Aviva Plc · LSE:AV.
Aviva — H1 2016 Earnings Presentation
28 slides from Aviva's earnings presentation, Aug 4, 2016
Slide 1: 2016 Interim Results
2016 Interim Results 4 August 2016
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 presentation contains, and we may make other verbal or written “forward-looking statements” wi
Slide 3: 2016 Interim Results - Mark Wilson, Group CEO
2016 Interim Results 4 August 2016 Mark Wilson Group Chief Executive Officer
Slide 4: Performance
Performance Operating profit Capital Interim dividend £1,325m Solvency II ratio1 174% 7.42p per share up 13% Capital Generation2 £1.2bn up 10% 1The estimated Solvency II ratio represents the shareholder view. This ratio excludes the contribution to Group Solvency Capital Requirement (SCR) and Group
Slide 5: Operating profit
Operating profit Operating profit: +13% Positives Operating EPS: +1% • Underlying growth • Foreign exchange £1,325m £1,170m • Friends Life £1,071m £1,008m Headwinds • Government levies / tax • Weather and fires HY131 HY14 HY15 HY16 • Brexit • Increased share count 1HY13 is as reported and has not be
Slide 6: Life insurance – sustainable growth
Life insurance – sustainable growth Value of new business1 • Operating profit £1,226m, +20% £583m • VNB growth 7%2 £534m £426m £444m £343m • £2.0bn pension & platform flows in UK Life HY12 3 HY13 HY14 HY15 HY16 • Platform AUM up 23% to £10.3bn 1MCEV basis 2Constant currency basis 3HY12 VNB is as rep
Slide 7: General insurance & health – returning to growth
General insurance & health – returning to growth Net written premiums3 • Premium growth 7%2 £4,026m £3,991m • Operating profit £334m -17%1 7%2 £3,757m £3,678m • Weather costs +c.£55m • Group COR 94.6% excluding HY13 HY14 HY15 HY16 Flood Re and Homeserve 1 2015 general insurance & health operating pr
Slide 8: Fund management – momentum
Fund management – momentum Positive net flows £bn • Operating profit £49m, +48% 0.6 1.1 • AIMS doubled to £6.2bn (1.7) (1.5) (1.4) • Improving margins (3.4) (0.1) (0.3) (1.7) • Positive net flows 1H14 2H14 1H15 2H151 1H16 Internal External 1Excludes transfers from Friends Life 8
Slide 9: Digital – meaningful contribution
Digital – meaningful contribution Leading indicator - registrations • Operating profit £111m1 3m • 16m UK customers on a 2.3m single database by year end 1.8m • MyAviva APH 2.7 • 30%2 lower costs shared Jan-15 Dec-15 Current with customers 1Unaudited management information 230% relates to total cost
Slide 10: Interim dividend – 10% growth
Interim dividend – 10% growth 10% 7.42p 15% 6.75p 4.5% 5.85p 5.60p Up 10% to 7.42p HY13 HY14 HY15 HY16 50% pay-out ratio target 2017 10
Slide 11: Interest rate – no significant impact
Interest rate – no significant impact Group SII ratio Balance sheet Capital redeployment • Low capital sensitivity 174% Interest rate -25bps (-3ppts 171% • Matched back book Working range on Solvency II) • Fully funded pension 100% Solvency Capital Requirement Risk reduction (“SCR”) Business model •
Slide 12: Checklist
Checklist Strong capital 174%, proven resilience Increase dividend 10% growth Grow operating profit 13% growth Friends Life Integration Ahead of schedule Simplify and self-help More to be done 12
Slide 13: 2016 Interim Results - Tom Stoddard, CFO
2016 Interim Results 4 August 2016 Tom Stoddard Chief Financial Officer
Slide 14: Growing operating profit
Growing operating profit Operating profit £million HY15 HY16 Change Life 1,021 1,226 20% Operating profit up 13% General Insurance & Health1 400 334 (17)% Fund Management 33 49 48% Corporate costs & other (90) (85) 6% Group debt & other interest costs1 (194) (199) (3)% Operating EPS up 1% Operating
Slide 15: Economic variances affect NAV & total EPS
Economic variances affect NAV & total EPS Net asset value per share IFRS Opening NAV per share at 1 January 20161 390p • 39% decline in integration & restructuring costs Operating profit 23p • NAV affected by fluctuations in Dividends (14)p − Interest rates, FX, credit spreads and Investment varianc
Slide 16: UK Life – discipline and growth
UK Life – discipline and growth IFRS life operating profit Value of new business1 £m 253 269 Protection 66 90 Annuities Pensions £699m 90 90 & Platform £555m Equity Release 59 64 & Other 38 25 HY15 HY16 HY15 HY16 Operating expenses • £138m of Friends Life run-rate synergies secured £418m and savings
Slide 17: UK Life – profit drivers
UK Life – profit drivers IFRS operating profit £ million HY16 Bps / Margin Bps / Margin basis Target Range Long Term Savings (45) n/a New business strain (45)-(50) New Business Annuities & Equity Release 88 11% PVNBP 7.5-8.5% Protection 46 41% APE 40-50% Long Term Savings 109 25bps Opening assets 25
Slide 18: Fund management – building momentum
Fund management – building momentum IFRS operating profit AIMS net flows £49m 4.0 Net Flows (£bn) 3.0 £33m 2.0 1.0 0.0 HY15 HY16 H2 14 H1 15 H2 15 H1 16 AIMS target return AIMS target income AIMS performance¹ • Increased contribution from Friends Life assets Annualised return 17.3% Average volatilit
Slide 19: UK & Ireland GI – returning to growth while maintaining cost discipline
UK & Ireland GI – returning to growth while maintaining cost discipline IFRS operating profit Combined operating ratio HY15 HY16 £217m £219m Underlying COR 97.2% 96.4% LTIR £96m £92m Prior year development -0.5% -1.5% Weather2 -3.5% -2.4% £121m £127m HomeServe new business strain +1.9% Underwriting
Slide 20: Canada – investing for future growth
Canada – investing for future growth IFRS operating profit Combined operating ratio £131m HY15 HY16 LTIR £49m £88m Underlying COR 97.7% 98.7% Prior year development -5.8% -3.8% £46m Underwriting £82m Weather and fires1 +0.9% £42m Reported COR 91.9% 95.8% HY15 HY16 Efficiency & growth NWP • NWP up 5%
Slide 21: Europe – stable results despite challenging market conditions
Europe – stable results despite challenging market conditions IFRS operating profit VNB1 £419m £420m FX Turkey Spain £9m £229m Italy £192m Poland France HY15 HY16 HY15 HY16 Combined Operating Ratio (France) • Profit impacted by French floods, £m HY15 HY16 lower equity markets and new asset Underlyin
Slide 22: Asia – investing in disruptive distribution strategies
Asia – investing in disruptive distribution strategies IFRS operating profit VNB1 £98m DBS FPI £14m £67m £70m £38m £62m £61m £29m £28m HY15 HY16 HY15 HY16 Operating expenses • VNB down following discontinuation of DBS £88m • Expanded Singapore armed forces distribution £65m • Recently added 280 advi
Slide 23: Strong capital position
Strong capital position £bn 180% (0.3) 174%1,2 (0.6) 1.5 (0.8) 9.7 9.5 31-Dec-15 Business unit Centre & debt costs Dividend FX, Markets & other 30-Jun-16 capital generation 1The solvency position includes the estimated impact of acquiring the RBC General Insurance business (£(0.3) billion) on a pro-
Slide 24: Sensitivities remain resilient to stresses
Sensitivities remain resilient to stresses Group SII ratio Equities Corporate movement Interest bond GI Longevity HY16: 174% (decrease) rates spreads shock1 shock2 coverage Capital redeployment ratio -10% -25% -25bps +100bps 173% 173% 171% 173% 172% Working range 166% Risk reduction 100% Solvency Ca
Slide 25: Commercial real estate portfolio largely de-risked
Commercial real estate portfolio largely de-risked 102% 95% 83% 85% Prudently positioned & reserved 61% 60% LTV • Loan interest cover improved to 2.14x (FY15: 2.05x) £m 1,583 1,492 Loans • £0.6bn IFRS valuation reserve in arrears 418 446 9 0 2.14x • LTV’s on commercial mortgage portfolio 2.05x Loan
Slide 26: Performance
Performance Operating profit Capital Interim dividend £1,325m Solvency II ratio1 174% 7.42p per share up 13% Capital Generation2 £1.2bn up 10% 1The estimated Solvency II ratio represents the shareholder view. This ratio excludes the contribution to Group Solvency Capital Requirement (SCR) and Group
Slide 27: 2016 Interim Results - Mark Wilson, Group CEO
2016 Interim Results 4 August 2016 Mark Wilson Group Chief Executive Officer
Slide 28: Our expectations
Our expectations Operating profit Cash Dividend Mid-single digit growth £7bn cash remittances 50% pay-out in medium term 2016 -2018 ratio 2017 28