Aviva Plc · LSE:AV.
Aviva — Merger or Acquisition (July 2006)
18 slides from Aviva's merger presentation, Jul 13, 2006
Slide 1: Acquisition of AmerUs & Trading Update
Acquisition of AmerUs & Trading Update 13 July 2006
Slide 2: Disclaimer
Disclaimer This presentation, which has been prepared by and is the sole responsibility of Aviva plc (the "Company"), concerns the acquisition of AmerUs Group (the “Acquisition”) and a placing of shares of the Company to institutional investors (the "Placing"). This presentation is being made only t
Slide 3: Agenda
Agenda 1. Transaction Highlights • A leader in highly attractive market segments 2. Strategic Rationale • Fulfils stated US objectives, positioned for growth 3. Financial Aspects • Appropriately financed, sound financial case with upside
Slide 4: A leader in a high growth and profitable segment of the world's largest long-term savings market
A leader in a high growth and profitable segment of the world’s largest long-term savings market • AmerUs is a well-managed, innovative and fast growing business with national distribution • Excellent organic growth platform Platform for • First-class management team Growth • No. 1 position in equit
Slide 5: Transaction highlights
Transaction highlights • Price $69 per AmerUs share in cash • Equity consideration $2.9 billion(1) Price • Represents 10% premium to market(2) • 12.5x estimated 2007 earnings(3) and 1.7x 31 March 2006 adjusted book value(4)(5) and c. 1.9x estimated EEV (5)(6) • Annual pre-tax cost savings of $45 mil
Slide 6: Trading update for H1 2006
Trading update for H1 2006 • EEV operating profit before tax will be not less than £1.65 billion (2005: £1,318 million) and IFRS operating profit before tax will be not less than £1.35 billion (2005: £943 million) • Life and pensions new business sales growth and margins expected to be broadly in li
Slide 7: Agenda
Agenda 1. Transaction Highlights • A leader in highly attractive market segments 2. Strategic Rationale • Fulfils stated US objectives, positioned for growth 3. Financial Aspects • Appropriately financed, sound financial case with upside
Slide 8: AmerUs is consistent with Aviva's strategy
AmerUs is consistent with Aviva’s strategy • The US market is the world’s largest long-term savings market • Post-accumulation opportunity with $13 trillion in retirement assets targeting income generation and wealth accumulation • Forecast population growth of over 40% by 2050 will support more abs
Slide 9: Fast growing specialist insurer fulfils stated US objectives
Fast growing specialist insurer fulfils stated US objectives • Leading market positions: • No. 1 player in equity indexed life with 51% market share(1) • No. 3 player in equity indexed annuities with 9% market share(1) • No. 11 player in fixed annuities with 3% market share(2) • Diversified nationwi
Slide 10: "Baby boomers" in the post accumulation phase
“Baby boomers” in the post accumulation phase • US “baby boomers” 50-59 and 60-69 age ranges represent the highest growth age groups - forecast growth of 37% from 2000 to 2010 • Equity index annuities are attractive to those in or near retirement: • provides a capital guarantee, guaranteed minimum r
Slide 11: Equity indexed products have driven AmerUs' growth
Equity indexed products have driven AmerUs’ growth EQUITY INDEXED ANNUITY PRODUCT EQUITY INDEXED LIFE PRODUCT • 45% CAGR in sales between 2000 and 2005 • Innovative new product development • Products delivered an IRR (1) of 12% in 2005 • 68% CAGR in sales between 2000 and 2005 • 1 year statutory bre
Slide 12: Revenue enhancements
Revenue enhancements • Aviva’s superior financial strength and credit rating will provide access to additional distribution, including broker dealers, bank channels and high net worth advisers; financial strength is a key sales driver • Aviva has significant relevant expertise in bank distribution,
Slide 13: Aviva has a track record of growing international businesses
Aviva has a track record of growing international businesses • Aviva has successfully expanded its business internationally, with over 59% of its life revenues in 2005 coming from outside the UK • Aviva USA achieved 18% average annual growth in premiums between 2000 and 2005 • Proforma, in 2005, the
Slide 14: Swift integration planned, led by experienced management
Swift integration planned, led by experienced management • Integration due to be completed by 2008 • The combined business will be called Aviva • Philip Scott to become Chairman of Aviva USA Aviva Group • Full integration with Aviva Group risk management and control environment • Size and compatible
Slide 15: Agenda
Agenda 1. Transaction Highlights • A leader in highly attractive market segments 2. Strategic Rationale • Fulfils stated US objectives, positioned for growth 3. Financial Aspects • Appropriately financed, sound financial case with upside
Slide 16: Financial case
Financial case Earnings • Accretive to operating EEV earnings per share by 2008 (1) Impact • Accretive to operating IFRS earnings per share by 2007 (1) Return on • Attractive base case post-tax return on investment of over 10% by 2009 Investment significantly above cost of capital Cost Savings • $45
Slide 17: Transaction financing
Transaction financing • Approximately £900 million fully underwritten placing Equity Placing • New shares to rank for 2006 interim dividend • Approximately 5% of Aviva’s issued equity share capital Other Financial • Approximately £700 million of internal resources and external debt Resources • Assum
Slide 18: Conclusion
Conclusion • Fulfils stated US objectives • Growth accelerated by Aviva • First class management team • Sound financial case with upside • Right markets, right capabilities, right people 13