Aviva Plc · LSE:AV.
Aviva — Investor Day (July 2014)
14 slides from Aviva's investor day presentation, Jul 9, 2014
Slide 1: Still more to do
Still more to do Tom Stoddard Group Chief Financial Officer 14
Slide 2: Industry challenges
Industry challenges • Regulatory change ‒ Solvency II ‒ GSII ‒ Consumer value • Legacy of global financial crisis • New reporting requirements • Systems and Management Information in transition Who would want to be an insurance CFO? 15
Slide 3: Finance issues and actions
Finance issues and actions • Invest in change • Improve profitability • Reduce internal and external leverage • Accelerate cash flow and growth 16
Slide 4: Increased scrutiny on underperforming cells
Increased scrutiny on underperforming cells Capital backing underperforming cells has improved to 50%, but this is still unacceptable Under- Performing Adequate performing 13 cells 9 cells 20 cells Returns well above cost of capital Returns above cost of capital IFRS capital £3bn Return Some returns
Slide 5: Invest in change: True Customer Composite & Digital First
Invest in change: True Customer Composite & Digital First More focus on strategic spend 18
Slide 6: How we achieved £400m run-rate savings
How we achieved £400m run-rate savings Full time employee savings (74%) UK & Ireland 31% Europe, Canada & Asia 45% 11% Aviva Investors 13% Group Centre & Other 43% Other Savings 7% (26%) 8% 16% 4% 22% 2011 cost base De-layering BU cost De- Operating Property Consultancy, Cost base post (rebased) eff
Slide 7: A focus on improving efficiency ratios
A focus on improving efficiency ratios Segmental efficiency ratios Group ratio 58% 57% 54% <50% 37% 37% 33% 16% 15% 15% 13bps 17% 14bps 15% 15% 12bps Life GI FM Health Group Expenses per PDA Expenses Op Expenses Op Expenses Op Expenses Profit Driver Analysis* (PDA) Net Written Average Funds Net Writ
Slide 8: Improve profitability: Unlocking value in back books
Improve profitability: Unlocking value in back books UK Life MCEV: £7.4bn Policies in-force: 6.6mn France MCEV: £3.7bn Policies in-force: 2.6mn Poland MCEV: £1.3bn Policies in-force: 4.7mn Back book strategies Aviva Systems Thinking • Improved retention by: • View from a customer perspective Integ
Slide 9: Drive value from balance sheet
Drive value from balance sheet Assets Liabilities • Group asset allocation framework • Creation of Reinsurance Mixer • Greater collaboration with Aviva • Significant opportunities from Back Investors Book management • Consistent approach to Investment • Revised and improved debt structure Management
Slide 10: Improving financial flexibility
Improving financial flexibility Economic capital surplus1 Holding company liquidity £bn £bn 10 8.3 1.8 1.6 7.8 1.5 8 6 5.3 1.2 4 3.6 0.6 2 0.2 0 0 2011 2012 2013 Q1-14 Jan-13 Feb-14 Q1-14 Inter-company loan External leverage ratio £bn TNAV S&P Plan 5.8 % 6 50% 50% 50 4.1 4.0 45 4 40% 40 Plan 2.2 35
Slide 11: Accelerating growth of holdco excess cash flow
Accelerating growth of holdco excess cash flow £m 1.6 Areas to improve • Profit growth • Higher remittances £1.3bn • Lower central costs 1.2 63% • Lower interest costs £(0.2)bn • Tax and capital efficiency • Lower restructuring costs £0.9bn £(0.2)bn £0.8bn 0.8 More Than £(0.4)bn Double 0.4 £0.8bn £0
Slide 12: Summary of financial plan and desired outcomes
Summary of financial plan and desired outcomes Growing the sustainable level of excess cash flow from operations at the holding company level is the key to our investment thesis and business strategy Metric Plan Timing Group operating Below 50% YE 2016 expense ratio Holdco excess More than double an
Slide 13: Q&A
Q&A Tom Stoddard Group Chief Financial Officer 26
Slide 14: Cautionary statements
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” with respect