Aviva Plc · LSE:AV.
Aviva — Investor Day (2004)
57 slides from Aviva's investor day presentation, 2004
Slide 1: Aviva Life International
Aviva Life International Philip Scott - Group Executive Director, Life International © Aviva plc
Slide 2: What is Aviva Life International?
What is Aviva Life International? Country with Country with other ALI presence Aviva Group presence © Aviva plc Slide 2
Slide 3: ALI in context – Aviva Group 2003 operating profit
ALI in context – Aviva Group 2003 operating profit (includes life on achieved profit basis) 35% 38% 27% Aviva Life International* UK Life Aviva General Insurance International * Includes GI operations in France, Netherlands, Italy, Turkey and Poland © Aviva plc Slide 3
Slide 4: ALI – implementing Group strategy
ALI – implementing Group strategy Netherlands: bancassurance JV with ABN AMRO Entered France: Lithuania life bancassurance from Poland from Q4 2004 China: JV life business Italy: major new from 2003 Spain: created bancassurance leading life agreements business Singapore & HK: bancassurance with DBS
Slide 5: Aviva bancassurance
Aviva bancassurance • 23% of Group life & pensions sales APE • Margins 39.7%… vs group average of 26.1% Aviva bancassurance life & pension sales (APE) £m 600 £541m +22% vs 2002 300 0 2000 2001 2002 2003 © Aviva plc Slide 5
Slide 6: Bancassurance strategy
Bancassurance strategy • Our strategy is multi-distribution – bancassurance is a tactic in suitable markets • Our diverse range of partnerships is an advantage: – Credibility as a partner – Economies of scale • Service quality is a key priority • We shall work with partner banks to provide a compreh
Slide 7: Aviva France
Aviva France Bruno Rostain © Aviva plc © Aviva plc Slide 7
Slide 8: French life market
French life market France market premium income in €bn 100 Non bancassurance 75 CAGR = 4.4% 50 25 0 1999 2001 2003 (estimation) Bancassurance Agents Sales force Brokers Direct The French Life market by distribution The French Life & Health market channel (premiums received) by class of business (est
Slide 9: Aviva's market position and prospects - Strong track record in existing sectors
Aviva’s market position and prospects - Strong track record in existing sectors Aviva France new business By distribution 2003 premium by type of business In €m Group Protection 3 000 pensions 2.5% 2 500 0.5% CAGR = 2 000 7.9% 1 500 compared 1 000 to 4.4% for 500 the market 0 1999 2001 2003 Agents S
Slide 10: Aviva's market position and prospects - positioned to benefit from market improvement
Aviva’s market position and prospects - Aviva is positioned to benefit from market improvement Unit-linked share of individual savings 100% 80% Aviva France – Total 60% France Market Aviva France - 40% AFER Aviva France - 20% non AFER 0% 1999 2000 2001 2002 2003 1Q04 • Aviva France non-AFER business
Slide 11: Antarius (CdN) joint venture – Key benefits for Aviva
Antarius (CdN) joint venture – Key benefits for Aviva • Partnership with Crédit du Nord begins 1st October 2004 for a minimum of 12 years • Exclusive distribution for most product types through CdN’s network of over 600 branches with access to a 1.2+ million strong customer base • Collaboration in L
Slide 12: AFER: "unique" in the French market
AFER: “unique” in the French market • Successful association for over 25 years: – Representing funds of €30bn and over 588 000 customers – With a single product concept, sold in two versions: a euro product first and now a multi-support • Strong customer loyalty built on low charges and strong finan
Slide 13: Pensions reform in France
Pensions reform in France • Precise conditions were finalised in April 2004 • First PERP products launched in Q2 2004 • Anticipated business of around €1bn in 2004, as consumers adapt to longer-term saving commitments, thanks mostly to transfers from existing savings • Savings rate in France is alre
Slide 14: Aviva Gestion d'Actifs: an award-winning asset manager
Aviva’s unit-linked fund performance - Aviva Gestion d’Actifs: an award-winning asset manager 2004 ... for particular funds … for fund ranges Lipper Fund Awards Prix La Tribune/Standard & Poor's Best fund: international convertible bonds - Gold award: best provider of extended fund range Victoire Co
Slide 15: Conclusions
Conclusions • Significant potential to increase higher margin unit-linked sales supported by current trends: – strong performances of Aviva Gestion d’Actifs – high degree of control over distribution networks – market recovery • Antarius provides not only a strong return on investment, but also an o
Slide 16: Delta Lloyd
Delta Lloyd © Aviva plc © Aviva plc Slide 16
Slide 17: Powerful market with upward potential
Powerful market with upward potential The market GWP life market shares • 4.5% of total European life ING 22.2% premium income Aegon 13.3% • $1,345 per capita spending Fortis 12.1% • 5.7% of Dutch GDP DL Groep 10.6% CAGR 9.6% over 1980 - 2001 Including ABN AMRO • Rabobank 7.4% • GWP life Euro 24 bn
Slide 18: Multi Label - Multi Channel: A variety of choice for the customer
Multi Label - Multi Channel: A variety of choice for the customer • Distribution channel linked to Labels / Channels Products / Sectors exclusive label Life Health GI Bank • Channel / label relation concerning product development, 9 9 9 9 pricing and marketing Intermediary • Full range of competitiv
Slide 19: The Dutch insurance market is facing significant challenges...
The Dutch insurance market is facing significant challenges... Challenges Opportunities • Regulator taking a more • Profitability is highly geared sophisticated approach on to investment returns capital adequacy • Demographic trends remain • Enhanced consumer favourable to insurers protection • Gove
Slide 20: Framework of the ABN AMRO joint venture
Framework of the ABN AMRO joint venture • Exclusive distribution agreement with a 30 years duration • Usage of ABN AMRO brand in The Netherlands • Agreement covers existing Life and GI in-force business of ABN AMRO • Delta Lloyd management control (51%/49%) • Fund management (own risk) provided by D
Slide 21: Conclusions
Conclusions • Strong brands give DL scope to become market leader in life sales • ABN AMRO venture delivering strong IRR of 12% • Specific projects underway to increase operational efficiency • Cost efficiencies/margin improvements achieved and targeted • Appropriate response to policyholder demand
Slide 22: Aviva Spain: Bancassurance partner for life
Aviva Spain Bancassurance partner for life © Aviva plc © Aviva plc Slide 22
Slide 23: Aviva No 1 in Life Business
Aviva No 1 in Life Business Premium Income RANKING POSIT ION MARKET SHARE EVOLUTION 1º 12% 10.0% 10% 8% 6.9% 7.4% 4º 5º 6% 6º 3.5% 4% 2% 0% 2000 2001 2002 2003 2000 2001 2002 2003 Source: ICEA Market Leader in Spain in 3 years(1) © Aviva plc (1) 10% market share by premium income: 9.2% for bancassur
Slide 24: Unique Business Model Designed for Growth
Unique Business Model Designed for Growth • Trusted partners with strong franchises • Partners incentivised for value growth • One-factory business model • Proven and successful bancassurance process • Management expertise to develop the business • Aviva brings ownership, controls and insurance expe
Slide 25: Drivers of Growth are Positive
Drivers of Growth are Positive • 11.1m customers • 12.6% of clients have policies • Less than 1.5 policies per client Client Penetration • Ageing Population • 3,713 Branches • Low Insurance Penetration • 20% growth next 5 years • Strong growth forecast • Growing in new regions Market Branch Growth N
Slide 26: One Factory Bancassurance Business Model
One Factory Bancassurance Business Model Customer Benefits Premiums 50% Profits 50% Profits JV Companies Bank Partners Commissions Aviva Fees Services Spain 50% Profits 50% Profits TPA (1) Bancaja © Aviva plc (1)Aseval provides third party administration (TPA) services for other JVs Slide 26
Slide 27: Aviva's bancassurance network has leading market shares
Appendix 2 Aviva’s bancassurance network has leading market shares in territories that account or c.70% of Spanish GDP • Strong multi-regional Caixa Galicia Caja España presence in fastest 2% growing regions in 5% 6% 2% Spain 1% 6% 19% • Growing presence in 3% attractive areas outside home regions 1
Slide 28: Aviva Italy
Aviva Italy Italy’s pre-eminent bancassurer © Aviva plc © Aviva plc Slide 28
Slide 29: The Italian Life Market
The Italian Life Market High Growth of almost 20% Per Annum Over Last 6 Years – twice as fast as any other European market Premium Income 1998 - 2004 * 80000 70000 * * 70000 62780 60000 55298 46328 50000 €m 39784 40000 35597 26483 30000 20000 10000 0 1998 1999 2000 2001 2002 2003 2004 © Aviva plc So
Slide 30: The Italian Life Market
The Italian Life Market Generali Group 13,916,720 Allianz Group 8,945,350 San Paolo - 7,181,340 Fideuram Group Unipol Group 5,061,150 Aviva top five by end 2005 ? Poste Vita 4,489,480 Cattolica Group 2,819,920 Aviva Group 2,469,878 Monte Dei Paschi Di 2,389,900 Siena Group 2,000,000 4,000,000 6,000,
Slide 31: Broadening and Building Partnerships
Broadening and Building Partnerships New bancassurance partnership 2000 2001 with Banca Popolare Commercio e 2004 BPU agreement New bancassurance partnership Industria (now Banche Popolari extended to include with Banca delle Marche Unite) BPB branches New New Extended distribution bancassurance ban
Slide 32: National Network over 3,400 branches and 2,500 financial advisors
National Network over 3,400 branches and 2,500 financial advisors Branches Financial Share of Advisors APE in 2003 UCI 522 1,750 53% BPL 538 717 17% BPL Eurovita 657 11% BDM 253 BPCI 241 7% BPU CARIME 326 BPB 380 N/A BCC (*) 167 12% Other 336 100% TOTAL 3,420 2,467 (*) former Nad.Ned. distributors F
Slide 33: Opportunity to Increase Customer Penetration
Opportunity to Increase Customer Penetration 30% CU VITA UNICREDITO 23% *EUR 2.25M PENETRATION 20% CU PREVIDENZA EUROVITA BPL CU LIFE 4,4% AVIVA VITA B.D. MARCHE *EUR 0.3m BPCI/CARIME 2% 2% * * EUR 0.3m *EUR 0.4m BANK RETAIL CUSTOMERS * 2003 NB PREMIUM 500,000 1,000,000 1,500,000 2,000,000 PER BRANC
Slide 34: Pensions Opportunity
Pensions Opportunity Government Pension Reforms – currently in Parliament • Gradual postponement of retirement age towards 40 years working service • Reduce the possibility of early retirement on a full pension and introduce incentives in order to convince employees to postpone retirement • TFR: new
Slide 35: Pensions Opportunity: Life Assurers role
Pensions Opportunity Life Assurers role Opportunities • € 13 bn contribution from employers each year to TFR • TFR re-evaluation rate: 3.4% actual performance in 2003 versus 5.7% average for Pension Funds Our plans • Insurers of “open” pension funds • Providers of annuities to members retiring from
Slide 36: Aviva Italia Summary
Aviva Italia Summary • Italy’s pre-eminent bancassurer • Expanding its distribution network • With a cost competitive advantage • Innovative • With a fast & proven develoment capability • In one of the most exciting growth markets © Aviva plc Slide 36
Slide 37: Asian Financial Services Analyst Presentation
Asian Financial Services Analyst Presentation © Aviva plc © Aviva plc Slide 37
Slide 38: Aviva Asia FS kicks off…
Aviva Asia FS kicks off… China Start Date: January 2003 India Hong Kong Start Date: June 2002 Purchase Date: July 2002 Singapore Purchase Date: July 2001 Our Winning Proposition for Asia Financial Services: Aggressive development in our chosen markets of multi-distribution focusing on effective banc
Slide 39: Singapore: Progress on all fronts
Singapore: Progress on all fronts • Purchased 100% of ICS from DBS Group in July 2001 • Concluded 10 year bancassurance deal with DBS at the same time • Total amount invested in life business of S$290m • Sold Direct Sales Force in 2002 • Launched profitable bancassurance product offerings in April 2
Slide 40: Singapore – Where are we heading?
Singapore – Where are we heading? • Realise full potential of DBS relationship – Out-of-branch sales – using full financial needs analysis – Increasing focus on risk products • Further development of IFA/Broker market – Pro-actively support growth of this segment (Less than 5% in 2003) – Maintain nu
Slide 41: Singapore
Singapore • Solid start • Focus on profitability, ROCE • Valuable infrastructure created • Positioned for future growth • Asia Springboard established © Aviva plc Slide 41
Slide 42: Hong Kong: Space for us to grow
Hong Kong: Space for us to grow • HK is 6th largest life insurance market in Asia and 21st worldwide • Our approach is substantially different to other players • Our foundation is a 10 year agreement with DBS Distribution Channels Market Now Aviva Now Aviva in 2006 Direct Salesforce 70% 0% 0% Bancas
Slide 43: Hong Kong: Operating Model
Hong Kong: Operating Model • Formed in July 2002 following the acquisition of Dao Heng Assurance and Kwong On Insurance from DBS Group for £31 million Singapore Hong Kong Backoffice Support Aviva Life HK DBS Bank • Finance • Sales Support • Top 5 in HK • Products • Call Centre • 60 branches • Admin
Slide 44: Hong Kong: Where we are heading
Hong Kong: Where we are heading • Build on brand positioning as a quality long-term savings provider – Use of the bank’s brand helps to manage channel conflict • Achieve the full potential from the DBS franchise – Extend scope of activity to other customer segments e.g. “emerging affluent” – Conduct
Slide 45: Hong Kong
Hong Kong • Volumes starting to flow • Efficient operating model • Differentiated market position • Further opportunities for growth © Aviva plc Slide 45
Slide 46: India: Going places…
India: Going places… • Aviva was the last of 12 entrants - now ranked 9th • Our share of Private (non-LIC) market is over 3% • DSF headcount at 1,900 2004 (24 Sales Centers) 2003 (17 Sales Centers) • 21 branches in 18 cities 2002 (9 Sales Centers) • Bancassurance partners: ABN Ludhiana Amro, Amex, C
Slide 47: India: Bancassurance partners
India: Bancassurance partners 250,000 customers 400,000 customers 9 branches 5 branches 27 million customers 2 million customers 2,450 branches 220 branches HNI focus – 25,000 customers + 2 branches Access to almost 30 million customers © Aviva plc Over 2500 bank branches Slide 47
Slide 48: India
India • Huge potential • Substantial capabilities developed • Leadership in bancassurance • Supportive local partner in Dabur • Looking to increase stake from 26% to 49% © Aviva plc Slide 48
Slide 49: China: Where we are now?
China: Where we are now? • 50:50 Joint Venture • Profile of our JV partner - COFCO – Listed in Fortune Global 500 enterprises for 9 consecutive years – 5th largest state-owned enterprise – China’s largest grains and oil import & export enterprise – Has good relationships with government – Has GI ins
Slide 50: China: Where next?
China: Where next? Beijing • Beijing – Population 14.6 million – Life premium volume at US$2,782 million Chengdu – No. of life players: 8 locals & 5 foreign branch/JVs – Our future China HQ Guangzhou – Expect to launch in 2004 • Chengdu – Population 10.4 million; Life premium volume at US$522 millio
Slide 51: China
China • Huge potential • COFCO a strong partner • Solid start in Guangzhou • Beijing and Chengdu next © Aviva plc Slide 51
Slide 52: Conclusion
Conclusion • Controlled but fast expansion from a low (in fact, nil) base • We are bringing our expertise and a quality approach to Asian markets • Focus on profitability • Corporate governance in place • Differentiated position – Not a just “me-too” approach – Bancassurance leadership in key market
Slide 53: United States
United States 100 90 • US expected to be the major source of worldwide savings growth in 80 medium and long-term 70 • Aviva a strong niche player 60 • Low interest rates hit sales in 2003 – Aviva’s response: £m 50 – Product withdrawal and redesign 40 – Reduction of commissions 30 – Staff redeploymen
Slide 54: Turkey Life
Turkey Life 30 • A major growth opportunity: – 70 million population 20 – Life insurance penetration <0.5% of GDP • Aviva is market leader for new business £m 10 • Key to the future is pensions – Aviva has clear advantages: – High-quality sales force (mainly graduates) 0 2001 2002 2003 – Market-lead
Slide 55: Poland and other Central and Eastern Europe
Poland and other Central and Eastern Europe 120 • Includes Poland, Lithuania, 100 Czech Republic, Romania and Hungary 80 • Regional trends dominated by severe recession in £m 60 Poland • Scale of Polish in-force portfolio keeps profitability 40 high • EU accession and economic 20 recovery promise su
Slide 56: Australia
Australia 70 Australia Life 60 50 • Niche life business £m 40 30 growing well 20 10 • Navigator impacted by: 0 2001 2002 2003 – Bear market New business (APE) Achieved operating profit – Software problems in service delivery Australia Navigator 1,000 7 – Cost of correcting these 6 problems 800 Opera
Slide 57: © Aviva plc Slide 57
© Aviva plc Slide 57