Aviva plc plc Aviva 2002 Interim Results 2002 Interim Results 1 August 2002 1 August 2002
Agenda Agenda � Business review Business review Richard Harvey � Richard Harvey � Financial review Financial review Mike Biggs � Mike Biggs � Results Results � � Capital update Capital update � � Questions & answers Questions & answers �
Highlights Highlights Group operating profit 1 at £979m (2001: £977m) � Group operating profit at £979m (2001: £977m) � � On MSSB basis operating profit at £757m (2001: £728m) On MSSB basis operating profit at £757m (2001: £728m) � � Long Long- -term savings new business up 9% on APE basis term savings new business up 9% on APE basis � New business contribution 2 up 6% to £289m � New business contribution up 6% to £289m � � General insurance profit of £480m with worldwide COR of General insurance profit of £480m with worldwide COR of � 101% (2001: 103%) 101% (2001: 103%) � Interim dividend of 8.75p (2001: 14.25p) Interim dividend of 8.75p (2001: 14.25p) � Net asset value 3 at 511p (31 Dec 2001: 524p, restated) � Net asset value at 511p (31 Dec 2001: 524p, restated) � � Strong financial position in worldwide group and UK life Strong financial position in worldwide group and UK life � � AA rating (“very strong”) reaffirmed by S&P AA rating (“very strong”) reaffirmed by S&P � 1 From continuing operations including life achieved operating profit before amortisation of goodwill and exceptional items 2 Before the effect of solvency margin 3 After adding back equalisation provision
Aviva the largest life & pensions the largest life & pensions Aviva provider to Europe provider to Europe GWP GWP (€ (€ bn bn) 28 28 � European European strategic focus strategic focus 21 21 � Strong market Strong market 14 14 positions positions 7 0 Aviva Aviva Allianz Allianz Axa Axa Generali Generali Rank Rank 2001 2001 1 3 2 4 2000 2000 4 3 1 2 1999 1999 4 2 1 3 Source: Company accounts, Morgan Stanley
Life & pension new business up 11% Life & pension new business up 11% APE growth APE growth Life and pension sales Life and pension sales - APE £m APE £m + 12% + 12% UK UK - 10% 10% France France + 30% + 30% Ireland Ireland + 25% + 25% Italy Italy - 15% 15% Neths Neths + 26% + 26% Spain Spain + 44% + 44% Int'l Int'l 700 700 0 75 75 150 150 225 225 300 300 Strong growth from geographical diversity Strong growth from geographical diversity
Bancassurance sales doubled sales doubled Bancassurance Total Increase Total Increase sales in sales sales in sales £m £m � Royal Bank of Scotland Group Royal Bank of Scotland Group 391 339% � 391 339% � Italy Italy 504 87% � 504 87% � Spain Spain 352 31% � 352 31% � DBS (Singapore) DBS (Singapore) 97 n/a � 97 n/a Bancassurance accounts for 20% of Group life & pension sales Bancassurance accounts for 20% of Group life & pension sales
Value from bancassurance bancassurance Value from � Structured to meet IRR Structured to meet IRR � � Incentivise Incentivise bank sales bank sales � � Structure according to markets Structure according to markets � Insurer Bank 50% equity Fee -Products -Sales -Admin -Marketing 50% equity -Asset mgt -CRM Fee Joint Board aims to maximise value of JV
Assessing shareholder value in a Assessing shareholder value in a Sandler environment environment Sandler � Recognition of need to stimulate savings Recognition of need to stimulate savings � � Principles favour providers with scale, brand and Principles favour providers with scale, brand and � operational efficiencies operational efficiencies � Examination of the viability of the new stakeholder Examination of the viability of the new stakeholder � product proposals product proposals � Assessment of the attribution of the inherited estate Assessment of the attribution of the inherited estate �
Benefiting from refocused general Benefiting from refocused general insurance insurance COR* 2002 2001 COR* 2002 2001 � Excellent results Excellent results � % % % % � Improving risk profile Improving risk profile � UK 101 103 UK 101 103 France 100 103 France 100 103 � Profit not volume Profit not volume � Ireland 100 104 Ireland 100 104 � Strongly capitalised Strongly capitalised � Netherlands 102 104 Netherlands 102 104 and cash generative and cash generative Aust & NZ & NZ 102 103 Aust 102 103 businesses businesses Canada 103 104 Canada 103 104 GROUP 101 103 GROUP 101 103 * Combined operating ratio * Combined operating ratio Best general insurance results amongst European insurers Best general insurance results amongst European insurers
Financial Review Financial Review
Group financials Group financials Group operating profit 1 maintained at £979m � Group operating profit maintained at £979m � New business contribution 2 up 6% to £289m � New business contribution up 6% to £289m � � General insurance profit of £480m with worldwide COR of General insurance profit of £480m with worldwide COR of � 101% (2001: 103%) 101% (2001: 103%) � On MSSB basis operating profit at £757m (2001: £728m) On MSSB basis operating profit at £757m (2001: £728m) � Operating EPS 1 at 27.4p (2001: 27.5p) � Operating EPS at 27.4p (2001: 27.5p) � Net asset value 3 at 511p � Net asset value at 511p (31 Dec 2001: 524p, restated) (31 Dec 2001: 524p, restated) � � Post Post- -tax return on capital of 11.0% (FY 2001: 9.7%, restated) tax return on capital of 11.0% (FY 2001: 9.7%, restated) � 1 From continuing operations including life achieved operating profit before amortisation of goodwill and exceptional items 2 Before the effect of solvency margin 3 After adding back equalisation provision
New business profitability New business profitability £m £m Group Group UK UK France France Spain Spain Italy Italy New business New business 289 289 164 164 34 34 33 33 16 16 contribution contribution Annual premium Annual premium 1,202 1,202 676 676 110 110 63 63 69 69 equivalent equivalent New business New business 24.0% 24.0% 24.3% 24.3% 31.0% 31.0% 52.3% 52.3% 23.3% 23.3% margin margin New business margin New business margin - 25.5% 25.5% 25.8% 25.8% 33.9% 33.9% 46.5% 46.5% 22.2% 22.2% FY 2001 FY 2001
Life achieved operating profit Life achieved operating profit � UK: Impact of lower UK: Impact of lower � 2002 2002 2001 2001 embedded value embedded value £m £m £m £m UK UK 424 424 465 465 � Benefits from Benefits from � France France 111 111 110 110 bancassurance bancassurance Ireland Ireland 37 37 37 37 partnerships in Spain, partnerships in Spain, Italy Italy 30 30 24 24 Italy and DBS in Italy and DBS in Netherlands Netherlands 87 87 93 93 International International Poland Poland 47 47 44 44 � Minimal operating Minimal operating Spain Spain 38 38 31 31 � assumption and assumption and Other Europe Other Europe - 28 28 experience variances in experience variances in International International 22 22 17 17 2002 2002 Total Total 796 796 849 849
General insurance result General insurance result Operating profit 1 up £53m to £480m � Operating profit up £53m to £480m � Underwriting result 1 improvement of £74m � Underwriting result improvement of £74m � � UK UK + £34m � + £34m � Other Other + £40m � + £40m Improved COR 1 ratio at 101% (2001: 103%) � Improved COR ratio at 101% (2001: 103%) � term investment return 1 down £21m � Longer Longer- -term investment return down £21m � at £558m at £558m 1 From continuing operations
Capital Capital
Strong and resilient capital base Strong and resilient capital base � AA rating (“very strong”) reaffirmed by S&P AA rating (“very strong”) reaffirmed by S&P � � GI & health capital GI & health capital - - £1.3bn in excess of risk based £1.3bn in excess of risk based � requirement requirement � £3.2bn capital available to support overseas life businesses £3.2bn capital available to support overseas life businesses � � UK life with UK life with- -profits profits � � Free asset ratio: Free asset ratio: 14.1% at 30 June 14.1% at 30 June 10.1% excluding implicit items 10.1% excluding implicit items � Orphan estate of £4.7bn at 30 June Orphan estate of £4.7bn at 30 June � Strong relative position Strong relative position � Cash generative operating model after current levels of new Cash generative operating model after current levels of new � business business
Agenda Agenda � Capital at group level Capital at group level � � Operational capital strength Operational capital strength � � Financing growth Financing growth �
Capital at group level Capital at group level
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