Aviva Plc · LSE:AV.
Aviva — Merrill Lynch Conference 2008
23 slides from Aviva's conference presentation, October 2008
Slide 1: One Aviva, twice the value
One Aviva, twice the value Value and Growth Andrew Moss Group Chief Executive “Accelerating transformational change to deliver a unified and more profitable company” Merrill Lynch Conference 2008 1
Slide 2: Disclaimer
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 ‘an
Slide 3: Aviva is a strong company with great potential
Aviva is a strong company with great potential • Aviva remains focussed on achieving its targets and plans • The hygiene factors – Aviva has a diversified and strong asset base – Confident position with regard to capital and cash flow – Exposure to Lehmans, AIG, other higher risk companies is well w
Slide 4: Aviva is undergoing transformational change
Aviva is undergoing transformational change • One Aviva, twice the value – an agenda for change – Range of senior management appointments – Uniting under one brand – Dealing with underperformance • Growing operating profits and a sound capital position – EEV operating profit up 12% to £1,719m – IFRS
Slide 5: Sound capital position - IGD Solvency surplus
Sound capital position - IGD Solvency surplus Equity 30 June 2008 5 Sept 2008 movement £bn £bn • H108 IGD surplus of £1.8 billion -10% (0.4) (0.4) -20% (0.7) (0.6) -30% (1.0) (0.7) -40% (1.3) (0.9) Events since 30 June 2008 • Downside protection further increased • Additional £200m hybrid raised in
Slide 6: Aviva's balance sheet is strong and of a high quality
Aviva’s balance sheet is strong and of a high quality Equities are principally held to back policyholder liabilities • The largest single asset class is Debt Securities, of which 94% are investment grade (with 1% below investment grade, and 5% not rated). • The Group continues to have very limited e
Slide 7: A strong asset base with a diversified portfolio
A strong asset base with a diversified portfolio • Aviva has a diversified and strong asset base – HY08 IFRS net assets of £15.4 billion • Lehman Brothers debt face value of £270m, exposure estimated at less than 1% of HY IFRS net assets • No loss anticipated on Dawnay Day – £642m loans across 210 p
Slide 8: A transformational agenda
A transformational agenda Purpose Prosperity & peace of mind Purpose Vision One Aviva, twice the value Vision Strategic Targets priorities • Manage composite • 98% meet or beat COR portfolio • Long Term Savings • Build global Asset growth targets Management • £500m cost savings by • Allocate capital
Slide 9: Allocate capital rigorously to drive growth
Allocate capital rigorously to drive growth Capital utilisation for dividends and profitable growth Dividends Net capital generation UK Europe N.America Asia Aviva Pacific Investors • More mature Aviva markets are UK, Holland, France and Ireland • The other 23 countries, and Aviva Investors have a s
Slide 10: One Aviva, twice the value: The growth opportunity
One Aviva, twice the value The growth opportunity Merrill Lynch Conference 2008 10
Slide 11: The growth portfolio - Europe
The growth portfolio - Europe Rank PVNBP £m Life HY 2008 HY 2007 Spain 3rd 1,259 1,114 Italy 6th 1,275 1,818 Poland 2nd (Life), 1st (Pen) 739 379 Turkey 3rd (Life), 1st (Pen) 123 82 Russia 20th 21 3 Hungary 3rd 83 71 Romania 5th 269 9 Czech Republic 13th 14 10 11
Slide 12: The growth portfolio – USA, Asia & Aviva Investors
The growth portfolio – USA, Asia & Aviva Investors Rank PVNBP £m Life HY 2008 HY 2007 USA 1st indexed annuity 2,205 1,716 China 2nd foreign insurer 126 48 India 10th 95 57 Singapore 4th 149 138 Hong Kong 16th 138 162 Malaysia Entered market Jul 07 26 - Taiwan Commenced Jan 08 38 - Sri Lanka 3rd 7 9
Slide 13: Europe – a market leading position
Europe – a market leading position NBC growth post cost of capital EEV operating profit growth HY1 CAGR 13% HY1 CAGR 19% 500 Scale, growth, 400 1500 capital £ million 1250 300 1000 £ million 200 750 • Seize unique 500 growth 100 250 opportunities 0 0 2005 2006 2007 2008 2005 2006 2007 2008 • Leverag
Slide 14: North America - USA on track to double scale
North America - USA on track to double scale Pro-Forma PVNBP growth EEV operating profit growth 8000 1000 HY1 CAGR 28% HY1 CAGR 52% Double scale 6000 750 US$ million US$ million 4000 • Focus: top 5 in 500 chosen 2000 250 segments 0 0 2005 2006 2007 H1 08 2006 2007 2008 • Expand products, HY 2008 upd
Slide 15: Asia Pacific – a growing presence
Asia Pacific – a growing presence Growth in Asia Pacific PVNBP EEV operating profit growth 1500 HY1 CAGR 14% Scale, growth HY1 CAGR 33% 100 75 £ million 1000 £ million • Prioritised 50 portfolio 500 25 • Regional 0 0 2005 2006 2007 2008 2005 2006 2007 2008 operating model HY 2008 update • Investment
Slide 16: Aviva Investors – executing the strategy
Aviva Investors – executing the strategy IFRS operating profit 125 Aviva Investors 100 £million 75 • Globally 50 integrated 25 business 0 2005 2006 2007 2008 • Transform the investment HY 2008 progress model • UK investment portfolios restructured • Launched new funds on SICAV platform with more pla
Slide 17: One Aviva, twice the value: The value opportunity
One Aviva, twice the value The value opportunity Merrill Lynch Conference 2008 17
Slide 18: UK Life – continuing operational improvement
UK Life – continuing operational improvement EEV operating profit growth IFRS operating profit growth 1000 1000 HY1 CAGR 13 % HY1 CAGR 39 % Market 750 750 Leadership £ million £ million 500 500 ● Address legacy 250 250 ● Transform 0 0 business 2005 2006 2007 2008 2005 2006 2007 2008 model HY 2008 up
Slide 19: UK Life – new business profitability
UK Life – new business profitability 5,000 7% WACC 4,500 Bonds & 4,000 Savings 2007 results: 3,500 • Composite IRR of 13% 3,000 (unleveraged) PVNBP £m 2,500 Individual • Equity shareholders IRR 2,000 Pensions Annuities of 15% (leveraged) 1,500 Group 1,000 Personal Pensions Protection Corporate 500 P
Slide 20: UK General Insurance – delivering transformational change
UK General Insurance – delivering transformational change The external environment remains competitive • Personal lines rates improving Market • Commercial rate increases averaging 2% Leadership • Broker consolidation putting upward pressure on commission rates ● Address legacy • Short term inflatio
Slide 21: UK General Insurance - expense management
UK General Insurance - expense management Inflation and (38) one-off Costs11 (125+) (200) Market Leadership Expense ratio 13.9% ● Address legacy Expense ratio ● Transform 12.4% Aiming for an business expense ratio of model less than 11% 3 Starting RAC 2 2006 C&E Prog. 1 2008 point integration saving
Slide 22: Outlook in the current economic environment
Outlook in the current economic environment • Maintaining our focus to deliver Aviva’s objectives and targets – Continuing to invest in order to achieve the benefits of One Aviva, twice the value – Keeping a clear focus on delivering against the plans • Responding to the current economic environment
Slide 23: Questions and Answers
One Aviva, twice the value Andrew Moss, Group Chief Executive Questions and Answers Merrill Lynch Conference 2008 23