Aviva Plc · LSE:AV.
Aviva — H1 2009 Earnings Presentation
32 slides from Aviva's earnings presentation, Sep 30, 2009
Slide 1: 2009 Interim Results
2009 fåíÉêáã=oÉëìäíë 1
Slide 2: Disclaimer
Disclaimer qÜáë=éêÉëÉåí~íáçå=ã~ó=áåÅäìÇÉ=çê~ä=~åÇ=ïêáííÉå=“Ñçêï~êÇJäççâáåÖ=ëí~íÉãÉåíëÒ ïáíÜ=êÉëéÉÅí=íç=ÅÉêí~áå=çÑ=^îáî~Ûë= éä~åë=~åÇ=áíë=ÅìêêÉåí=Öç~äë=~åÇ=ÉñéÉÅí~íáçåë=êÉä~íáåÖ=íç=áíë=ÑìíìêÉ=Ñáå~åÅá~ä=ÅçåÇáíáçåI=éÉêÑçêã~åÅÉI=ëíê~íÉÖáÅ= áåáíá~íáîÉë=~åÇ=êÉëìäíëK==qÜÉëÉ=Ñçêï~êÇJäççâáåÖ=ëí~íÉãÉåíë=ëçãÉí
Slide 3: Agenda
Agenda oÉîáÉï=çÑ=íÜÉ=_ìëáåÉëë ^åÇêÉï=jçëë `ÜáÉÑ=bñÉÅìíáîÉ=lÑÑáÅÉê OMMV=e~äÑ=vÉ~ê=êÉëìäíë mÜáäáé=pÅçíí `ÜáÉÑ=cáå~åÅá~ä=lÑÑáÅÉê nìÉëíáçåë=~åÇ=^åëïÉêë 3
Slide 4: Building a Position of Strength in a Tough Market
Building a Position of Strength in a Tough Market Return to profit in a challenging economic environment • fcop=éêçÑáí=~ÑíÉê=í~ñ=çÑ=¡TQT=ãáääáçåI=j`bs=éêçÑáí=~ÑíÉê=í~ñ=çÑ=¡NIMUQ=ãáääáçå= Strategic action to create financial flexibility • mä~åë=Ñçê=é~êíá~ä=fml=çÑ=aÉäí~=iäçóÇ=çå=bìêçåÉñí ^ãëíÉêÇ~ã=bñÅ
Slide 5: Lower Dividend Reflects Strategy, Earnings and Uncertain Economic Outlook
Lower Dividend Reflects Strategy, Earnings and Uncertain Economic Outlook Interim dividend reduced by 31% to 9 pence IFRS operating profit down 14% to £1,049 million Lower earnings due to • içïÉê=çéÉåáåÖ=Ä~ä~åÅÉ=ëÜÉÉí= • içïÉê=~îÉê~ÖÉ=êÉíìêå=çå=áåîÉëíãÉåíë • fåÅêÉ~ëÉÇ=ÇÉÄí=~åÇ=éÉåëáçå=Åçëíë Increase
Slide 6: Decisive Action to Build a Position of Strength
Decisive Action to Build a Position of Strength 1. Focus on margins and profit vs sales volumes 2. Strong cost management and operational improvement 3. Investing in our customers and brand 4. Progress with strategic allocation of capital 5. Strengthening the balance sheet 6
Slide 7: 1. Focus on Margins vs Sales
1. Focus on Margins vs Sales Life and Pensions margins maintained Sales Life General and Pensions insurance Margins £18.2bn COR2 £17.5bn NO=ãçåíÜë S=ãçåíÜë NA/Asia OMMV=B NA/Asia OMMU=B £3.1bn ¡NR=Äå rh NKTB OKNB £3.9bn bìêçéÉ= bìêçéÉ OKUB OKSB iáÑÉ Europe kçêíÜ=^ãÉêáÅ~ NKMB MKRB PSB Europe ^ëá~=m~Å
Slide 8: Focus on Profit vs Premiums
Focus on Profit vs Premiums General Insurance COR improved NWP £5.1bn General General Insurance insurance CORs COR2 ¡R=Äå £4.9bn NA/Asia S=ãçåíÜë NO=ãçåíÜë £0.8bn OMMU=B OMMV=B NA/Asia £0.9bn rh VVB VVB Europe bìêçéÉ VTB VSB ¡NKMÄå bìêçéÉ= iáÑÉ Europe kçêíÜ=^ãÉêáÅ~ VVB VTB PSB DL £1.1bn ¡P=Äå £ 0.5b
Slide 9: 2. Strong Cost Management
2. Strong Cost Management £2,700m (£38m) £72m (£80m) £2,622m (£118m) √ ^ÜÉ~Ç=çÑ=êìå=ê~íÉ=¡RMM= £148m £2,493m ãáääáçå=Åçëí=ë~îáåÖ=í~êÖÉíë (£75m) £2,500m (£38m) √ bäáãáå~íáåÖ=Åçëí=çîÉê=êìåë= ~åÇ=êÉÇìÅáåÖ=çéÉê~íáçå~ä= ÅçãéäÉñáíó=áå=rh=iáÑÉ £2,300m √ `äçëáåÖ=NP=çéÉê~íáçå~ä= 9.0% - £239m ÅÉåíêÉë=~åÇ==ëáã
Slide 10: UK Life
UK Life Significant improvement through operational excellence √ j~êâÉí=ëÜ~êÉ=áåÅêÉ~ëÉÇ=íç=NOB= HY1 08 HY1 09 +/- Ñêçã=NNB=ïÜáäëí=~äëç=áåÅêÉ~ëáåÖ= ã~êÖáåë iáÑÉ=~åÇ=mÉåëáçå=ë~äÉë ¡SIMNMã ¡QITPRã JONB √ j~å~ÖÉãÉåí=~Åíáçå=í~âÉå=çå=éêçÇìÅí= ãáñI=áåÅêÉ~ëÉÇ=éêáÅáåÖ=ëçéÜáëíáÅ~íáçåI= êÉÇìÅÉÇ=Åçããáëëáçåë=~åÇ
Slide 11: UK General Insurance
UK General Insurance Transforming the business √ bñÉÅìíáçå=çÑ=ëíê~íÉÖó=áë=áãéêçîáåÖ=íÜÉ= HY1 08 HY1 09 +/- èì~äáíó=çÑ=É~êåáåÖë √ ^ÅíáîÉäó=ÉñáíáåÖ=éççê=éÉêÑçêãáåÖ= kÉí=ïêáííÉå=éêÉãáìã ¡OIRUVã ¡OIMQVã JONB ÄìëáåÉëë `lo VUB VVB HNééë √ o~íáåÖ=áåÅêÉ~ëÉë=~ÄçîÉ=áåÑä~íáçå=çå=~ää= ã~àçê=Åä~ëëÉë `ìêêÉåí=óÉ~ê
Slide 12: Europe Excluding Delta Lloyd
Europe Excluding Delta Lloyd Strength from diversity √ píêçåÖ=Ä~åÅ~ëëìê~åÅÉ=éÉêÑçêã~åÅÉ= Local äáãáíë=Ñ~ää=áå=äáÑÉ=~åÇ=éÉåëáçå=ë~äÉë HY1 08 HY1 09 Currency √ j~êÖáåëW Growth √ `ìëíçãÉê=éêÉÑÉêÉåÅÉ=Ñçê=äçïÉê= ã~êÖáå=éêçÇìÅíë=ïáíÜ=Öì~ê~åíÉÉë= iáÑÉ=~åÇ=éÉåëáçå=ë~äÉë ¡SIVTVã ¡TIMTNã JVB EtáíÜ=mêçÑáíë=ë~ä
Slide 13: North America
North America Focus on greater capital efficiency √ açìÄäÉÇ=ÄìëáåÉëë=áå=O=óÉ~êëI=~ÜÉ~Ç= Local çÑ=í~êÖÉí HY1 08 HY1 09 Currency √ mêáÅáåÖ=~åÇ=Åçããáëëáçå=~Åíáçå=íç=ëäçï= Growth ÖêçïíÜ=~åÇ=áãéêçîÉ=éêçÑáíë √ j~êÖáå=î~êá~åÅÉ=ÇêáîÉå=Äó=íáãáåÖ=çÑ= iáÑÉ=~åÇ=éÉåëáçå=ë~äÉë ¡OIOOTã ¡PINUVã HUB êÉáåëìê~åÅÉ=ÇÉ~ä
Slide 14: Asia Pacific and Aviva Investors
Asia Pacific and Aviva Investors Progressing medium and long term objectives Asia Pacific • fcop=éêçÑáíë=çÑ=¡TM=ãáääáçåI=áåÅäìÇÉë=çåÉJçÑÑ=êÉäÉ~ëÉë=çÑ=¡RU=ãáääáçå=áå=páåÖ~éçêÉ • p~äÉ=çÑ=íÜÉ=^ìëíê~äá~å=äçåÖ=íÉêã=ë~îáåÖë=ÄìëáåÉëë=Ñçê=¡QRO=ãáääáçåI=NSñ=fcop=É~êåáåÖë • bñÅÉääÉåí=äçåÖ=íÉêã=ÖêçïíÜ=çééçêíìå
Slide 15: 3. Investing in Customers and Brand
3. Investing in Customers and Brand
Slide 16: 4. Progress with Strategic Allocation of Capital
4. Progress with Strategic Allocation of Capital Reattribution of the inherited estate • ré=íç=N=ãáääáçå=ÅìëíçãÉêë=ïáää=ÄÉåÉÑáí • mêçîáÇÉë=¡SMM=ãáääáçå=çÑ=åÉï=ÄìëáåÉëë=Å~éáí~ä=áå=íÜÉ=Ñáêëí=R=óÉ~êë=ïáíÜ=ëáÖåáÑáÅ~åí=éçíÉåíá~ä= ìéëáÇÉ • TMB=êÉëéçåëÉ=ëç=Ñ~ê=ïáíÜ=VSB=~ÅÅÉéí~åÅÉ Sale of Australian busines
Slide 17: Planned IPO of Delta Lloyd
Planned IPO of Delta Lloyd Subject to market conditions An opportunity for Aviva • jçåÉíáëÉ=~=ãáåçêáíó=çÑ=áíë=ëÜ~êÉÜçäÇáåÖ=áå=aÉäí~=iäçóÇ • båÜ~åÅÉÇ=î~äìÉ=~åÇ=äáèìáÇáíó=çÑ=êÉí~áåÉÇ=ëí~âÉ An opportunity for Delta Lloyd • oÉ~äáëáåÖ=íÜÉ=î~äìÉ=çÑ=íÜÉ=Äê~åÇ • kÉï=ëÜ~êÉÜçäÇÉê=Ä~ëÉI=ëìééçêíáîÉ=çÑ=ÖêçïíÜ=áå
Slide 18: Philip Scott
Philip Scott `ÜáÉÑ=cáå~åÅá~ä=lÑÑáÅÉê
Slide 19: IFRS Operating Profit
IFRS Operating Profit A lower asset and earnings base £m 1,500 £1,223m £(18)m £17m £(40)m £(16)m £(63)m √ léÉê~íáåÖ=É~êåáåÖë=çÑ=£1,049 1,250 million, down 14% on prior year £(54)m £1,049m √ fãé~Åí=çÑ=ÇÉÄí=Åçëíë=~åÇ= 1,000 éÉåëáçå=mCi=Åçëíë √ fåîÉëíãÉåí=êÉíìêå=Ñçê=çéÉê~íáåÖ= 750 éêçÑáí=Ä~ëÉÇ=çå=NM=óÉ
Slide 20: MCEV Operating Profit
MCEV Operating Profit New business and in force book both generate strong earnings £m √ léÉê~íáåÖ=É~êåáåÖë=ìé=NOB= 2,000 £312m £17m £(34)m £(17)m íç=£1,685 million £(63)m £(54)m £1,685m √ iáÑÉ=åÉï=ÄìëáåÉëë=áåÅêÉ~ëÉ= êÉÑäÉÅíë=äçïÉê=îçäìãÉëI=çÑÑëÉí=Äó= £1,509m £15m áåÅêÉ~ëÉÇ=Öêçìé=ã~êÖáå 1,500 √ iáÑÉ=
Slide 21: IFRS Profit After Tax
IFRS Profit After Tax Material decrease in investment losses and provisions IFRS H1 2009 H1 2008 FY 2008 £m £m £m • mêçÑáí=~ÑíÉê=í~ñ=çÑ=¡TQT=ãáääáçå Operating profit 1,049 1,223 2,297 • kç=êÉéÉ~í=çÑ=áåîÉëíãÉåí=äçëëÉë= Investment variances – Long term business 155 (636) (1,631) ÉñéÉêáÉåÅÉÇ=áå=OMMU In
Slide 22: MCEV Profit After Tax
MCEV Profit After Tax Material decrease in investment losses and provisions MCEV • oÉíìêå=íç=éêçÑáí=çÑ=¡NIMUQ=ãáääáçå= áå=OMMV H1 2009 H1 2008 FY 2008 • kç=êÉéÉ~í=çÑ=áåîÉëíãÉåí=äçëëÉë= £m £m £m ÉñéÉêáÉåÅÉÇ=áå=OMMU Operating profit 1,685 1,509 3,367 • ¡ONU=ãáääáçå=ÉñÅÉéíáçå~ä= êÉÇìÅíáçå=áå=íÜÉ=î~äìÉ=
Slide 23: Net Asset Value
Net Asset Value Volatile markets continue to generate large fluctuations • k^s=éÉê=ëÜ~êÉ=çÑ=QNSé=ìåÇÉê= MCEV IFRS j`bs=~åÇ=PQVé=ìåÇÉê=fcop • mÉåëáçå=ëÅÜÉãÉ=êÉÑäÉÅíë=ÅêÉÇáí= HY2009 HY2009 ëéêÉ~Çë=å~êêçïáåÖ=ÅçãÄáåÉÇ=ïáíÜ= Pence per Pence per áåÅêÉ~ëÉ=áå=äçåÖ=íÉêã=áåÑä~íáçå=ê~íÉ= share share çå=QM=óÉ~ê
Slide 24: IGD Solvency Surplus Significantly Strengthened
IGD Solvency Surplus Significantly Strengthened £bn 4.0 (£0.1bn) £0.5bn (£0.3bn) £0.1bn £3.2bn £0.4bn 3.0 £0.2bn (£0.3bn) £0.2bn £0.5bn £2.0bn 2.0 1.0 0 IGD surplus Operating Market Dividends Issue of Issue Sale of DL Value of Increase Other IGD December profits and movements Hybrid debt of hybrid H
Slide 25: IGD Solvency Surplus
IGD Solvency Surplus Stress tests show resilience Illustrative impact of market stress Equity hedges protect IGD surplus on IGD Surplus • QMB=Ñ~ää=áå=ÉèìáíáÉë=êÉÇìÅÉë=ëìêéäìë=Äó=¡PMM=ãáääáçå £bn • QMB=êáëÉ=áå=ÉèìáíáÉë=áåÅêÉ~ëÉë=ëìêéäìë=Äó=¡TMM=ãáääáçå 4.0 £3.2bn (£0.3bn) Interest rate guarantees (£0
Slide 26: UK Commercial Mortgages
UK Commercial Mortgages No defaults in H1 2009 30 June 2009 31 Dec 30 June 2008 2009 Total UK Interest service cover 1.30 1.32 Remaining UK Commercial commercial commercial loans property Average loan to value 103% 106% mortgage £8.1bn portfolio portfolio Vacancy rates 4.1% 4.7% £8.5bn £11.1bn Renta
Slide 27: Corporate Debt - Shareholder
Corporate Debt - Shareholder A high quality, diverse portfolio • gìëí=çîÉê=VQB=çÑ=Åçêéçê~íÉ=ÇÉÄí=áë=áåîÉëíãÉåí=Öê~ÇÉ=çê=k^f`=ê~íÉÇ • jáåáã~ä=ãçîÉãÉåí=áå=ê~íáåÖ=Öê~ÇÉë 27
Slide 28: 5. Strengthening the balance sheet
5. Strengthening the balance sheet Summary Equities marked to market and additional hedging provides significant protection A high quality debt portfolio, valued at fair value • råêÉ~äáëÉÇ äçëëÉë=äçïÉê=~í=¡UKT=Äáääáçå=Ecv=OMMUW=¡NPKN=ÄáääáçåF=çå=íçí~ä=ÇÉÄí=ëÉÅìêáíáÉë= çÑ=¡NQT=Äáääáçå=çê=SB=çÑ=íçí~ä=
Slide 29: Andrew Moss
Andrew Moss `ÜáÉÑ=bñÉÅìíáîÉ=lÑÑáÅÉê
Slide 30: Building a Position of Strength
Building a Position of Strength Taking decisive action Purpose Open to the recovery Prosperity & Delivering peace of mind the Strategy Vision One Aviva, twice the value Creating financial flexibility Strategic Targets priorities Capitalising • Manage composite onmeet • 98% the or beat COR portfolio
Slide 31: Questions
nìÉëíáçåë 31
Slide 32: Interim Results
2009 Interim Results AVIVA 32