Aviva Plc · LSE:AV.
Aviva — Friends Life Group — Q1 2014 Earnings Presentation
18 slides from Aviva's earnings presentation, May 9, 2014
Slide 1: Q1 interim management statement and update on recent market developments
Friends Life Group Limited Q1 interim management statement and update on recent market developments 9 May 2014
Slide 2: Agenda
Agenda Q1 2014 trading update Tim Tookey Recent market developments Andy Briggs Impact on guidance Tim Tookey Q&A 2 2
Slide 3: Key messages
Key messages Q1 2014 trading update • UK division VNB maintained at £35m with strong APE growth of 42% to £201m: • Performance supported by strong Protection and Corporate Benefits growth • Retirement Income volumes maintained with limited Budget impact to date; contribution reflecting expected marg
Slide 4: Q1 2014 trading update - open insurance businesses
Q1 2014 trading update - open insurance businesses Protection • Sales growth across both the individual and APE, £m VNB, £m group propositions • Protection APE and VNB up 33% albeit 24 against a low base in Q1 2013 18 16 12 • Full year VNB expected to be marginally Q1 2013 Q1 2014 Q1 2013 Q1 2014 lo
Slide 5: Q1 2014 trading update - asset-based businesses (Corporate Benefits)
Q1 2014 trading update - asset-based businesses Corporate Benefits Assets under administration, £bn Net fund flows, quarterly progression, £bn 0.6 (0.4) 20.1 (0.2) 20.1 0.2 0.1 0.0 (0.1) (0.2) 1 January Inflows Outflows Net investment 31 March Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 2014 return 2014
Slide 6: Q1 2014 trading update - asset-based businesses (Lombard)
Q1 2014 trading update - asset-based businesses Lombard Assets under administration, £bn Net fund flows, quarterly progression, £bn (0.1) 20.2 0.3 20.2 (0.5) 0.3 0.2 0.2 (0.1) (0.2) (0.2) 1 January Inflows Outflows Net FX 31 March Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 2014 investment 2014 return •
Slide 7: Agenda
Agenda Q1 trading update Tim Tookey Recent market developments Andy Briggs - FCA legacy product review - DWP pension charge cap - March Budget announcement Impact on guidance Tim Tookey Q&A 7 7
Slide 8: FCA legacy product review
FCA legacy product review Dedicated Heritage team ensuring customers are treated fairly and provided with good outcomes • Upcoming FCA enquiry into whether life insurance firms are operating legacy products in a fair way and whether they have adopted strategies that are not in the best interest of e
Slide 9: DWP pension charge cap
DWP pension charge cap Welcome clarity; limited financial impact DWP proposals • A 0.75% charge cap is proposed to default funds of all qualifying DC schemes from April 2015 • The application of Active Member Discounts (AMDs) will be banned from April 2016 • Deductions of commission payments from me
Slide 10: Budget – Impact on market-level asset flows marginal
Budget – Impact on market-level asset flows marginal But major changes to both customer engagement and proposition choices in Retirement Income Recap: March Strategy Update Corporate Benefits • As the No.2 player in the UK, we are well placed to benefit from the growth in the workplace savings marke
Slide 11: Customer engagement and guidance - mass affluent opportunity
Customer engagement and guidance - Significant opportunity to help existing mass affluent customers FL is well placed with 1 in 9 maturing pensions, of which only 30% are estimated to have an active IFA relationship Estimated split1 How the market is expected to develop FL vesting pensions FL annuit
Slide 12: Customer proposition choices – downside on annuities versus upside
Customer proposition choices – downside on annuities versus upside from new propositions and deferral Easy for existing customers to stay on FL platforms – and delay is also advantageous 2013 FL retiree Expected FL choices retiree choices Opportunity for Delayed Customers likely to stay in ongoing A
Slide 13: Agenda
Agenda Q1 trading update Tim Tookey Recent market developments Andy Briggs Impact on guidance Tim Tookey Q&A 13 13
Slide 14: Recap UK & Heritage expected return; £39m uplift confirmed
Recap UK & Heritage expected return; £39m uplift confirmed Confident of growing cash generation Includes strong cash growth from UK division • c.£20m of 2014 uplift driven by UK division • of which £4m contribution from Retirement Recap: March Income 2013 new business Shorter term presentation • Con
Slide 15: Performance ambitions
Performance ambitions Ambitions largely unchanged; increasing focus on asset-based metrics Performance ambitions Capital - unchanged • Maintain a strong capital base, on each measure, at all times Cash today • Positive operating leverage on asset-based Framework business - unchanged Cash • Growing u
Slide 16: Dividend policy unchanged
Dividend policy unchanged Recap: March presentation Dividend policy • Dividend policy unchanged Existing £400m ‘distributable cash generation’ target for considering a move towards a progressive dividend is replaced by: • Remain confident of “Our ordinary dividend policy is to pay 21.14 pence per ac
Slide 17: Recap of key messages
Recap of key messages Recent market developments • March 2014 Budget announcement is a major change for the whole industry, with potential significant impacts in the medium-term: • Positive for Corporate Benefits, no change for Heritage or Protection • Refocus Retirement Income on existing mass affl
Slide 18: Q&A
Q&A Q&A 18 18