Presentation to Investors Q3 2018 October 30, 2018
AvivaSA at a Glance: Unique Positioning and Attractive Business Model 2
Leading Life and Pension Player in Turkey Unique demographic profile: second largest country in Europe (~81million) with almost 50% under 30 years old • 19,5% market share in terms of AuM #1 • ~860 k participants; 17,0 billion TL AUM • 32% CAGR in terms of AUM (2013-2017) Pension Turkey’s • Strong position at corporate pension attractive growth and #2 • 22% market share in terms of AUM demographics • 21% market share in terms of participants Auto Enrolment • ~586 k participants; 366 million TL AUM (exc. state comp.) • 6,7% market share #8 • 358 mTL GWP and ~1.5m customers Life • 15% CAGR in terms of GWP (2013-2017) • 14,3% market share #2 • 57 mTL GWP and ~0.5m customers Personal Accident • 21% CAGR in terms of GWP (2013-2017) Source: TSB and EGM as of 30.09.2018 3
Blue- chip “Sponsoring” Shareholders: A Unique Blend of Expertise and Reputation Established in 2007 as a joint venture of Ak Emeklilik and Aviva Hayat Global diversified insurer with One of the largest Turkish presence in 17 countries and “multi - business company” over 100 bancassurance with wide franchise of partners. consumer brands and networks Best practice policies based on UK international standards Unparalleled local trust and on governance / audit. reputation 4
Cultural Change Initiatives Are Based on 5 Top Priorities 1-0/BE WELL AHEAD CUSTOMER FIRST 5
DIGITAL FIRST: 5 ambitions to Being a «Digital Insurance Company» Leading the Innovation • Digital Garage • Insurtech eco-system • Innovation Culture Being a Cost-Efficient Company New Working Culture • Lowering operating costs • Agile Development • Straight through processing • Collaborative working • Automation (Robotics etc.) • Cross-functional Project Teams Creating a Unique Digital User Experience Being a Data Driven Company • Holistic Data Strategy • B2I: Understanding customers • Analytical Excellence • User-Centric Design • Big Data • Unique Digital UX • Data Driven Culture 6
Solid Sales Culture through a Multidistribution Platform to Expand Scale and Penetration in Pension and Life Exclusive 15-year Fastest growing Bancassurance distribution distribution Agencies agreement channel # Branches Akbank: ~ 800 # Agencies: ~ 380 Akbank sales coaches: ~ 340 Total PVNBP: 428m (11%) Q3 2018 Total PVNBP: 1643m (42%) Q3 2018 Corporate # Corporate Sales Team: ~ 60 Direct sales force (DSF) # Total PVNBP: 195m (5%) Q3 2018 Key Distribution Channels # PVNBP (AE): 1137m (29%) Q3 2018 # FAs: ~ 410 (covering 17 cities) Total PVNBP: 524m (13%) Q3 2018 Strong position in employer-sponsored Largest direct sales force group pension in the sector Direct (web+call center) contracts by market (Developing) share Total PVNBP: 6m (0.1%) Q3 2018 7
Solid Financial Foundations and Historical Track Record of Value Creation YoY /Δ QoQ /Δ Q3 2018 Q3 2018 YTD ● AvivaSA has maintained #1 position in terms of Pension AuM Pension AUM (inc AE) 22% 17.3bTL ● AvivaSA moved to #5 position in Protection Total GWP (Life+PA) 137 mTL 23% -5% 422 mTL ● Steady increase thanks to pension scale and profitable protection segments Total Technical Profit 343 mTL 130 mTL 23% 16% Expense Ratio (1) 21.8% -3.7 pts -10.0 pts 16.5% ● Mainly due to decline in GWP resulting from slow-down in economy ● In Addition to 23% increase in technical profit, financial and other income is higher 16% Profit for the Period 150 mTL 61 mTL 41% than prior year due to higher interest and f/x income ● One of the leaders in the sector ROE +6.1 pts 36.1% MCEV (06-2018) 1,798 mTL 8%(ytd) Note: Segmental reporting data (1) General expenses, as % of insurance GWP and pension net contributions, excluding auto enroment expenses. 8
Pension and Auto Enrolment 9
Pension – Sustainable Growth and Scale Ambitions Pension System Pillar I Pillar II Pillar III Social Security Auto Enrolment (2017) Pension (2003) Defined Benefit Defined Contribution Defined Contribution State Subsidized State Supported State Supported Semi-Mandatory Mandatory Voluntary (enter mandatory / stay voluntary) New Topic Severance Payment: Covering Basic Needs for Saving and Improving Life Saving and Improving Life under discussion Retirement and Health Standard for Retirement Standard for Retirement - Admin by Pension Companies - Admin by Pension Companies Admin by government - Asset management by Asset - Asset management by Asset Management Companies Management Companies 10
Pension – Sustainable Growth and Scale Ambitions 408 Total population ~ 80m Fast Growing Working-age population CAGR: +30% Pension AUM ~ 60m (TLbn) Workforce ~ 30m Social security participants ~ 21m Pension + AE CAGR: +31% participants 80 ~ 11 m (6,9+5) 61 48 38 Incentives 26 20 12 14 Auto Enrolment Pension 2010 2011 2012 2013 2014 2015 2016 2017 2023 E - 25% state contribution - 1,000 TRY one-off state - 25% state contribution contribution - Defered tax in terms of pension - 5% state contribution of their Auto 25% State investment income total savings for retired 10 years Enrolment Contribution annuities buyers (2017) (2013) - Defered tax in terms of pension investment income 11 Source: EGM, TSB vision 2023 report, Turkstat.
One of the Leading Company in Auto Enrolment Market Supported by Selective Presence Resu esults s and and Less Lessons s Lea Learned So So Far ar More fragmented than regular pensions Servicing capability is very important Banks play a key role: AvivaSA achieved it’s targets mainly utilizing Akbank potential Cannibalization on private pension system was lower than expected Average opt-out ratio ~60% in the market Source: CMB as of 16.10.2018 12
Pension – Fee Structure Pension System – Fee Structure Auto Enrolment Pension Fund Management Fee Max: Max: 0,85% yearly Money market: 1,09% yearly Fixed Income: 1,91% yearly Initial Fund Equity-Flexible: 2,28% yearly Standard Fund State Contribution: 0,365% yearly Variable Fund (4 different risk appetite) Avivasa average: 1,5% including state contribution Bonus mechanism: For the policy older then 5 year old. No bonus for the fund management fee below 1,1%. It will start at 2021. 0-5 years; No bonus 6th year: 2.5% bonus of yearly fund mng. fee collected 7th year: 5.0% bonus of yearly fund mng. fee collected 14th year: 22.5% bonus of yearly fund mng. fee collected +15th year: 25.0% bonus of yearly fund mng. fee collected Management Fee None Max: %8,5 of the monthly minimum wage Collectible for the first 5 years of the policy 13
Pension – Fixed Income Dominance and Strong Real Return Average Pension Plan Return (AvivaSA) Fund Type Allocation 550 (include state contribution fund) (AvivaSA 201) 491 500 Auto Enrolment 450 State Contribution 424 1% Equity 12% 9% 400 380 Gold 372 5% Flexible 350 325 324 18% International 5% 300 278 277 314 254 281 250 FX Public 259 Borrowing 207 238 Money Market 193 13% 13% 200 220 205 163 193 145 175 150 164 122 TL Public 154 140 Borrowing 129 24% 100 118 109 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvivaSA Average Return CPI Inflation 14
Business Lines 15
Differentiated Management of Trends and Dynamics per Segment Pension* Life Protection Personal Accident AUM – Inc. State contribution (TLm) Gross Written Premium (TLm) Gross Written Premium (TLm) FMC % (inc. State contribution) CAGR: 21% 26% CAGR: 22% 1,7 1,6 1,6 1,5 1,5 1,5 1,4 8% 392,6 68,8 22% 358,2 CAGR: 32% 56,8 17.339 52,8 52,1 15.325 284,1 14.265 45,7 254,2 45,4 11.792 196,9 181,0 32,4 178,3 9.212 7.127 5.019 2013 2014 2015 2016 2017 Q3 2017 Q3 2018 2013 2014 2015 2016 2017 Q3 2017 Q3 2018 2013 2014 2015 2016 2017 Q3 2017 Q3 2018 (restated) Technical Profit (TLm) Technical Profit (TLm) Technical Profit (TLm) As Percentage Of Net Earned Premium As Percentage Of Net Earned Premium CAGR: 23% 13% 59 60 54 57 57 57 61 43 41 49 34 41 39 37 207,1 CAGR: 14% 37% CAGR: 14% 171,1 155,7 151,7 19% 138,7 146,3 144,1 23,9 22,2 114,2 111,8 19,6 106,6 103,4 91,8 16,7 16,5 86,8 86,1 15,2 13,9 2013 2014 2015 2016 2017 Q3 2017 Q3 2018 2013 2014 2015 2016 2017 Q3 2017 Q3 2018 2013 2014 2015 2016 2017 Q3 2017 Q3 2018 (restated) Source: Company information. 16 *Pension figures are including AE
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