Aviva Plc · LSE:AV.
Aviva — H1 2014 Earnings Presentation
25 slides from Aviva's earnings presentation, 2014
Slide 1: 2014 Interim Results
AVIVA 2014 Interim Results
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 announcement contains, and we may make other verbal or written “forward-looking statements” wi
Slide 3: 2014 Interim Results – Mark Wilson, Group CEO
2014 Interim Results Mark Wilson Group Chief Executive Officer 3
Slide 4: Half Year 2014 Results summary
Half Year 2014 Results summary Cash remittances to Group up 7% at £612m (HY13: £573 million) Cash flow Operating capital generation (“OCG”) stable at £910 million (HY13: £933 million) Interim dividend per share 5.85p (HY13: 5.6p) Profit after tax1 up 113% to £863 million (HY13: £406 million)
Slide 5: Key metrics
5 key metrics Cash remittances Operating profit Operating expenses £612m £1,052m £1,528m £573m £1,008m 4% £1,399m 7% 8% 55% 52% HY13 HY14 HY13 HY14 HY13 HY14 Value of new business Combined operating ratio Interim dividend £453m 5.85p 96.2% 5.6p £428m 0.7 95.5% 4.5% 9%1 ppt HY13 HY14 HY13 HY14 HY13 H
Slide 6: Progress on cash flow
Progress on cash flow Issue Plan HY update 1 Operating expense ratio is too high Below 50% 52% (FY13 54%) Excess cash flow is inadequate More than double annual run- Remittances up 7% 2 to £612m. Central Cash flow considering our earnings power rate to £0.8bn spend 24% lower Life back books are inef
Slide 7: Progress on growth
Progress on growth Issue Plan HY update VNB up 9%1 Growth is necessary but not at the cost Reallocate resources to growth 5 of dividends businesses VNB of growth markets up 54%1 U/W result up 11% Growth £1 billion of Positive external fund flows at platform net flows. 6 Third party flows are weak Av
Slide 8: Expense ratios
Expense ratios Savings achieved ahead of £400m target Operating expense ratio (132) 568 -3ppt (228) Annual Savings (208) 55% 3,366 3,234 1,399 52% Below 3,006 Below 50% 50% 1,399 FY11 Saving FY12 Saving FY13 Saving Implied FY14 run HY 2013 HY 2014 Target FY14 rate run rate Actions taken in 2014 Redu
Slide 9: Investment Thesis – Cash flow plus growth
Investment Thesis – “Cash flow plus growth” 1. Life Value of new business Remittances from business units less central Cash flow Growth 2. GI Underwriting result and debt financing costs 3. AI External net fund flows Our strategic anchor True customer composite Digital first Not everywhere Serving a
Slide 10: 2014 Interim Results – Tom Stoddard, Chief Financial Officer
2014 Interim Results Tom Stoddard Chief Financial Officer 10
Slide 11: Operating profit improvement
Operating profit improvement Operating profit £ million HY13 HY14 Change IFRS Operating profit reconciliation Life 910 954 5% Operating profit HY13 1,008 General Insurance & Health 428 403 (6)% UK Annuities (40) Fund Management 42 48 14% Weather year on year (40) Other operations (49) (54) (10)% Ase
Slide 12: Net asset value
Net asset value Net asset value per share IFRS MCEV* Opening NAV per share at 31 December 2013 270p 463p Operating profit 24p 31p Dividends and appropriations (9)p (9)p Investment variances & AFS equity movements 4p 3p Pension fund 11p 11p Integration and restructuring costs, goodwill impairment, ot
Slide 13: UK Life
UK Life Value of new business Operating profit Remittance to group £ million HY13 HY14 £472m £350m Annuities 138 81 (41)% £438m £300m Protection 36 45 25% Pensions 30 27 (10)% Equity release & other 20 24 20% Total 224 177 (21)% HY13 HY14 HY13 HY14 • Expense focus giving improved operating profit Op
Slide 14: UK GI
UK GI Operating profit Operating profit Net written premium £m HY13 HY14 £239m £251m £1,963m Underwriting result 78 114 £1,836m Inv Income internal loan 116 82 £137m £161m Other Inv Income 45 55 Total 239 251 £78m £114m Combined operating ratio HY13 HY14 HY13 HY14 Personal Motor 96% 95% LTIR Underwr
Slide 15: France
France Value of new business Operating profit VNB £m HY13 HY14 £222m £110m £216m Protection 30 30 0% £90m Unit linked savings 32 53 66% Other savings 28 27 (4)% Total 90 110 23% HY13 HY14 HY13 HY14 Operating expenses Operating Expense Ratio • Operating profit up 6% in constant currency £216m £203m 3
Slide 16: Canada
Canada Combined operating ratio Operating profit Net written premium HY13 HY14 £147m £1,126m £1,026m Personal Motor 87% 95% Home 95% 101% £83m Commercial 97% 97% Total 92% 97% HY13 HY14 HY13 HY14 • Net written premiums up 6% on constant Operating expenses Operating Expense Ratio currency basis £196m
Slide 17: General Insurance Combined Operating Ratio
General Insurance Combined Operating Ratio Current year Prior year Combined Weather vs underlying reserve Expense ratio operating LTA loss ratio movement ratio 32.3% 96.2% 31.0% 95.5% 21.8%1 21.0%1 0.8% 64.1% 64.5% 10.5%2 10.0%2 (0.2)% (0.1)% (0.8)% HY13 HY14 HY13 HY14 HY13 HY14 HY13 HY14 HY13 HY14
Slide 18: Value of new business
Value of new business GBP Constant HY13** HY14 Currency • UK VNB impacted significantly by lower individual annuities UK & Ireland 226 19% 183 19% • Greater collaboration with Aviva Investors and UK Life France 90 23% 110 27% • Improvement in France driven by higher volumes of higher Poland* 21 58%
Slide 19: A focus on improving efficiency ratios
A focus on improving efficiency ratios Segmental efficiency ratios Group ratio 55% 52% <50% 35% 31% 15% 15% 14% 14% 11bps 12bps Life GI FM Health Group Expenses per PDA Expenses Op Expenses Op Expenses Op Expenses Profit Driver Net Written Average Funds Net Written Op profit (before Analysis* (PDA)
Slide 20: Cash remittances
Cash remittances Total by country* Operating capital generation Remittances Comments on remittances £ million HY 13 HY 14 HY 13 HY 14 UK & Ireland Life 258 414 300 350 Increased by 17% UK & Ireland GI 216 228 0 0 Payable in H2 in line with prior year France 174 127 103 90 Further remittance due in H
Slide 21: Improving financial strength
Improving financial strength Intercompany loan External leverage ratio £bn % TNAV S&P Plan 5.8 6 50% 50% 50 46% 4.1 45 4 3.6 <40% Plan 40 2.2 35 33% 32% 2 30% AA 30 25 0 20 2012 Feb-14 Jul-14 Dec-15 2012 2013 HY14 Plan • Economic capital surplus1 £8.0bn (1Q14: £7.8bn) • Central liquidity £1.2bn • Ex
Slide 22: 2014 Interim Results – Mark Wilson, Group CEO
2014 Interim Results Mark Wilson Group Chief Executive Officer 22
Slide 23: 2014 Interim Results Q&A
AVIVA 2014 Interim Results Q&A
Slide 24: Appendix
2014 Interim Results Appendix 24
Slide 25: Operating Expense Ratio
Operating Expense Ratio Operating Expense Ratio -3ppt 55% 52% HY13 HY14 Components of Operating Expense Ratio £ million HY13 HY14 Market Operating Profit 1,331 1,351 Less Corporate Centre (72) (64) Group Operating profit excluding Debt Costs and Pension income 1,259 1,287 Add operating expenses 1,52