Aviva Plc · LSE:AV.
Aviva — CGNU — 9M 2000 Earnings Presentation
26 slides from Aviva's earnings presentation, Nov 8, 2000
Slide 1: 9 months results and business update
9 m onths res ults and bus ines s update 88 November November 2000 2000
Slide 2: Bob Scott, Group Chief Executive
Bob S cott Group Chief Ex ecutiv e
Slide 3: Agenda
Agenda ! Delivering change Bob Scott ! 9 months results ! Refocusing the Group ! Integration update Richard Harvey ! Launching Norwich Union UK ! The 1% environment ! Positioned for long-term savings growth
Slide 4: Delivering change
Deliv ering change ! Merger completed 30 May 2000 ! Rapid integration progress ! Launch of single marketing groups in the UK and Ireland ! Significant corporate activity ! Growing distribution power ! Investment for future long-term savings growth
Slide 5: Results highlights
Res ults highlights ! Operating profit from ongoing operations* at £1,138m (1999: £1,120m) after £95m UK wealth management investment ! Long-term savings new business up 14% to £9.0bn ! New business contribution up 5% to £349m ! Life achieved operating profit up 24% to £1,147m ! General insurance pr
Slide 6: Worldwide new business sales
Worldw ide new bus ines s s ales ! Worldwide sales up 14% to £9.0bn ! Total investment sales up 11% to £1.1bn ! UK new business sales up by 22% to £5.5bn ! Strong sales in major Continental European businesses ! France + 38% ! Ireland + 42% International ! Netherlands + 29% Europe (excluding UK) ! S
Slide 7: Worldwide achieved life profits
Worldw ide achiev ed life profits ! Life achieved operating profit up 24% ! UK ahead 17% to £690m ! UK margins held ! Profit in Europe (ex UK) up 42% to £417m ! France ahead 69% to £161m International Europe (excluding UK) UK ** restated restatedto to 2000 2000 rates rates of of exchange exchange
Slide 8: General insurance result
General ins urance res ult ! Operating profit* of £428m up 15% ! UK operating profit** of £341m (1999: £187m) ! Strong discrete third quarter underwriting performance ! Group combined operating ratio* at 108% (1999: 107%) - 106% excluding French storms ! Discrete third quarter COR* at 105% (1999: 10
Slide 9: Improving UK general insurance
Im prov ing UK general ins urance ! Largest UK general insurer % % ! Improvement in underwriting* 108 12 of £76m over 1999 ! Strong rating actions, particularly in Motor 106 ! Expense ratio* down to 10.8% 11 (1999: 11.9%) 104 ! Lowest expense ratio of major players ! Excellent UK personal lines 102
Slide 10: Refocusing the Group
Refocus ing the Group ! Lower risk, higher performance general insurance ! Exiting sub-scale or poorly performing businesses - US P&C business - UK London Market business - South Africa, Germany ! NU Poland sale - value created - completion planned November 2000 ! Other disposals: ! Canadian life bu
Slide 11: A strong UK and European platform ...
A s trong UK and European platform ... Analysis of 9 months 2000 premiums* # $ # General !" 35% !"# Life** 65% £19 billion premium income* ** nine nine month month2000 2000 premiums premiums excluding excludingbusinesses businesses being beingsold sold or ordiscontinued discontinued ** life premiums
Slide 12: A strong UK and European platform ...
A s trong UK and European platform ... Analysis of 9 months operating profit* # General % 25% Life** 75% !" * life achieved, fund management, general insurance and health operating profits from ongoing businesses ** life including health and fund management result
Slide 13: Richard Harvey, Deputy Group Chief Executive
Richard Harv ey Deputy Group Chief Ex ecutiv e
Slide 14: Achieving rapid integration
Achiev ing rapid integration 31/12/2001 target ! Annualised savings achieved of £50 million £275m ! Integration costs £203 million £425m ! UK integration activity ! Achieved Norwich Union UK launch - 2 October ! Over 15,000 staff appointed in the UK ! UK Central Services organisation now operational
Slide 15: Launching Norwich Union UK
Launching Norw ich Union UK ! Created UK’s largest insurance group and market leader ! Launched UK brand 2 October 2000 ! 130 new life and general insurance products ! Success in achieving panel presence with new life products ! Single sales force re-trained ! IFA and broker roadshows completed ! no
Slide 16: UK fund management
UK fund m anagem ent ! Launch of Morley Fund Management - 1 November ! Disciplined investment process in place ! Operations and systems integration on track ! Top rated Socially Responsible Investment team acquired ! Retail Investment business launched under Norwich Union brand - 2 October ! Retail
Slide 17: Stakeholder UK pensions (a market forecast)
S takeholder UK pens ions (a m arket forecas t) 9 Size = Annual Contributions 8 Individual Millions of Participants Stakeholder 7 6 Personal 5 Pension Company Stakeholder 4 3 DB 2 DC 1 GPP 0 1999 2000 2001 2002 2003 2004 2005 2006 Source: Bacon & Woodrow - based on recent consumer & employer researc
Slide 18: Winning in the 1% environment
Winning in the 1% env ironm ent Reducing unit costs Capped charges Margin pressures ! Scale ! Brand credibility ! Efficient product design ! Multi-distribution ! e-enabled administration ! Investment expertise ! Stakeholder margins ! Leverage capital strength ! Competitive market
Slide 19: Rapid growth of equity-related savings in Europe
Rapid grow th of equity -related s av ings in Europe 1993 1998 Equity-related market share 0% - 10% 10%- 25% 25%-50% 50% + Source: IAMA
Slide 20: CGNU growth in France
CGNU grow th in France ! Top five life company (excluding bancassurance) ! Multi-distribution - Agents, AFER, Direct, UFF and other brokers ! Strong new business growth at 9 months 2000 ! Total sales up 38% ! Unit-linked products up 76% ! New business contribution - up 24% Total new bus ines s * New
Slide 21: Investing for future growth
Inv es ting for future grow th ! Bancassurance joint ventures ! RBoS / NatWest Life UK ! Bancaja Spain ! Banca Popolare di Lodi Italy ! Wells Fargo US ! New ventures in emerging markets ! Romania - life business launched 11 October ! Czech Republic - pensions opportunity ! Turkey - pensions opportun
Slide 22: Summary
S um m ary ! Rapid integration progress ! Building a lower risk, higher performance general insurance business ! Strong long-term savings performance ! Investing for growth in long-term savings …… delivering the strategic objectives
Slide 23: Questions & Answers
Lt CGNU Questions & Answers
Slide 24: Appendices
Appendices
Slide 25: Major items included in 2000 results
Major item s included in 2000 res ults 6 months 9 months 2000 2000 French storms £90m £90m Corporate costs (one-off) incentive / performance awards £24m £24m Business development ! Wealth Management / assertahome £41m £95m ! European life: ‘Navigator’ & Poland £17m £20m ! UK retail investment busine
Slide 26: Impact of adverse weather
Im pact of adv ers e w eather ! No estimate as yet of total cost of storms/flood damage as situation continues ! Catastrophe cover in place with worldwide reinsurers ! Current best assessment of this reinsurance protection is that CGNU’s net exposure is limited to a maximum of £200 million ! Total e