance ratios Average rate 3.9% 3.8% (0.1)ppt Net
Slide 14: Group operating capital generation ahead of HY11
Group operating capital generation ahead of HY11 Operating capital generation Operating capital generation HY11 HY12 HY12 £0.9bn £0.9bn £bn Net Net Generated Invested Life 0.5 0.6 1.0 (0.4) £0.8bn General GI £0.3bn £0.3bn 0.3 0.3 0.3 - Insurance and other £0.3bn Total 0.8 0.9 1.3 (0.4) HY11 1.3 (0.5
Slide 15: Overall loss from the US goodwill write down. Interim dividend held flat
Overall loss from the US goodwill write down. Interim dividend held flat Continuing operations £ million HY11 HY12 Operating profit (after restructuring costs) 1,035 935 Investment variances & assumption changes (275) (199) Loss on disposals (11) (30) Goodwill, intangibles, amortisation and impairme
Slide 16: NAV lower due to the dividend, FX and US goodwill & intangibles write down
NAV lower due to the dividend, FX and US goodwill & intangibles write down Net Asset Value per share IFRS MCEV Opening NAV per share at December 2011 435p 441p Profit and investment variances 9p 29p Dividends net of scrip (16)p (16)p Pension fund 2p 2p Goodwill write down (30)p (30)p Foreign exchang
Slide 17: Economic capital surplus higher due to market movements, management action and the Delta Lloyd disposal
Economic capital surplus higher due to market movements, management action and the Delta Lloyd disposal Economic capital* surplus Key economic capital* movements in 2012 £4.7bn1 Economic Capital* Market Management Sale of £3.5bn £bn FY11 movements actions HY12 DL HY12¹ Available capital 15.7 (0.1) 0
Slide 18: Strategic progress
Strategic progress Managing the risk of the Italian business Progress on non-core cells Regulatory capital protected from spread widening 1 cell: Delta Lloyd • Implementation of Regulamento 43 significantly Further sell down on 6 July 2012 eases the need to provide more capital to Italian • 21% sold
Slide 19: Closing remarks
Closing remarks Performance • Operating profits down 2% to £1,121 million as a result of the sale of the RAC, adverse FX, the impact of recent weather. • Concluded it was necessary to write down £876 million US goodwill and intangibles at the half year. • The interim dividend has been held flat at 1