Aviva plc · LSE:AV.
Aviva — UBS Warburg Conference, New York 2004
20 slides from Aviva's conference presentation, May 11, 2004
Slide 1: Richard Harvey, Group Chief Executive
Richard Harvey Group Chief Executive 11 May 2004 New York 1 UBS Warburg Conference
Slide 2: Disclaimer
Disclaimer This presentation may contain certain “forward-looking statements” with respect to certain of Aviva’s plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertai
Slide 3: Aviva is Europe's best placed life assurer to capture an upturn in sales
Aviva is Europe’s best placed life assurer to capture an upturn in sales • Access to customer through multi-distribution networks • Pensions expertise to benefit from widespread reforms • Strong market positions Aviva life sales APE 2003 France rank: 10th Spain rank: 1st UK Italy rank: 8th rank: 1st
Slide 4: Aviva: Q1 2004 life sales
Aviva: Q1 2004 life sales • Total new business (APE) +6% - UK +7% - Continental Europe +6% - Including investment sales doubling • New business contribution +13% 4
Slide 5: Aviva life margins
Aviva life margins • Margins responding to actions on cost, price and mix Aviva total life and pensions margins % 28 27 26.4 26.1 26 25 24 23 22.3 22 21 20 2002 2003 Q1 2004 5
Slide 6: UK Life: potential "Golden Scenario"
UK Life: potential “Golden Scenario” Value D IV IVE E R TH SURVIVE Aviva : Better equity Markets Bear Market Aviva : Tough regulatory env Reducing costs Less regulation Margin & sales growth Price increases Confidence down Confidence returns Unit linked Trusted brand Industry shakeout Financial stre
Slide 7: UK Life – early signs of "Golden Scenario"
Aviva UK Life – early signs of “Golden Scenario” • Management prioritising margin over volume Aviva UK life market share Aviva UK life margins 12% % 24 23 22 5.2% 21 20 1996 1999 2003 2002 2003 Q1 2004 7
Slide 8: Aviva France
Aviva France • Strong first quarter sales performance +23% • Outperformed market (estimated +15%) • Margins maintained at 29.9% • Unit-linked sales +32% • Excellent investment track record Quartile ranking of Aviva Gestion d’Actif 1 year to 3 years to 5 years to 31/12/03 31/12/03 31/12/03 Number of
Slide 9: French Life insurance market
French Life insurance market Unit-linked sales historically highly geared to market levels € bn CAC 40 3.5 Unit-linked fund turnover CAC 40 3.0 7000 2.5 2.0 5000 1.5 1.0 3000 0.5 0.0 1000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Q1 04 Life and savings turnover on a monthly average
Slide 10: Aviva France: new opportunities
Aviva France: new opportunities • Crédit du Nord bancassurance JV from Q4 - 1.3m customers - 600 branches - Aim to handle additional sales within existing cost base • Pensions reform - Launch Q2 2004 - Estimated €1bn market sales for 2004 10
Slide 11: Aviva in the Netherlands
Aviva in the Netherlands • Benefit of ABN AMRO JV, cost reductions and increased value-based pricing discipline in market New business sales and margins Sales 250 35 % £m Margin 30 APE 200 25 150 20 100 15 10 50 5 0 0 11 2000 2001 2002 2003 Q1 2004
Slide 12: Spanish bancassurance protection is more profitable than UK protection business
Spanish bancassurance protection is more profitable than UK protection business... Spanish bancassurance UK protection product cashflow protection product cashflow % of % of 100% APE 50% APE 50% 40% 0% 30% 1 2 3 4 5 6 7 8 9 10 years -50% 20% -100% 10% -150% 0% -200% 1 2 3 4 5 6 7 8 9 10 years ...whi
Slide 13: Aviva Spain: Cost advantage
Aviva Spain: Cost advantage • Cost advantage over competition has grown with scale Acquisition and administration costs (% of premium, 2003) 6.45% % 6 5 4 3.04% 3 2.20% 2 1.55% 1 0 Aseval Aviva Other large Total Spanish life (Aviva factory) bancassurance bancassurers market cons. 13 Source: ICEA
Slide 14: Aviva Spain: Strong margins supported by pricing, low expenses and scale advantages
Aviva Spain: Strong margins supported by pricing, low expenses and scale advantages 100.0% Aviva Spain gross margins Increased weighting of protection 80.0% High volumes of savings 60.0% Average margin 55% 40.0% ( Q1 ’04 margin 54% ) 20.0% 0.0% Q4 Q2 Q4 Q2 Q4 Q2 Q4 2000 2001 2001 2002 2002 2003 2003
Slide 15: P&C growth opportunities?
P&C growth opportunities? • Aviva P&C re-focused post 2000 merger - Exited long tail and subscale businesses - Personal and SME commercial only • Customer consolidation to quality brand & service • Leverage scale advantages across smaller portfolios 15
Slide 16: Sustainable P&C performance
Sustainable P&C performance COR target 100% for each of the next 3 years Combined operating ratios % of total* P&C premiums 2003 2002 60 UK 99% 101% 6 France 102% 102% 7 Ireland 97% 100% 7 Neths 101% 105% 14 Canada 108%** 102% Group* 100% 102% Group 99% (excl Pilot) (** Pilot added 7pp) 16 *Continui
Slide 17: Proven business model in UK P&C
Proven business model in UK P&C New developments COR % 110 Telematics 105 Digital Aviva UK P&C flood ex NU pre-merger 100 Offshore capability 95 1997 1998 1999 2000* 2001 2002 2003 17 * 2000 excluding floods
Slide 18: Aviva P&C: strong scale advantages in UK claims handling
Aviva P&C: strong scale advantages in UK claims handling • Bulk purchase claims discounts 10-35% off • 40% reduction in retail market price claims handling cost 50% of UK claims handling capacity in India by end of 2004 18
Slide 19: Scale advantages in UK claims handling
Scale advantages in UK claims handling Personal motor & home insurance cumulative increases 30% ums m i a pre Aviv Competitive advantage s im 20% cla ms ket l a i ma r v iva c A UK 10% 2000 2001 2002 2003 19
Slide 20: Summary
Summary • Strong statutory earnings contribution from P&C • Capitalise on strong life platform in Continental Europe • Potential turnaround in the UK / Netherlands • Extensive distribution networks to capture upturn 20