Aviva Plc · LSE:AV.
Aviva — KBW Conference 2012
14 slides from Aviva's conference presentation, 2012
Slide 1: Focus Strengthen Perform
AVIVA Focus Strengthen Perform
Slide 2: Feedback on Aviva
Feedback on Aviva Strengths But clear challenges Strong core businesses Complex business and a great brand Weaker than peers on Growing GI business with leverage and capital with improving CORs Eurozone volatility UK Life business Issues on performing strongly strategic execution A greater emphasis
Slide 3: Focus, Strengthen, Perform
Focus, Strengthen, Perform • Allocate capital to most attractive businesses • Improve underperforming segments Narrowed Focus • Exit non core businesses • Create an attractive portfolio foundation for the future • 160% – 175% economic capital surplus target range Financial Strength • Reduce capital
Slide 4: Narrowed focus
Narrowed focus Portfolio assessed on relative financial performance & market prospects / competitive position performance Performing Out- 15 cells Relative financial performance • Economic margin Median • IFRS ROCE Improve/ • Net cash return / turn around Capital 27 cells performance Under- Non-core
Slide 5: Dynamic capital allocation
Dynamic capital allocation Improve / Performing Non-core turn around 15 cells 16 cells 27 cells Returns well above cost of capital Return • IFRS capital £6bn • IFRS capital £3bn Returns at or below cost of capital • IFRS OPAT £300m • IFRS OPAT £650m • ROCE 5% • ROCE 22% • IFRS capital £7bn • IFRS OP
Slide 6: Economic capital
Economic capital Estimated economic* capital Q1 2012 Sensitivities based on Q1 position Q1 2012 145% 145% Interest Rates +100bps 153% £17.6bn Equity +20% 150% Property +20% 152% Credit Spreads +100bps 132% Interest Rates -100bps 129% £12.1bn Equity - 20% 141% Property - 20% 139% Credit Spreads -100b
Slide 7: How we are going to get our target range
How we are going to get our target range Economic capital* 175% Credit reduction & other hedging Performance Cutting back improvement on annuities 160% Disposals & exits 145% Q1 12 Time Mechanisms for and impact from increasing capital surplus Impact of disposals Impact of actions on profits • Decre
Slide 8: Group-wide performance improvement themes
Group-wide performance improvement themes • Develop Higher Growth segment, seek revenue opportunities in Focused growth Developed markets where available • Develop additional cross-segment revenue streams Revenue growth • Reduce exposure to Life guarantee products – where possible Product portfolio
Slide 9: Life: resilience in the UK, lower profits in France, Spain and Italy
Life: resilience in the UK, lower profits in France, Spain and Italy Italy HY10 HY11 HY12 % change Operating profit Operating profit (£m) 49 72 70 (3)% Operating Capital Generation (£m) (41) - 42 - £72m Average reserves (£bn) 18 19 17 (11)% £70m Annualised ROCE* 4.8% 7.9% 7.6% (0.3)ppt Italy £49m £1
Slide 10: Life: higher profits in the US and Singapore, lower profits in Poland
Life: higher profits in the US and Singapore, lower profits in Poland Singapore HY10 HY11 HY12 % change Operating profit Operating profit (£m) 21 21 24 14% Operating Capital Generation (£m) (6) 7 4 (43)% Average reserves (£bn) 1 2 2 - Annualised ROCE* 18.0% 14.3% 18.8% 4.5ppt £21m £24m Poland HY10 H
Slide 11: GI & Health: higher profits in the UK and Canada offset by the RAC disposal and weather
GI & Health: higher profits in the UK and Canada offset by the RAC disposal and weather Operating profit £455m £461m £444m £15m £40m £43m Other £73m £50m France £11m £173m £118m Canada £132m RAC RAC £49m £38m £230m £198m UK £190m HY10 HY11 HY12 COR 97.0% 96.3% 95.5% All numbers exclude Delta Lloyd 1
Slide 12: Group operating capital generation ahead of HY11
Group operating capital generation ahead of HY11 Operating capital generation Operating capital generation HY11 HY12 HY12 £0.9bn £0.9bn £bn Net Net Generated Invested Life 0.5 0.6 1.0 (0.4) £0.8bn General GI £0.3bn £0.3bn 0.3 0.3 0.3 - Insurance and other £0.3bn Total 0.8 0.9 1.3 (0.4) HY11 1.3 (0.5
Slide 13: We will end up being
We will end up being Focused Financially strong Performing 13
Slide 14: Q&A
AVIVA Q&A