Aviva Plc · LSE:AV.
Aviva — Investor Presentation (April 2005)
13 slides from Aviva's investor presentation, Apr 14, 2005
Slide 1: Risk and capital management: the changing environment
Risk and capital management: the changing environment Andrew Moss Group Finance Director Aviva plc 14th April 2005
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: Sector remains undervalued?
Sector remains undervalued? Performance of European Life Sector vs FTSE Eurofirst 300 over 10 years The insurance sector experienced 400 heavy falls during the recent bear 350 300 market 250 200 Historically there have been a 150 100 number of legitimate concerns 50 underpinning sector valuation 0 d
Slide 4: Drivers of market under performance
Drivers of market under performance Under performance driven by falling equity market acting as a catalyst for concerns over risk and capital issues within the industry Risk and capital Capital strength management Uncertainty = concerns weaknesses Sector • Dividend cuts • Longevity valuation haircut
Slide 5: Regulators' and markets' response to sector shortcomings
Regulators’ and markets’ response to sector shortcomings Issue Risk and capital Lack of transparency management weakness Driver Regulator – policyholder Markets – both industry specific protection focus and cross sector Changes FSA (UK) EEV Prudential sourcebook IFRS Europe – IGD/ FGD Solvency 2 PVK
Slide 6: Risk and capital management response to challenge
Risk and capital management response to challenge VISIBILITY ANALYSIS ACTION Risk types Understand capital and capital Proactive, informed risk • Asset risks requirements and capital • Regulatory capital management • Liability risks • Pillar 1 • Risk Appetite • Operating Risks statements • Pillar 2
Slide 7: Embedding risk and capital management disciplines in Aviva
Embedding risk and capital management disciplines in Aviva Aviva’s Asset Liability Management Group Board Committee responsible for integrating Independent risk and capital disciplines across the Group Risk oversight from Group Appetite Group Business Risk Committee • Authoritative action oriented c
Slide 8: Clarity of Financial Disclosures - EEV Principles
Clarity of Financial Disclosures - EEV Principles Evolution from achieved profits reporting – consistent adoption will create greater transparency and comparability for investors Slide 7
Slide 9: EEV disclosures - Allowance for risk
EEV disclosures - Allowance for risk Achieved profits – allowance for risk captured mainly through Risk Discount Rate (RDR) Under EEV risk is allowed for •In margins in policy liability calculations •Explicit assessment of cost of financial options and guarantees •Allowance for the cost of holding c
Slide 10: Commercial benefits of risk and capital management in Aviva
Commercial benefits of risk and capital management in Aviva Example - 1 Example – 2004 Capital Invested into Life New Business Capital generated across Aviva businesses pooled and redeployed with objective of Total NBC IRR Invested Before Post optimising risk/reward trade-off Capital Tax Tax 2004 £m
Slide 11: Commercial benefits of risk and capital management in Aviva
Commercial benefits of risk and capital management in Aviva Example - 2 Digital flood mapping 28% of properties within this General Insurance Business successfully postcode area flood: SY3 7 re-positioned to deliver high quality earnings through leveraging scale and volume Creating competitive advan
Slide 12: Aviva: Emerging benefits
Aviva: Emerging benefits External perspective Internal perspective High quality, diversified business model Economic capital requirement of Business Unit risk positions Strong capital position: EU Insurance Groups Directive excess of £3.6bn at end 2004 Relative returns on risk adjusted capital Stron
Slide 13: Risk and capital management: the changing environment
Risk and capital management: the changing environment Slide 12