Aviva Plc · LSE:AV.
Aviva — H1 2021 Earnings Presentation
49 slides from Aviva's earnings presentation, Aug 12, 2021
Slide 1: Aviva plc Interim results 2021
Aviva plc Interim results 2021 12 August 2021 1
Slide 2: Disclaimer and reminders
Disclaimer and reminders 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
Slide 3: Strategic progress update
Strategic progress update Amanda Blanc Interim results 2021 Jason Windsor Q&A 3
Slide 4: Significant strategic delivery and strong growth in key areas
Significant strategic delivery and strong growth in key areas 4
Slide 5: Delivering on our commitments
Delivering on our commitments Focus the portfolio Financial Focus theStrength portfolio Substantially complete with 8 businesses Interim dividend up 5% to 7.35p sold for £7.5bn Debt reduction of £1.9bn in H1 and Completed disposals of Aviva Vita in Italy c.£1bn additional debt reduction and AvivaSA
Slide 6: Focus is on transforming performance
Focus is on transforming performance Our strategic transformation Progress made in H1 2021 To be the UK’s leading insurer by establishing Aviva as • Cash remittances1 up significantly to £1.1bn the go-to customer brand for all insurance, protection, savings and retirement needs for all of our custom
Slide 7: Transform performance: Delivering targeted growth
Transform performance: Delivering targeted growth Growth priorities Fundamental trends Delivery Individual Savings & Ageing population & income in Individual savings net flows up 48% to £2.8 billion Retirement retirement gap Individual responsibility for #1 workplace platform1: AUM up 10% to £89 bil
Slide 8: Transform performance: Sharp focus on efficiency
Transform performance: Sharp focus on efficiency Controllable costs down 2% 1 UK General Insurance motor claims • 65% of motor claims2 processed digitally Controllable costs excluding cost reduction HY21 • Driving lower costs and indemnity savings vs manual handling implementation and IFRS 17 costs1
Slide 9: Transform performance: Delivering for our customers
Transform performance: Delivering for our customers Customer Growth and Increased Digital No.1 UK insurance brand Satisfaction Engagement • Extended leadership • 100k (3%) additional position in the UK Workplace customers to MyAviva mobile 50% 16% ahead of nearest 3.9m app log-ins YoY competitor • 3
Slide 10: Transform performance: Delivering for society
Transform performance: Delivering for society Leading UK Financial Services on ESG Infrastructure and real estate investment First insurer globally to commit to Net Zero by • One of the largest UK real asset managers with £43bn AuM 2040 • £10bn investment committed to UK infrastructure and real esta
Slide 11: Financial strength: Delivering against our capital framework
Financial strength: Delivering against our capital framework • £1.9bn reduction in external debt in H1, SII debt leverage ratio down to Debt reduction 26%; c.£1bn additional debt reduction expected over time to <30% • £0.7bn reduction in internal loan following sales of France and Poland Shareholder
Slide 12: On track to meet our financial targets and commitments
On track to meet our financial targets and commitments Financial targets Cash remittances 1 Operating efficiency SII debt leverage ratio of >£5bn £1.8bn £300m Top quartile <30% cumulative 2023 On track to deliver net Pursuing efficiency 2021-’23 savings from continuing across all operations in 2022
Slide 13: Interim results 2021
Interim results 2021 Aviva: Confidential
Slide 14: Growth in cash and profit with strategic delivery
Growth in cash and profit with strategic delivery Cash remittances Operating profit From continuing operations From continuing operations • Cash remittances of £1.1bn (HY20: £0.1bn) 1 £1,063m • Strong growth in key areas and operating profit up 1 £725m 17% to £725m £621m Ґ ) !$/$)"!-*($1 -. -)$)".($
Slide 15: Strong cash remittances and growing dividend
Strong cash remittances and growing dividend On track to achieve cash remittance target Cash remittances and dividend up 21-23 Target >£5bn • Cash remittances of £1.1bn (H1 20: £150m) 1 £1.8bn • Growing towards our £1.8bn ambition for 2023 £1.4bn • Interim dividend up 5% to 7.35p in line with our di
Slide 16: HY21 financial results highlights
HY21 financial results highlights Group (including discontinued operations) Continuing operations HY21 HY20 Change HY21 HY20 Change £m £m % £m £m % Cash remittances 1,296 150 764% Cash remittances 1,063 108 884% SII operating own funds generation 710 632 12% SII operating own funds generation 393 26
Slide 17: UK & Ireland Life
UK & Ireland Life HY21 HY20 Change £m £m % Operating profit 545 822 (34)% • Pleased with momentum in Protection & Health and Savings & Retirement with strong start to H2 for BPAs - Less: management actions & other 1 (38) 69 - Excl. management actions & other 583 753 (23)% • Management actions & othe
Slide 18: Annuities & Equity Release stronger in H2
Annuities & Equity Release stronger in H2 Annuity & Equity Release sales 1 Operating profit £7.5bn H2 5.3% 4.4% IFRS new business margin H1 H2: £3.7bn £365m New business £4.7bn Existing business £265m July: £2.2bn £205m BPA £109m £2466m YTD BPA £3.7bn H1: £3.8bn H1 21 BPA: £1.6bn £3838m H1: £2.5bn £
Slide 19: Strong growth in S&R net flows driven by workplace and adviser platform
Strong growth in S&R net flows driven by workplace and adviser platform AUM and flows Savings & Retirement AUM and profit £73m £73m £141bn £7.8bn £141bn £5.2bn £113bn £39bn Operating profit £128bn £30bn Platforms £89bn Workplace £71bn IPP £12bn £13bn FY20 H1 21 net flows Market HY21 HY20 HY21 moveme
Slide 20: Significantly improved profitability in Protection & Health
Significantly improved profitability in Protection & Health Sales and new business margin 1 Operating profit 6.6% 7.6% £107m £1,292m £1,255m £81m New business margin Sales HY20 HY21 HY20 HY21 VNB up 12% with margins helped by improved mix in Health Operating profit up 32% benefiting from lower costs
Slide 21: General Insurance – UK, Ireland and Canada
General Insurance – UK, Ireland and Canada Improvement in underlying operating performance Strong growth in GWP and lower COR HY21 HY20 Change £m £m % 101.4% 97.2% Operating profit 420 79 432% 91.6% Underwriting result 320 (53) - LTIR and other 100 132 (24)% £4,366m GWP 4,366 4,107 6% COR (%) 91.6%
Slide 22: UK GI – continued profitable growth in commercial
UK GI – continued profitable growth in commercial UK GI commercial UK GI personal HY21 HY20 Change HY21 HY20 Change GWP (£m) 1,280 1,104 16% GWP (£m) 1,213 1,211 -% Underwriting (£m) 63 (151) 142% Underwriting (£m) 65 19 242% COR 93.6% 116.8% (23.2)pp COR 94.2% 98.2% (4.0)pp PYD and weather* (1.7)%
Slide 23: Canada – an excellent H1 performance
Canada – an excellent H1 performance Canada GI personal Canada GI commercial HY21 HY20 Change HY21 HY20 Change GWP (£m) 1,047 1,029 2% GWP (£m) 614 551 11% Underwriting (£m) 126 140 (10)% Underwriting (£m) 48 (72) - COR 87.9% 86.4% 1.5pp COR 90.6% 115.0% (24.4)pp PYD and weather* 0.8% 3.9% (3.1)pp P
Slide 24: Aviva Investors – improving profitability and flows
Aviva Investors – improving profitability and flows Continuing operations (excl. France and Poland) HY21 HY20 Change £m £m % Asset Supporting growth in S&R and Annuities Operating profit 19 9 111% manager Enhancing Aviva’s ESG offering and credentials 1 for Aviva Revenue 192 180 7% Controllable cost
Slide 25: Utilising all of the divestment cash proceeds
Utilising all of the divestment cash proceeds Divestment cash proceeds of £7.5bn Capital return and lower leverage Announced disposals £bn Internal loan Shareholders £0.7bn in H2 2021 At least £4bn by HY Singapore 1.1 20221 including up to France 2.8 £750m share buyback Italy 1.1 >£7.5bn Poland 2.2
Slide 26: Completion of disposals enables return of capital and further debt reduction
Completion of disposals enables return of capital and further debt reduction 31 December 20 30 June 21 Remaining Illustrative return Pro forma £bn unless otherwise stated disposals £4bn equity estimated c.£1bn ext. debt £0.7bn int. debt Own funds1 25.8 23.6 (0.5) (5.0) 18.1 SCR1 (12.8) (11.6) 2.3 -
Slide 27: Implementing the capital return
Implementing the capital return Substantial return of capital to shareholders Significantly lower leverage and interest • At least £4bn capital return by HY 2022 1 • £1.9bn debt reduction achieved in H1 2021 • Including up to £750m via share buyback to • Additional debt reduction required to maintai
Slide 28: Outlook
Outlook • Growing annual cash remittances from £1.4bn in 2020 towards our £1.8bn ambition for 2023 Cash • On track to achieve cash target of over £5bn 2021-23 • Expect reduction in controllable costs of > £225m in 2021 vs 2018 baseline 1 Efficiency • On track to meet £300m target in 2022 and continu
Slide 29: 29
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Slide 30: Strong progress in transforming performance and clear focus on where Aviva can win
Strong progress in transforming performance and clear focus on where Aviva can win Leading positions in growing markets across UK, Ireland and Canada #1 insurance brand in the UK and the insurer able to serve all customer needs Breadth of offering providing financial, operating and c.£2bn diversific
Slide 31: Q&A session
Q&A session Amanda Blanc, Chief Executive Officer Jason Windsor, Chief Financial Officer 31
Slide 32: Investor relations
Investor relations Coming up … Contact us 13 August Post half year results virtual roadshow Investor relations IR@aviva.com 31 August Jakub Rosochowski +44 (0)7385 382 206 Virtual roadshow - 1 September Tegan Gill +44 (0)7800 691 138 21 September Bank of America CEO Conference Michael O’Hara +44 (0)
Slide 33: Appendix
Appendix 33
Slide 34: Balance sheet
Balance sheet 34
Slide 35: Solvency II position
Solvency II position Cover ratio 1 202% +3pp +13pp (5)pp (13)pp +3pp 203% OCG £578m Surplus 1 £m Debt & Non-operating Dividends3 Debt issuance / £m 31 December 2020 BU generation Other 2 Disposals 30 Jun 2021 Centre costs generation (ordinary + preference) repayment Own funds1 25,770 908 (230) 32 (7
Slide 36: Solvency II return on capital/equity
Solvency II return on capital/equity SII RoE ROE excl. management actions HY21 HY20 Change Management actions & Other1 £m £m % Life new business 262 361 (27) % 0.4% Existing business 242 239 1 % 0.6% Non-life capital generation 404 217 86 % Debt & centre costs (incl. pref/DCI costs) (249) (284) (12)
Slide 37: Solvency II sensitivities (Group shareholder view)
Solvency II sensitivities (Group shareholder view) Impact on surplus Impact on cover ratio Impact on surplus Impact on cover ratio Sensitivity HY21 HY21 FY20 FY20 £bn pp £bn pp Changes in economic assumptions 25 bps increase in interest rate 0.1 3 pp 0.3 5pp 50 bps increase in interest rate 0.2 6 pp
Slide 38: Solvency II regulatory own funds tiering and debt leverage
Solvency II regulatory own funds tiering and debt leverage % of own % of own HY 2021 HY 2020 % of SCR % of SCR HY21 FY20 Regulatory view funds funds Regulatory view £m £m HY21 HY20 £m £m HY21 HY20 Unrestricted Tier 1 20,556 20,096 76 % 71 % 137 % 125 % Solvency II regulatory debt2 6,457 8,316 Restri
Slide 39: Debt profile
Debt profile Restricted Tier 1 Tier 2 Senior £502m 6.125% £400m 5.125% £258m 6.125% 3.375% 6.125% £500m 3.875% 4.00% 6.875% 8.25% £263m 1.875% 4.375% £270m 4.00% 0.625% All debt instruments have been presented at optional first call dates at nominal values converted to GBP using 30 June 2021 rates.
Slide 40: Earnings per share
Earnings per share 40
Slide 41: Operating earnings per share
Operating earnings per share HY21 HY20 Continuing operations Adjusted operating profit before tax attributable to shareholders’ profits 725 621 Less - Tax attributable to shareholders’ profit (168) (105) - Amount attributable to non-controlling interests (10) (10) - Coupon payments in respect of DCI
Slide 42: Basic earnings per share
Basic earnings per share HY21 HY20 Continuing operations Adjusted operating profit attributable to ordinary shareholders 538 470 Adjusting items - Reclassification of unallocated interest 25 26 - Investment variances, short term fluctuations and economic assumption changes (241) 422 - Impairment of
Slide 43: Assets
Assets 43
Slide 44: Total managed assets
Total managed assets Assets by type of liabilities covered Participating assets by type £m £m Euro-style Shareholder funds UK With-profits style Policyholder funds Participating funds Shareholder assets by type £m GI, Health & other Annuity & non-profit 44
Slide 45: Shareholder assets
Shareholder assets Shareholder assets by type Corporate debt by rating Total: £26,326m £m Government debt by rating Total: £26,145m 1% 45
Slide 46: Shareholder assets – corporate bonds and loans
Shareholder assets – corporate bonds and loans Corporate bonds by industry Loans by type Total: £32,996m 46
Slide 47: Shareholder assets – Mortgage loans
Shareholder assets – Mortgage loans Mortgage loans Commercial real estate portfolio HY21 mortgage loans total: £21,684m HY21 commercial mortgage total: £7,251m LTV (%) Balance in arrears (£m) Loan interest cover (x) 47
Slide 48: Footnotes (1)
Footnotes (1) Slide Reference Footnote 5 1. Commencing 13 August 2021 1. From continuing operations 6 2. References to sales represent present value of new business premiums (PVNBP) for our life business and gross written premiums (GWP) for our general insurance business 3. From continuing operation
Slide 49: Footnotes (2)
Footnotes (2) Slide Reference Footnote 24 1. Represents Aviva Investors revenue. Further guidance in respect of the APMs used by the Group can be found in the 'Other information' section of the Half Year Report 2021. 25 1. Subject to regulatory and shareholder approval, completion of disposals and m