Aviva Plc · LSE:AV.
Aviva — Investor Day (July 2016)
99 slides from Aviva's investor day presentation, Jul 6, 2016
Slide 1: Aviva Capital Markets Day
Aviva Capital Markets Day 6 July 2016
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 presentation contains, and we may make other verbal or written “forward-looking statements” wi
Slide 3: Mark Wilson, Group Chief Executive Officer
Aviva Capital Markets Day 6 July 2016 Mark Wilson Group Chief Executive Officer
Slide 4: Context
Context Fundamentals are sound… Yet… Fixed balance sheet Brexit uncertainty No longer capital constrained Questions on growth Results are consistent Still too complex Strong brand and franchises 4
Slide 5: What we are here to answer
What we are here to answer How will you grow earnings? What is the trajectory of the dividend? How strong and resilient is the balance sheet? What is the outlook for capital generation? What are capital management priorities? What is the quality of your franchises? What is the potential of TCC digit
Slide 6: Insurance is about diversity
Insurance is about diversity. And for Aviva, diversity is about multi-line, multi-country in a focused disciplined way. 6
Slide 7: Strategic anchor
Strategic anchor Cash flow plus growth True Customer Composite Digital First Not Everywhere 7
Slide 8: British champion, focused
Strategic identity Quality core franchises British Strong balance sheet champion, Sustainable growing dividend focused composite Surplus capital provides options Oaks, acorns and apple trees 8
Slide 9: Our expectations
Our expectations Operating profit Cash Dividend Mid-single digit growth £7bn cash remittances 50% pay-out in medium term 2016 -2018 ratio 2017 9
Slide 10: Brexit considerations
Brexit considerations Diversified earnings No significant operational issues Structure Other 1% Locally incorporated and regulated Asia 7% Spain 3% Italy 5% Poland 4% Canada 7% Proven resilience Capital France 14% Low interest rate sensitivity AI 3% UK GI 12% Positive: FX, diversity Earnings Negativ
Slide 11: Capital allocation: to maximise return for shareholders
Capital allocation Philosophy Options • Dividend is paramount To maximise • Organic growth return for • Bolt on M&A shareholders • Capital return • Debt restructuring 11
Slide 12: Oaks, acorns and apple trees
Oaks, acorns and apple trees Oaks Acorns Apple trees Solid growth, Future, Simplify, restructure, sustainable cash fast growth focus, improve 12
Slide 13: Oaks, acorns and apple trees
Oaks, acorns and apple trees Oaks Acorns Apple trees UK: Deepen AI: Accelerate Spain: Simplify France: Focused Digital: Innovate Italy: Restructure Poland: Grow Asia: Disrupt FPI: Optimise Canada: Diversify Turkey: Grow India/Taiwan: Improve 13
Slide 14: Digital first lower total cost
Digital first Leading indicators Margin implications Size of the prize Registrations UK digital budget operating profit 2.8m £300m 1.8m £150m Jan 15 May 16 Average policy holding 30% 2.5 lower 1.8 1.5 total cost1 2016 2018 UK Direct MyAviva 1. 30% relates to total cost for new GI home cross sales to
Slide 15: Our brand is a key source of competitive advantage
Our brand is a key source of competitive advantage 15
Slide 16: Preferred brand for consolidation
Clear link between brand and cross-sell 12% “ Direct Line Aviva 10% Preferred brand for consolidation The UK market is not known 8% as a composite one and preferences for consolidation 6% are quite low. However, Aviva Churchill does compare well highlighting AXA the opportunity if it can make a 4% S
Slide 17: Why the UK?
Why the UK? 3rd largest insurance market Large, ageing and affluent population Structural savings growth Attractive product set Disintermediation @ Digital opportunity Stable regulation Consolidated and commercial 17
Slide 18: Tom Stoddard, CFO
Aviva Capital Markets Day 6 July 2016 Tom Stoddard CFO
Slide 19: What we are here to answer
What we are here to answer How stable is the balance sheet? What is our exposure to interest rates? What is our exposure to credit? What is the outlook for operating EPS? When will we reach our dividend pay-out target? What funds the dividend? How will Aviva’s business mix result in growth? 19
Slide 20: How stable is the balance sheet?
How stable is the balance sheet? Capital Liquidity Debt leverage Ratings EC S2 172% 1 182% 178% 180% £1.3bn 31% £1.1bn 28% 27% A+ (Stable) 130% A1 (Stable) A (Stable) AA- (Stable) 2011 2012 2013 2014 2015 Feb-15 Feb-16 2013 2014 2015 Capital position resilient to wide S&P Leverage Ratio range of mar
Slide 21: Well capitalised and resilient to stress
How stable is the balance sheet? Well capitalised and resilient to stress Group SII ratio Equities movement Interest Corporate bond GI shock² Longevity 2011 financial 2008 financial FY15: 180% (decrease) rates¹ spreads shock3 crisis4 crisis4 Capital redeployment coverage ratio -10% -25% -25bps +100b
Slide 22: What is our exposure to interest rates?
What is our exposure to interest rates? Balance sheet Profit & loss Resolute matching strategy Business mix Resilience improved during H116 Av. yield significantly above guarantees UK risk margin – transitional reset Av. yield in GI 2.7%. New money c.1.8% Low guarantees in European savings Annuity v
Slide 23: What is your exposure to credit?
What is your exposure to credit? Shareholder assets Debt securities (FY 2015) • Conservative portfolio - minimal defaults £ million £ million % of portfolio • 93% of non rated assets rated as AAA 6,770 14.1% investment grade internally AA 16,271 34.0% • Bank debt securities both senior and A 13,145
Slide 24: What is the outlook for operating EPS?
What is the outlook for operating EPS? IFRS Operating EPS • Longer term earnings growth: mid single digit increase • Growth in 2016 / 2017 may be challenged 49.2p by uncertainty 1 48.3p 44.2p • 2016 impacted by increased share count. Weighted average share-count increased by 8% on 2015 • Intention t
Slide 25: When will we reach our dividend pay-out target?
When will we reach our dividend pay-out target? Dividends Pay-out ratio 50% 42% • We aim to reach a 50% pay-out ratio in 2017 1 37% 34% – Allows for balance between cash flow and growth – 50% pay-out ratio not a ceiling on capital return • From FY18 onwards: DPS in-line with operating EPS 2013 2014
Slide 26: What funds the dividend?
What funds the dividend? Cumulative 2016 – 2018 position FY15 180% Business unit generation BU generation • FY 16–18 capital generation covers dividend Centre costs & debt • Ongoing c.20pts of generation Dividends Remittance expectation 80% - 100% of capital generation 2018 Not to scale 26
Slide 27: What is our approach to capital management?
What is our approach to capital management? • Complete upward rebasing of the dividend to 50% operating EPS pay-out ratio cover by 2017 • Sustainable long term dividend growth from 2018 onwards Balanced approach to excess capital – with investment and return both on the agenda Investment Capital ret
Slide 28: How will Aviva's business mix result in growth? (UK)
How will Aviva’s business mix result in growth? (UK) 2016 – 2018 ambition Opportunities Challenges • DC & platform flows • Heritage run-off Life Low to mid single digit CAGR • Annuity & protection new business • Fee margin compression • Expenses • Brexit • HomeServe + TSB • Expenses General Insuranc
Slide 29: Our expectations
Our expectations Operating profit Cash Dividend Mid-single digit growth £7bn cash remittances 50% pay-out in medium term 2016 -2018 ratio 2017 29
Slide 30: UK Life
UK Life 6 July 2016 Andy Briggs 2015 UK Life results including 12 months of Friends Life, excluding PMI & Ireland. Results below UK Life level are an internal view and are unaudited.
Slide 31: What we are here to answer
What we are here to answer What is the size and growth potential of the UK Life market? What is the quality of Aviva’s UK Life franchise? How will we win in this market? How does UK Life support the ‘True Customer Composite’? How do we make money in UK Life? How fast can we grow? What cash will we d
Slide 32: Market leading position and competitive advantage drive cash flow plus growth
Aviva’s market leading position and competitive advantage will drive cash flow plus growth Leading Competitive Low to mid single digit position in advantage from earnings growth growing multi-line model markets £3.5 – 4.0bn cash remittances (2016 – 18) 32
Slide 33: UK Life market assets expected to double over 10 years
We expect UK Life Market assets to double over the next 10 years1 Customer Assets Asset flows Annuities & equity release Long term savings2 £350bn assets; 1-3% CAGR £1.0tn assets £25bn p.a. flows; 2-6% CAGR 6-11% CAGR Private DB pensions £1.3tn assets c.0% CAGR Legacy c.£275bn assets c.-10% CAGR Pro
Slide 34: Aviva has strong, scale market positions
Aviva has strong, scale market positions Long term savings Annuities & Protection Legacy Equity Release 1st Workplace £51bn 1st £52bn assets 1st £1.7bn in-force £83bn assets assets premiums 5th Platform £3.2bn 1st £3.8bn premiums 2nd £230m new c.20% UK Life profits net flows premiums 34
Slide 35: Sustainable competitive advantage from our multi-line model
Sustainable competitive advantage from our multi-line model Cost Capital Customer Economies of scale Significant diversification Strong brand UKL cost:income ratio, % SCR diversification, £bn Customer spontaneous awareness, % 34% cost 47% Aviva advantage benefit Peer Avg. 49% 19 15% 37% benefit 32%
Slide 36: Low to mid single digit growth in IFRS earnings
Our market leading position and competitive advantage drives low to mid single digit growth in IFRS earnings… £260m £1,450m £350m Low- mid £180m single digit £520m CAGR £130m Long Term Annuities & Protection Legacy Management 2015 IFRS Savings Equity Release Actions Operating Profit … and £3.5 - 4.0
Slide 37: Long term savings: Aviva leading in workplace
Long term savings: Aviva leading in workplace Strong market growth Aviva in #1 position… … generating value Market AUA, £bn Bundled Workplace AUA, £bn • c.80% of new premiums 950 from existing schemes • Engaging directly with businesses and employees 7-12% CAGR 51 • Award winning platform 600 39 30
Slide 38: Long term savings: challenging in Adviser and Consumer platform
Long term savings: Aviva challenging in Adviser and Consumer platform Strong market growth Aviva a challenger… …with key advantages Market AUA, £bn Platform net flows, £bn • Broad distribution reach 1,600 • In-house advice • Migration to single platform 9-14% • New business flows to CAGR 6.6 Aviva I
Slide 39: Long term savings: significant growth in assets and profits
Long term savings: Expecting significant growth in assets and profits Growing assets… …with stable margin 2015 2015 2016-20 Stable margin Opening Assets £83.6bn Margin 27bps EB £228m 25-30bps Stable NB cost Net Fund Flows £2.8bn NB cost £98m NB £(98)m c.£90-100m Market Movements £1.2bn Total OP £130
Slide 40: Annuities & Equity Release: Strong market position
Annuities & Equity Release: Strong market position Moderate market growth Aviva in #1 position Market AUA, £bn NB Premiums, £bn 2015 NB Premiums1, £bn 475 45 1-3% CAGR 2-6% CAGR 3.8 3.8 3.5 350 375 3.1 2.9 30 25 2015 2025 2015 2025 Aviva PIC Rothesay Scot. L&G Life Widows • Increased appetite for bu
Slide 41: Annuities & Equity Release: asset origination and longevity
Annuities & Equity Release: Strong capability in asset origination and longevity Diverse range of illiquid assets Longevity expertise 1 Assets backing annuities, 2015 £50bn liabilities c1.3m lives Commercial Mortgages 27% 36% Equity Release Infrastructure 200+ years 10m life years experience exposur
Slide 42: Annuities & Equity Release: margin and profit growth
Annuities & Equity Release: Expecting significant margin and profit growth Stable assets… …with growing margin 2015 2015 2016-20 Margin growing Opening Assets £53.0bn Margin 45bps EB £236m to 55-70bps 1 Margin growing Premiums £2.1bn £1.7bn Margin 7.5% NB £288m to 7.5-8.5% Claims £(2.6)bn Total OP £
Slide 43: Protection: Attractive financials for scale players
Protection: Attractive financials for scale players Stable market Aviva a market leader… …with real advantages Market AUA, £bn NB Premiums, £m APE • c.60% of individual sales from 1.4 long-term partnerships e.g.: 1-3% CAGR 231 230 1.0 1.1 115 75 • Platform investment, delivering 56 c.75% straight th
Slide 44: Protection: margin and profit growth
Protection: Expecting significant margin and profit growth Stable premiums… …with growing margin 2015 2015 2016-20 Margin growing Opening Premiums £1.7bn Margin 7% EB £116m to 7.5-8.5% Margin growing New Premiums £0.2bn Margin 28% NB £66m to 40-50% Run Off £(0.2)bn Total OP £182m Closing Premiums £1
Slide 45: Legacy: deeper customer relationships for long term value
Legacy: Driving deeper customer relationships to create long term value Legacy run off… …with stable margin 2015 2015 2016-20 Legacy Opening Assets £91.2bn Margin Margin 38bps Total OP £350m delivers 35-40bps c.20% of UK Life £(7.8)bn Net Fund Flows profits Market Movements £(0.2)bn • Legacy run off
Slide 46: Deeper relationships with customers, businesses and intermediaries
Deeper relationships with customers, businesses and intermediaries Customers Focus on mass market / mass affluent MyAviva Digital First Corporate wrap Aviva for Advisers Consumer platform Channels Workplace Intermediated Digital direct Long term Annuities & Products savings Equity Release Protection
Slide 47: UK Life Financials
UK Life Financials 6 July 2016 Jason Windsor 2015 UK Life results including 12 months of Friends Life, excluding PMI & Ireland. Results below UK Life level are an internal view and are unaudited.
Slide 48: New business and existing business margins
Aviva’s market leading position and competitive advantage will drive cash flow plus growth Market 2015 opening assets 2015 2015 2016-20 margin, = 2015 margin growth / premium £bn margin OP £m Long term savings 6-11% 80bps 83.6 27bps 228 0bps 25 30 Existing business Annuities & ER 1-3% 53.0 45bps 236
Slide 49: Reducing cost profile: track record of cost efficiency
Reducing cost profile: strong track record of cost efficiency Operating Expenses £73m £29m £525m £967m £865m £612m £442m 2012 2014 2014 2014 Integration Other 2015 - Aviva - Aviva - Friends - Total Savings Savings - Total • UK Life integration delivered £113m run-rate savings; £73m realised in 2015
Slide 50: £3.5-4.0bn of planned cash remittance over next 3 years
£3.5 – 4.0bn of planned cash remittance over next 3 years £3.5bn to £4.0bn Low to mid single digit CAGR £1.45bn £1.0bn Tax £2.5bn to £3.0bn £0.29bn £0.8bn Post tax £1.16bn Low to mid single digit CAGR 2015 OP 2015 2016 2017 2018 Special Dividends Cash Remittance1 • Cash remittances supported by capi
Slide 51: Delivery of management actions
Delivery of management actions: dedicated team focusing on opportunities to optimise our c.£240bn balance sheet • Commercial mortgage • Expense reductions Actions executed sale/restructuring • Balance sheet hedging • Equity release securitisation • Diversification driven by Part VII transfers in 201
Slide 52: Strong capital position and low market sensitivity
Balance sheet: Strong capital position and low market sensitivity UK Life Solvency II ratio Equities movement Interest Corporate bond Longevity FY15: 156% (decrease) rates spreads shock coverage ratio Excess capital -10% -25% -25bps +100bps Working range 155% 153% 155% 154% 147% 100% Solvency Risk r
Slide 53: Market leading position and competitive advantage drive cash flow plus growth
Aviva’s market leading position and competitive advantage will drive cash flow plus growth Leading Competitive Low to mid single digit position in advantage from earnings growth growing multi-line model markets £3.5 – 4.0bn cash remittances (2016 – 18) 53
Slide 54: Aviva Investors: Accelerating Profit Growth
Aviva Investors Accelerating Profit Growth 6 July 2016 Euan Munro Chief Executive Officer, Aviva Investors
Slide 55: What we are here to answer
What we are here to answer Where is Aviva Investors today? How will we win? What does success look like? 55
Slide 56: AI – Low cost, scale manufacturer
AI – Low cost, scale manufacturer; 3% Group profits Scale New Solutions Investment Profit Recovery Performance £300bn AUM AIMS TR 84% vs BM 2015 £105m Multi location AIMS Income 33% increase on 2014 Multiple asset classes + Incubators 56
Slide 57: AI – Transforming to strong profit contributor
AI – Transforming to strong profit contributor Transformation Demand for Winning faster Share price journey outcome with Aviva growth orientated solutions Half way Low interest, high Product co-creation Double digit profit 5 year turnaround volatility world Digital CAGR Strong indicators Ageing popu
Slide 58: Transformation journey
Transformation journey Fix Rebuild Grow & Monetise 2014 2015/16 2017 – 2020 Set strategy & vision Solution design / launch Distribution reach & partner Build top team Build illiquid capability Consultant ratings Fix controls Build morale and engagement High performance culture Next generation soluti
Slide 59: Growing global demand – $3.7tn in active solutions
Growing global demand – $3.7tn in active solutions New active solutions will Different solutions needed drive Global AUM growth $3.5 Trading $3.1tn Strategies $3.0 $0.3tn (8%) Next- $1.0 Real Generation 2016-2020 Global net flows ($tn) $2.5 assets/private Fixed Income $0.1 markets $1.1tn $0.9tn (23%
Slide 60: Good early proof points: assets building strongly
Good early proof points … Assets building strongly AIMS - Quarterly Net Flows AIMS - Closing AUM 2 7.0 1.8 1.7 6.0 6.0 1.6 1.3 5.0 1.5 1.4 1.2 1.2 4.3 Net Flows £bn AUM £bn 1.2 4.0 0.9 1 3.0 0.8 3.0 0.6 0.6 0.4 2.0 4.5 0.4 3.4 1.0 0.4 2.4 0.2 0.2 0.1 0 0.0 0.3 H2 2014 H1 2015 H2 2015 Q1 2016 Q2 2016
Slide 61: Good early proof points: market leading flows
Good early proof points… Market leading flows Performance vs Peers Strong Q1 wholesale net flows growth has placed Aviva Investors above major competitors despite industry’s ‘worst Q1 in over 20 years’ Q1 2016 Morningstar Retail and Institutional global net flows by asset class (£m, excl seg, MM and
Slide 62: Winning faster with Aviva
Winning faster with Aviva Co-creation of Higher share of Illiquid origination Digital innovative Aviva platform solutions products business DB/DC Workplace Adviser and Annuity and Multi Channel savings consumer Equity Release platforms Leverage / replicate across Aviva Markets 62
Slide 63: What success might look like
What success might look like Comment 2016 2017 2018 2019 2020 How would you Significant Global leader in describe where Delivering Diversified Sound bite we have got to Transformation growth excellence contribution to Solutions provider Group profits of choice on our journey? How would competitors O
Slide 64: Right solutions, positive flows, growth track
1 Right solutions for today's environment 2 Flows now positive; expect to accelerate with Aviva distribution 3 We are already on a growth track 64
Slide 65: UK General Insurance: Growing from a position of strength
Growing from a position of strength UK General Insurance 6 July 2016 Maurice Tulloch Chairman, Global GI
Slide 66: UKGI is uniquely well-positioned in the market
UKGI is uniquely well-positioned in the market Number one Diversified Proven track Why we win business record – resilient performance Leading UK Multi-channel, Sustainable earnings Scale and core General Insurer multi-product and dividends capabilities provide competitive advantage 66
Slide 67: What we are here to answer
What we are here to answer How do we exploit our market scale advantages? How do we maintain and strengthen our diversification? What are our sustainable sources of competitive advantage? How we will win and grow our business 67
Slide 68: Number 1 UK General Insurer
Number 1 UK General Insurer Scale Performance Recognition £4bn GWP & 11% 2014 & 2015 COR 95% Strong brand, quality market share customer franchise £100m cost reduction in Advantages in procurement, last 2 years General Insurer of the data and service Year 2014 & 2015 68
Slide 69: Diversified business
Diversified business Products Channels Aviva UKGI FY15 GWP, % Aviva Personal Lines FY15 GWP, % Commercial Specialty, 12% Digital Direct, Brokers, 27% 35% Personal Motor, [CATEGORY 27% NAME], [VALUE] Commercial Home, 17% Banking Retail Partners, Motor, 14% Partners, 25% 13% Personal Specialty,13% Wel
Slide 70: Strong track record – resilient performance
Strong track record – resilient performance Operating Profit Reported COR Underwriting £368m 98.3% December Dec Floods 95.1% Floods 94.8% LTIR £249m +0.6pp £154m £37m Mid single digit CAGR 94-96% £214m Target £212m FY12 FY15 FY18 FY12 FY14 FY15 FY18 *FY12 LTIR adjusted to reflect FY15 AGH Loan value
Slide 71: Market outlook and UKGI ambition
Market outlook and UKGI ambition 2015 Market growth Op profit 2016-20 growth ambition GWP COR and COR £m £bn % Personal Lines Personal Motor Level 98-102% 1.1 98 87 1-2% Homeowner Level 92-97% 0.7 91 86 2-4% Personal Speciality 3-5% 94-96% 0.5 94 28 6-10% Commercial Lines Commercial Motor 0-1% 98-10
Slide 72: Why we will win
Why we will win Strong Results Leading Digital Capability across our Products Growing Direct Business Routes to Growth Excellence in Innovative Indemnity Pricing & Underwriting Management Powered by Analytics & Fighting Fraud 72
Slide 73: Personal Motor
Personal Motor Personal Motor Personal Motor COR Why we will win: GWP by channel £1,073m 97.8% £1,065m £997m 96.2% 97.4% • Growing the Digital business – 5.4% Expenses 7.7% 8.4% Low cost manufacturer 40% Brokers 46% 43% 7.8% Commission 8.5% 8.0% • Further sophisticated underwriting Partners techniqu
Slide 74: Commercial Lines
Commercial Lines Commercial Commercial COR Why we will win: GWP by channel £1,717m £1,694m £1,719m COR 102.7% • #1 SME largest distribution footprint 95.8% Expenses 92.9% 13.2% 12.0% Large Corporate 37% 38% 39% 12.5% • Targeted and controlled expansion Commission 21.5% 20.2% 20.5% • Market leading p
Slide 75: Home
Home Home GWP Home COR Why we will win: by channel £814m 93.1% £769m 87.3% 9.6% 90.6% • Growing digital – Revitalising the 10.5% Brokers 26% £677m Expenses 9.5% home proposition 25% 23% 34.8% 29.9% Commission 32.9% • Partner of choice for most banks – New TSB deal Partners 58% 58% 58% • Analytic sop
Slide 76: Excellence in Pricing and Underwriting
Excellence in Pricing and Underwriting c 76
Slide 77: Innovative Indemnity Management
Innovative Indemnity Management c 77
Slide 78: Routes to growth
Routes to growth Market Hardening market conditions Total Customer Exploiting the power of the focussed composite Composite Distribution Deeper relationships leveraging our core competencies, Management and unparalleled brand reach Expanded & Expanding our products and propositions – Home, Corporate
Slide 79: UKGI is uniquely well-positioned in the market
UKGI is uniquely well-positioned in the market Number one Diversified Proven track Why we win business record – resilient performance Leading UK Multi-channel, Sustainable earnings Scale and core General Insurer multi-product and dividends capabilities provide competitive advantage 79
Slide 80: Digital first
Digital first 6 July 2016 Andrew Brem Chief Digital Officer
Slide 81: What we are here to answer
What we are here to answer What is our digital strategy? Do we have the capabilities to deliver it? Are customers responding to it? How does it deliver to the bottom line? 81
Slide 82: Clear digital strategy and vision
Clear digital strategy and vision Three strategies to compete Build more and 1. Digital direct deeper customer relationships 2. Multi-access Max Deliver an outstanding Create leading customer experience composite propositions Culture, Capabilities, 3. Digital ecosystems Execution ‘Affinity 2.0’ Digi
Slide 83: For customers, for Aviva
For customers For Aviva Ultimate tailoring True customer composite One-Click convenience Average product holding Customer-level pricing Lifetime value 83
Slide 84: The Aviva Customer Experience Toolkit
The Aviva Customer Experience Toolkit Customer facing digital ecosystem Public websites MyAviva portal Customer tools Agent tools Apps 84
Slide 85: World-class digital capabilities from two Garages
World-class digital capabilities from two Garages London Singapore Digital product Customer Digital Digital marketing and design analytics engineering Digital business units in markets UK Digital France Poland Canada Asia 85
Slide 86: UK Digital
UK Digital Our journey to connect with our 16m UK personal customers 86
Slide 87: Digital first: Blair Turnbull, MD UK Digital
Digital first 6 July 2016 Blair Turnbull MD, UK Digital
Slide 88: UK market remains attractive and presents growth opportunities
UK market remains attractive and presents growth opportunities 91% internet usage 30% of retail & travel via 100 mobile/tablets – forecast to rise to 45% by 20201 90 % 80 40% prefer to manage financial products online2 70 60 70% view bank UK USA CAN AUS SGP EU statements online3 World Bank / Interna
Slide 89: Customers need more from insurers
Customers need more from insurers Today… Poor Don’t reward Confusing Low trust engagement loyalty Preference for one provider 31% of UK consumers prefer one 51% of MyAviva users prefer one insurance and savings provider1 insurance & savings provider2 1. Aviva Consumer Attitudes Survey, ICM March 201
Slide 90: MyAviva
MyAviva Change of personal details Travel, Home, Health Customer loyalty - once for all products - pre-calculated quotes - 20% customer discount 90
Slide 91: Leading indicators supporting UKD business model
Leading indicators positively supporting UKD business model Direct sales per month Single customer database 70k 51k 16m Policies 8.6m Single available on Customer database MyAviva registrations 4.5m Net Promoter Score, Jan 161 Jan 15 Apr 16 32 Engage Loyalty & & repeat Jan 15 Apr 16 Dec 16 9 longevi
Slide 92: Positive composite and retention lead indicators
Positive composite and retention lead indicators As at April 2016 Customers with multiple New business customers 78% products reaching 5+ years 70% register for MyAviva Customer registrations Average policy holding Engage Loyalty & & repeat 2.5 longevity Visits MyAviva annual visits 1.5 1.8 2.5 12x
Slide 93: Significant opportunity for digitising operational processes
Significant opportunity for digitising operational processes 40% unit cost efficiencies delivered Similar opportunities in Life and pan UK, through GI digitisation since 2010 with pilot activity in progress 100 -40% Letters 30m p.a. GI unit cost* (indexed) Telephone calls 13m p.a. Claims 730,000 p.a
Slide 94: Unique benefits from digital and existing customers
Unique benefits from digital and existing customers, especially retirement Scenario: New customer purchasing a home policy, modelled over 5 years 30% lower total Customer discount costs Contribution Acquisition Operating costs Shared Claims cost with customers Intermediated UKD retirement new custom
Slide 95: Plan to double earnings by 2018
Plan to double earnings by 2018 Lead indicators Digital direct operating profit £300m 8 4 6 2 3 4 12 2 8 1 4 £150m 0 16 0 10 0 5 Millions Millions Number of products Single customer Registrations Average product 2016 2018 database holdings Key: Current position 95
Slide 96: Why we will win
Why we will win 16m customers Composite Single customer view Analytics and pricing Brand strength 96
Slide 97: What we have answered today
What we have answered today Balance sheet Strong and proven resilience UK franchises Scale, strength, consistency, growth, composite Profit Mid-single digit growth in medium term Dividend 50% pay-out ratio in 2017 Cash flow £7bn remittance (2016-2018) Capital management priorities Progressive divide
Slide 98: Resilient balance sheet, growing franchises, sustainable dividend
1 Resilient balance sheet 2 Growing core franchises 3 Sustainable dividend growth 98
Slide 99: Aviva Capital Markets Day
Aviva Capital Markets Day 6 July 2016