Aviva Plc · LSE:AV.
Aviva — Investor Presentation (June 2022)
40 slides from Aviva's investor presentation, June 2022
Slide 1: In Focus: Annuities, Equity Release and Asset Origination
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Slide 2: Disclaimer
Disclaimer Cautionary statements This document should be read in conjunction with the documents distributed by Aviva plc (the ‘Company’ or ‘Aviva’) through The Regulatory News Service (RNS). This announcement contains, and we may make other verbal or written ‘forward-looking statements’ with respect
Slide 3: Agenda
Agenda Welcome and Annuities, equity release and introduction asset origination update Amanda Blanc Doug Brown Mark Versey Group CEO CEO CEO UK Life Aviva Investors WAVIVA 3
Slide 4: Aviva business structure
Heritage, Ireland Life & UK Life Other General Insurance, Wealth, Protection & Health, Aviva Investors Aviva: Confidential
Slide 5: A scale player delivering long-term cash generation
Ascale player delivering long-term cash generation Akey business for Aviva, delivering long-term cash generation from business written on £ 1 b n attractive terms Cash remittances over 2022-24 Ascale UK player with leading market positions with a strong brand, serving over 1m retail 1 3 m customers
Slide 6: Annuities & Equity Release is a key business for Aviva
Annuities & Equity Release is a key business for Aviva Annuities & Equity Release accounts for c.40% of UK Life total operating own funds generation Wealth Accumulation and management of pension and individual wealth assets Market anna a onmtais Position | Share numbers AuM (PVNBP £bn, generation (F
Slide 7: Individual annuities and equity release
Individual annuities and equity release
Slide 8: Demand for individual annuities remains post-reforms
Demand for individual annuities remains post-reforms Individual annuities Provides customers with a secure lifetime retirement income New business premiums 2021 Others Peer 4 AVIVA Peer 3 15% £3.8bn 2021 total Peer 1 1. Based on estimated 10% penetration for individual annuities; 2.2021-24 CAGR; 3.
Slide 9: Supporting pension customers and meeting Group ambitions
Supporting pension customers and meeting Group ambitions We aim to grow external volumes of individual annuities which will generate long-term value for a more sustainable business ey Customer retirement needs are constantly evolving; we are actively considering what new offerings support them Indiv
Slide 10: The biggest lender in an attractive equity release market
The biggest lender in an attractive equity release market A Equity release Supplements customers retirement income, enabling customers to unlock housing equity in a tax eficient way Fundamental trends support long-term growth £48bn annual shortfall in pensioners’ income? £3.3tn housing equity owned
Slide 11: Helping customers unlock housing equity in retirement
Helping customers unlock housing equity in retirement Strategy By leveraging Aviva’s capabilities we are broadening our distribution reach and improving pri ing capability This will enable more of our customers to release value from their homes, giving them and their families a brighter financial fu
Slide 12: Bulk purchase annuities (BPAs)
Bulk purchase annuiti (BPAs)
Slide 13: Top player in a competitive BPA market
Top 4 player in a competitive BPA market Bulk purchase annuities Allows pension trustees to secure their future obligations to defined benefit scheme members BPA premiums? 2019-21, £bn 1 Source: Aon UK Risk Settlement Market Update; 2. Includes members of both buy-outs and buy-ins £25bn £6.2bn 160k
Slide 14: Aviva: Confidential
• • • • • • • • Aviva: Confidential
Slide 15: Disciplined growth in our BPA business since 2016
Disciplined growth in our BPA business since 2016 The BPA market has grown rapidly in the last 5 years Supports long-term cash generation for the Group BPA premiums! £bn £30-50bn p.a. ¥v Cash generative . a - Replenishing the run-off of internal individual annuities v Greater value chain capture B 4
Slide 16: Attractive capital returns in BPA
& Enabling us to grow the cash generated by the Group Attractive capital returns in BPA Cash is generated over time from investment returns and the unwind of SCR and risk margin Initial strain? typically paid back after 4-6 years with strong long-term cash generation thereafter Group returns materia
Slide 17: Prudent approach to new business reporting
& Prudent approach to new business reporting Value of new business calculation as £212m 3.4% 2021 VNB 2021 new business margin VNB is reflective of actual asset mix in the reporting period Reflecting the day 1 own funds impact from writing new business Current approach to calculating VNB is prudent
Slide 18: Risk management framework supports Group ambitions
@) Risk management framework supports Group ambitions Reinsurance strategy for longevity risk Disciplined management of credit risk Competitive advantage Through Aviva Investors’ asset origination and deploying our capabilities to win High levels of longevity reinsurance on new business using collat
Slide 19: Asset strategy & portfolio quality
Asset strategy & portfolio quality
Slide 20: Business underpinned by a well diversified asset mix
Business underpinned by a well diversified asset mix Investment strategy key areas of focus Annuities & Equity Release - asset mix Cashflow management Long-term annuity cashflows allow capture of illiquidity premium 3% 3% . . 5B — €.50% | @ Credit selection @ ~~ Sftotalaum High quality, in asset cla
Slide 21: A cashflow matching investment strategy
A cashflow matching investment strategy Cashflow profile of the assets in the portfolio is well matched with the run-off of the liabilities Asset & liability cashflows 2022 2042 2062 Mim Equity release mmm Infrastructure Commercial mortgages mmm Other illiquid l@am Gilts, bonds, cash & swaps —Liabil
Slide 22: A high quality portfolio with strong credit ratings
A high quality portfolio with strong credit ratings Diverse mix of high-quality assets across a wide range of sectors with strong credit ratings 31 December 2021 Annuity & Equity Release assets Commercial mortgage assets MM cits 20% I Sovereigns, supras & quasis 18% office © Financial institutions I
Slide 23: Diversified and agile investment strategy
Diversified and agile investment strategy We have actively diversified the assets held Recently invested £5bn in non-Sterling assets Expansion of our capabilities in emerging market debt Widening investment in long-income real estate Extending investment in US private and infrastructure sectors Use
Slide 24: Asset origination
Aviva: Confidential
Slide 25: A multi-award winning asset manager
A multi-award winning asset manager Aviva Investors has won a number of prestigious insurance investment awards in recent times Climate Mitigation Investment Initiative of the Year Stewardship Initiative of the Year 2022 Insurance Asset Risk Awards 2021 Insurance Asset Risk Awards Nw /, Innovation P
Slide 26: One of the largest real asset investors in Europe
One of the largest real asset investors in Europe Aviva Investors | A powerful intersect £250bn Aviva Investors real assets — sss Aviva Investors AuM Sustainable ineceitts £47bn £26bn = £4.6bn Real asset AUM Size of 2021 real asset loan book origination Competitive capabilities 44% £1.9bn Deployment
Slide 27: Aviva: Confidential
• • • • • • • • Aviva: Confidential
Slide 28: Aviva: Confidential
• • • • • • • • • • • Aviva: Confidential
Slide 29: Delivering our clients' objectives
Delivering our clients’ objectives Investment type: Real estate debt £227m Sustainable Transition Loan secured on a portfolio of offices, hotel and retail assets in London for privately owned Romulus Date: May 2022 Investment: £227m combining a term extension of an existing loan and £91m of new lend
Slide 30: Multi-asset approach aligned to structural trends
Multi-asset approach aligned to structural trends ©) Multi-asset capabi ities with four areas of focus; Infrastructure Debt, Real Estate Debt, Real Estate Long Income and Structured Finance Expertise in multiple asset classes provides the flexibility to deal where the market is strongest with the be
Slide 31: A leading institutional lender in infrastructure debt
A leading institutional lender in infrastructure debt £1.1bn 6% Investment type: Infrastructure debt se 2021 green investment Market share £1.6bn refinancing of Thameslink rolling stock, the IE § in infrastructure debt in infrastructure debt largest fleet in the UK serving the London north/south com
Slide 32: In house asset manager optimises investment strategy
In house asset manager optimises investment strategy Dynamic relationship between UK Life and Aviva Investors creates optimal investment strategies Adapt asset allocation Warehousing assets boosts supply of illiquids ahead of writing new business Continuous assessment of value and market insight wit
Slide 33: Innovation in structured finance
Innovation in structured finance Investment type: Structured finance £79m notional 30 year sustainable swap repack transaction with Associated British Ports Date: April 2021 (S) Investment: £79m notional swap repack facilitating bank de- risking USP: Innovation. First SONIA-linked interest rate swap
Slide 34: Sustainability helps us win new business
@) Sustainability helps us win new business While others are focused on greenifying portfolios we have taken a leading role in investing in ESG, which we will continue to do £1bn £4.3bn £1.4bn £7.6bn £3m Sustainable Transition Loans, UK infrastructure & real Total investment in low- Total investment
Slide 35: Summary messages to leave you with
Summary messages to leave you with A key cash generative business for Aviva | £1bn Cash remittances over 2022-24 Ascale UK player with leading market positions | 1.3m Customers? £15-20bn Mid-single digit growth Double digit growth Target BPA volumes over 2022-24 CAGR in external individual annuity s
Slide 36: Q&A Session
Q&A Session Amanda Blanc Doug Brown Mark Versey Group CEO CEO CEO UK Life Aviva Investors BIAVIVA 36
Slide 37: Appendix
Aviva: Confidential
Slide 38: Individual annuities: Overview
Individual annuities: Overview An annuity is an insurance policy that provides a regular guaranteed income. An annuity can be tailored to meet customer’s specific needs (e.g. death benefits, payment frequency & increase, value protection, guaranteed period) with an amount paid determined by the annu
Slide 39: Equity release: Overview
Equity release: Overview Equity Release is a way for customers to release cash from the equity value of their home. It is a long-term loan, repaid on customer’s death or move into long-term care. There is no requirement to make any payments, including interest, during customers’ lifetime We offer th
Slide 40: Aviva: Confidential
• • • • • • • • • Aviva: Confidential