Aviva Plc · LSE:AV.
Aviva — FY2011 Earnings Presentation
39 slides from Aviva's earnings presentation, May 11, 2012
Slide 1: Aviva Preliminary Results 2011
Aviva Preliminary Results 2011 Athletics pictures
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: Agenda
Agenda Operational performance and strategic progress Andrew Moss Financial results Patrick Regan Looking ahead Andrew Moss Q&A 3
Slide 4: Objectives for 2011
Objectives for 2011 Improving operating performance Allocating capital to chosen markets where we can grow and earn the highest returns Simplifying the portfolio Balance sheet strength 4
Slide 5: A volatile year
A volatile year 10 year sovereign yield Equity volatility 8% 60% 50% 6% 40% 4% 30% 20% 2% 10% 0% 0% Jan-11 Dec-11 Jan-11 VFTSE Index V2X Index VIX (S&P 500) Dec-11 Italy Spain France UK (EuroStoxx) Credit spreads Equity markets 250 120 110 200 100 150 90 80 100 70 50 60 Jan-11 Dec-11 Jan-11 FTSE 100
Slide 6: Focus on value and increasing profitability
Focus on value and increasing profitability IFRS operating profit Life IRR GI COR £2,550m £2,503m 14.4% 97.1% 96.8% 13.3% 6% £2,026m £2,155m Target Target Target Ex DL Ex DL Target 12% 98% 97% 12% 2010 2011 2010 2011 2010 2011 Operating capital generation IFRS NAV Dividend £2.1bn 454p 26.0p 435p 25.
Slide 7: Track record of growth in Life
Track record of growth in Life Operating profit Net operating capital generation £1.3bn £2.1bn £0.8bn £2.0bn £305m £245m £0.4bn £1.6bn US & Asia £137m £898m £893m 2009 2010 2011 Europe £761m IRR 14.4% £920m 13.3% £850m UK £672m 10.6% 2009 2010 2011 2009 2010 2011 All numbers exclude Delta Lloyd. 200
Slide 8: Track record of growth in GI
Track record of growth in GI Operating profit COR 99.4% 97.1% £907m 96.8% £32m £849m £762m £87m £254m Aviva Re £97m & Other £222m Canada £144m 2009 2010 2011 £113m £64m £97m Europe Sales £8.3bn £508m £7.7bn £476m £424m £7.3bn UK 2009 2010 2011 2009 2010 2011 All numbers exclude Delta Lloyd 8
Slide 9: Progress in the UK
Progress in the UK Market leading brand recognition 400,000 new motor customers 25% market share individual annuities 15% market share in protection Unparalleled customer reach through intermediaries, corporate partners and direct 9,000 IFA firms UK General Insurer of the Year Best Pension Provider
Slide 10: Progress in the UK
Progress in the UK Life IFRS operating profits L&P sales IRR £920m £11.3bn 15.0% 15.2% £850m £10.3bn 8% Payback Payback 7 years 7 years GPP, annuities, protection 2010 2011 2010 2011 2010 2011 GI IFRS operating profits* NWP* COR* £508m £4.4bn 96% 96% £476m £4.0bn 11% £433m £391m Ex RAC Ex RAC 2010 2
Slide 11: Europe: resilience in a tough environment
Europe: resilience in a tough environment IFRS operating profits Resilient life result Tied agency network 13% growth in bancassurance sales France £467m AFER IRR up to 11.4% (2010: 9.4%) Bancassurance Strong GI result IRR of 23.3% (2010: 21.6%) £216m Bancassurance Spain Record operating profits IRR
Slide 12: Europe: resilience in a tough environment
Europe: resilience in a tough environment Life IFRS operating profits L&P sales New business IRR £13.5bn £10.9bn 14.2% £898m £893m Pensions, 13.0% £10.1bn WP savings £7.8bn Payback Payback 7 years 7 years £3.4bn Unit linked, £3.1bn Protection 2010 2011 2010 2011 2010 2011 GI IFRS operating profits N
Slide 13: Canada & USA: record profits
Canada & USA: record profits Canada IFRS operating profits NWP COR £2.1bn £254m 97% £2.0bn £222m 14% 95% 2010 2011 2010 2011 2010 2011 USA IFRS operating profits L&P sales IRR £4.7bn £197m 14.4% £3.9bn 14.1% £174m 13% Indexed £3.7bn annuities £2.8bn £1.0bn Life £1.1bn 2010 2011 2010 2011 2010 2011 1
Slide 14: Continuing profit growth in Asia Pacific
Continuing profit growth in Asia Pacific IRR Life sales 13% £1.8bn 11% £1.6bn 6% £1.1bn 2009 2010 2011 Underlying IFRS operating profit* £45m £4m £(31)m 2009 2010 2011 2009 excludes Australia. 2009 2010 2011 * Underlying operating profit excludes Singapore reserve release in FY09, FY10 excludes Chin
Slide 15: Growing external sales in Aviva Investors
Growing external sales in Aviva Investors Fund management Aviva Investors IFRS operating profits net external sales* £98m £99m £5.6bn £2.4bn £(0.2)bn 2010 2011 2009 2010 2011 • Strategy materially unchanged, with record net external sales in 2011 • Business review in light of a challenging industry
Slide 16: A fitter and stronger Aviva
A fitter and stronger Aviva 2009 2011 Life IRR 10.6% Life IRR 14.4% Profitability GI COR 99.4% GI COR 96.8% Operating capital Capital generated £1.0 billion Capital generated £2.1 billion generation Markets 30 countries 21 countries Cost base £5.1 billion Cost base £4.1* billion Efficiency Headcount
Slide 17: Patrick Regan: Financial results
Patrick Regan Financial results 17
Slide 18: Objectives for 2011
Objectives for 2011 Improving operating performance Allocating capital to chosen markets where we can grow and earn the highest returns Simplifying the portfolio Balance sheet strength 18
Slide 19: Sharply increased operating capital generation
Sharply increased operating capital generation Life generation Non-life generation £2.3bn £0.6bn £0.6bn £2.1bn Net operating capital generation £2.1bn £1.7bn 2010 2011 2010 2011 Life investment Non-life investment £(1.2)bn £(0.9)bn 2010 2011 £0.2bn £0.1bn 2010 2011 2010 2011 19
Slide 20: Sharply increased operating capital generation
Sharply increased operating capital generation Life generation Non-life generation £2.3bn £2.1bn £0.6bn £0.6bn Net operating capital generation £2.1bn 2011* Net operating capital generation £2.1bn £1.7bn 2010 Corporate costs 2011 2010 (0.1) 2011 Group debt & other costs (0.5) Life investment Non-lif
Slide 21: Sharply increased operating capital generation
Sharply increased operating capital generation Life generation Non-life generation £2.3bn £0.6bn £0.6bn £2.1bn Net operating capital generation £2.1bn £1.7bn 2010 2011 2010 2011 Life investment Non-life investment £(1.2)bn £(0.9)bn 2010 2011 £0.2bn £0.1bn 2010 2011 2010 2011 21
Slide 22: Focus on profitable growth
Focus on profitable growth Life investment IRRs £1.5bn 2009* 2010 2011 UK £1.2bn UK 14% 15% 15% £0.9bn Europe 13% 13% 14% Europe USA 7% 14% 14% Asia Pacific 6% 11% 13% USA Overall 10.6% 13.3% 14.4% Asia Pacific *2009 excludes Australia 2009 2010 2011 Life sales Average reserves £30bn £269bn £28bn £2
Slide 23: Increased operating profit
Increased operating profit 2010 2011 IFRS operating profits Life GI* Life GI* £m 2,200 £31m £(37)m UK 850 579 920 552 Europe 893 109 898 137 £135m £2,155m North America 174 222 197 254 Asia Pacific 71 (6) 108 (8) 2,100 Total Life / GI 1,988 904 2,123 935 Fund Management 98 99 Other, non-insurance (1
Slide 24: Summary IFRS life profit drivers
Summary IFRS life profit drivers £m 2010 2011 Key: UK 850 920 Driver Aviva Europe 893 898 2010 2011 Variance North America 174 197 Pre-tax Asia Pacific 71 108 operating profit Operating profit 1,988 2,123 1,988 2,123 7% Income DAC/AVIF Expenses and amortisation and other commissions 4,391 4,612 5% (
Slide 25: Total IFRS life investment return
Total IFRS life investment return Key: Driver Investment return 2010 2011 Variance 2,606 2,760 6% Unit linked margin Participating business Spread margin Expected return on shareholder assets 920 976 6% 569 556 (2)% 688 813 18% 429 415 (3)% AMC Bonus Spread (0.3) 111 109 (2) 54 51 (3) 108 116 8 Equi
Slide 26: Strong GI profit growth
Strong GI profit growth GI & Health underwriting result Current year COR at best estimates 103.6% £224m 99.1% £203m 96.4% £66m 2009 2010 2011 2009 2010 2011 GI & Health LTIR £770m £749m £750m • £36 million net reserve strengthening across the £9 billion book of reserves • Continuing to reserve at be
Slide 27: Controlled growth in UK Motor
Controlled growth in UK Motor UK direct motor NWP UKDI car bodily injury frequency 115 Market* Indexed frequency 18% 100 13% Higher risk 11% 85 Aviva customer sales 70 2009 2010 2011 2006 2007 2008 2009 2010 2011 Two - year rolling average 51% 49% 43% • High quality risk selection Lower risk • Rated
Slide 28: IFRS total return
IFRS total return £m 2010 2011 Operating profit* 2,026 2,155 Profit before tax continuing operations 1,545 813 Discontinued operations (Delta Lloyd) 895 (726) Total profit before tax 2,440 87 * excluding Delta Lloyd 28
Slide 29: IFRS total return
IFRS total return £m 2010 2011 Operating profit 2,026 2,155 Delta Lloyd as an associate - 157 Integration & restructuring costs (225) (268) Other exceptional items 276 (81) Investment variances & assumption (479) (1,152) changes Profit or loss on disposals 163 565 Goodwill and intangibles amortisati
Slide 30: Net Asset Values
Net Asset Values Pence per share IFRS MCEV EEV 595p NAV at December 2010 454p 533p 621p 457p Profit and investment 6p (64)p variances Dividends (net of scrip) (15)p (15)p (26)p EEV Pension fund 25p 25p IFRS Delta Lloyd sell down (21)p (11)p Foreign exchange and other (14)p (27)p movements NAV at Dec
Slide 31: Balance sheet
Balance sheet IGD solvency surplus £3.3bn £2.2bn £1.6bn UK annuity provisions £3bn notional equity put options 2011 29 Feb 2012 £2bn notional euro currency cap & collar estimate Economic capital surplus* Credit risk hedges in place c.145%-150% c.125% Reduced level of product guarantees across the po
Slide 32: Andrew Moss: Looking ahead
Andrew Moss Looking ahead AVIVA 32
Slide 33: Looking ahead
Looking ahead: A changing world We’re well positioned Sharply improved operational capital generation Eurozone outlook improved, but still tough Competitive and profitable in our chosen markets Low interest rate environment Benefits of a diversified portfolio Regulatory uncertainty Beating profitabi
Slide 34: Objectives for 2012
Objectives for 2012 Improving operating performance Allocating capital to chosen markets where we can grow and earn the highest returns Simplifying the portfolio Balance sheet strength 34
Slide 35: Increasing the targets for 2012
Increasing the targets for 2012 13% Life new business IRR with a payback period of less than 10 years 97% Group COR £1.6 billion - £1.9 billion net operating capital generation £400 million cost and efficiency savings by end 2012 35
Slide 36: Q&A
Q&A AVIVA
Slide 37: Appendix
Appendix AVIVA 37
Slide 38: Delta Lloyd
Delta Lloyd Total IFRS operating profit (100% basis) Analysis of operating profit £556m £m Life GI FM Other1 Total2 £524m 2010 330 146 103 (55) 524 Up to May 6 185 1 11 (6) 191 After May 6 157 2011 – Aviva share 348 After May 6 non-Aviva share 208 2011 556 2010 2011 1Operating profit “other” segment
Slide 39: A strong balance sheet
A strong balance sheet Shareholder assets* Limited exposure to higher risk European debt** FY11 FY11 Participating £bn % S/H funds S/H funds S/H funds funds Senior Subordinated sovereign Sovereign Government bonds 13.3 14% 2011 £bn bank debt bank debt debt debt Greece - - - - Corporate bonds 39.0 43