Aviva Plc · LSE:AV.
Aviva — H1 2019 Earnings Presentation
40 slides from Aviva's earnings presentation, Dec 17, 2019
Slide 1: Interim results 2019
BIAVIVA Interim results 2019 Aviva plc
Slide 2: Disclaimer
Disclaimer Cautionary statements: This should be read in conjunction with the documents distributed by Aviva plc (the “Company” or “Aviva”) through The Regulatory News Service (RNS). This presentation contains, and we may make other verbal or written “forward- looking statements” with respect to cer
Slide 3: Aviva plc interim results 2019
BIAVIVA Aviva plc interim results 2019
Slide 4: Update from June
Update from June Organisational design Digital Costs Strategy What we said Separate management structure for UK Life & GI Align with trading business £300m cost saving by 2022 net of inflation & at constant FX Full review of group and business unit strategy What we’ve done Separate management teams
Slide 5: Interim results headlines
Interim results headlines £1,448m 27.3p 9.50p Operating profit’ , +1% Operating EPS, +2% Dividend, +3% 194% £0.8bn £2.3bn Solvency II cover ratio” Operating capital generation Centre liquidity’
Slide 6: Results snapshot
Results snapshot Financial performance Fundamentals Financial strength Interim dividend Strategy ‘Allfootnotes onpage 49 Resilient results in challenging markets, with fewer one-off benefits But mixed performance reinforces importance of improving fundamentals Progress on expenses with contractor he
Slide 7: Aviva: Confidential
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Slide 8: Efficiency
Efficiency Operating expenses £1,929m 1H18 2H18 1H19 + Operating expenses up 2%, elevated 2H18 baseline flowed into 1H19 + FY expenses expected to be lower than FY18, including implementation costs + Action taken to stop non-core projects with greater rigour on future project funding approval £300m
Slide 9: Aviva: Confidential
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Slide 10: Capital
10 Capital Solvency II cover ratio’ 3 180% Target range aees---------Y 160% FY15 FY16 FY17 FY18 HY19 Capital surplus broadly stable at £11.8bn Progress on balance sheet strength recognised by S&P with upgrade to AA- ‘Allfootnotes onpage 49 Centre cash’ £2.3bn £2.0bn £1.8bn £1.6bn £1.3bn a i i Feb-16
Slide 11: Dividend
ul Dividend 30.00p 27.40p 23.30p 20.75p 19.00p 15.88p 7.42p 8.40p 9.25p 9.50p FY16 FY1T FY18 FY19 Final dividend Il Interim dividend Interim dividend 9.50p per share, +3% Consistent with progressive dividend policy Reflects underlying business performance and external environment - OCG: £0.8bn, vs £
Slide 12: Interim Chief Financial Officer
BIAVIVA Interim Chief Financial Officer Aviva plc interim results 2019
Slide 13: HY19 snapshot
B HY19 snapshot Operating profit’ +1% Life 1,392 1,282 GI & Health 302 391 Aviva Investors 76 62 Corporate costs & other (148) (120) Group debt costs (184) (167) Group operating profit 1,438 1,448 BU operating profit by geography (£m) HY19 UK Life 831 722 Europe 508 498 UK GI & Health 209 187 Canada
Slide 14: Net asset value
Net asset value IFRS NAV per share’ +2% (7)p lp 3) 1 P (1)p 432p] 424p) (21 NAV per 2018 final Operating Markets, AVIF & IFRS 16 Ogden Other NAV per share dividend profit Pension Intangibles _ Leases share 01/01/19 &FX — amortisation 30/06/19 4 ‘Alifootnotes on page 0 Net benefit from non-operating
Slide 15: Solvency II position
15 Solvency II position 01 (0.2) (0.2) _ : a (2 BU wuts Debt & Other capital al S053 actions dividend 30 Jun 2038 3.6 (0.2) 0.2 Own funds 0.7 (0.8) 24.4 NB 03 EB 0.6 SCR (11.6) 0.0 - (0.1) (0.9) - (12.6) NB (0.4) FB 0.4
Slide 16: Cash
Cash BU cash remittances of £1.6bn... . driving Centre Liquidity of £2.3bn + HY19 benefitted from phasing of dividends from UK Life, * Strong centre liquidity underpins £1.5bn+ deleveraging plans UKGI, Poland, France and Aviva Investors * Nospecial dividend in HY19 (HY18: £500m from UK Life) * Stron
Slide 17: Aviva: Confidential
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Slide 18: Aviva: Confidential
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Slide 19: Aviva: Confidential
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Slide 20: Aviva: Confidential
• • • • • • • • • Aviva: Confidential
Slide 21: Aviva: Confidential
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Slide 22: Aviva: Confidential
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Slide 23: Interim results headlines
Interim results headlines £1,448m 27.3p 9.50p Operating profit’ , +1% Operating EPS, +2% Dividend, +3% 194% £0.8bn £2.3bn Solvency II cover ratio” Operating capital generation Centre liquidity’
Slide 24: Aviva: Confidential
Aviva: Confidential
Slide 25: Aviva: Confidential
Aviva: Confidential
Slide 26: Earnings per share
Earnings per share HY 2018 HY 2019 Group operating profit! 1,438 1,448 Less operating tax (303) (319) Minority Interest (46) (47) DCl and fixed rate tier 1 notes (6) (6) Preference shares (9) (9) Total operating earnings after tax, MI & DCI and preference shares 1,074 1,067 Weighted average number o
Slide 27: Aviva: Confidential
Aviva: Confidential
Slide 28: Operating return on total capital employed & return on equity
Operating return on total capital employed & return on equity Group return on capital employed Group return on equity 9.50% 9.6% 12.4% 12.7% 12.6% 9.3% 970 07% HY17 HY18 HY19 HY17 HY18 HY19
Slide 29: Operating return on total capital employed
Operating return on total capital employed 17.4% 13.6% 13.6% 13.9% 13.1% 19.79 11.8% ia 10.5% 7.1% -1.5% UK® Canada Europe® Asia FM Mi vi7 Mi pvis HY19 29
Slide 30: Analysis of operating return on equity
Analysis of operating return on equity Operating profit? Weighted average shareholders' funds incl. 6 months 2019 Before tax After tax NCI Return on equity % United Kingdom Life 722 581 10,100 11.5% United Kingdom General Insurance 187 151 1,434 21.1% Canada 98 72 1,374 10.5% Europe 515 370 5,330 13
Slide 31: Aviva: Confidential
Aviva: Confidential
Slide 32: SII own funds by tier
SII own funds by tier Regulatory view* Shareholder view 9 HY19 fbn %ofscR *ofown funds Tier 1 21.6 133% 77% * Regulatory view of own funds adjusted by T1unrestricted 195 120% 70% £3.6bn due to with-profits funds, pension schemes, notional reset of transitionals and T1 restricted 21 13% % other pro-f
Slide 33: Sensitivities
33 Changes in economic assumptions Changes in non-economic assumptions Sensitivity 25 bps increase in interest rate 50 bps increase in interest rate 100 bps increase in interest rate 25 bps decrease in interest rate 50 bps decrease in interest rate 50 bps increase in corporate bond spread? 100 bps i
Slide 34: Subordinated debt profile
Subordinated debt profile £1,300m Restricted Tier 1 MM Tier 2 Mi tier 3 £883m fa0om £805m £700m 450m 582m £626m 600m £500m £400m £400m £210m 500m 271m] 2019 2020 2021 2022 2023 2024 2025 2026 2029 2030 2038 All debt instruments have been presented at optional first call dates at nominal values conve
Slide 35: Aviva: Confidential
Aviva: Confidential
Slide 36: Total managed assets
Total managed assets Assets by liabilities covered Participating assets by type —m fm 141,461 401,690 Hl Euro-style 374,742 78,806 84,667 UK With-profits style 141,461 54,549 56,794 133,355 Il Participating funds FYI"! HY19 Policyholder funds Shareholder funds Shareholder assets by type 167,716 152,
Slide 37: Shareholder assets
Shareholder assets Shareholder assets by type Corporate debt by rating Total: £29,670m fm 92,513 89,229 9 _ 24,608 8% 17% 11% AAA MA Ml Less than BBB Government debt AA BBB [lll Non-rated 30,473 29,670 Hl Corporate bonds : Other debt : Hl Morteaze | Government debt by rating lortgage loans Other Tot
Slide 38: Shareholder assets
Shareholder assets Corporate bonds by industry Loans by type Total: £30,291m Financials - Banks 4 Communications 1 Loans & advances to banks Financials - Insurance & other [ill Real estate Healthcare, Infrastructure & PFI other loans BB Utilities Hl oil& gas Mortgage loans Consumer services Hl other
Slide 39: Shareholder assets - mortgage loans
39 Shareholder assets - mortgage loans Mortgage loans Commercial real estate portfolio Total: £20,772m Commercial total: £7,363m, 14% LTV Loans in arrears (£m) Loan interest cover Healthcare, infrastructure & PFI FY13. FY14.«s-FYI5) «s-FYI6. Ss FY17_—s* FY18~—HY19 Hl commercial Securitised mortgage
Slide 40: Footnotes
40 10. 11. Footnotes Group adjusted operating profit is a non-GAAP Alternative Performance Measure (APM) which is not bound by the requirements of IFRS. Further details of this measure are included in the ‘Other information’ section of the Analyst Pack. The estimated Solvency II position represents