Presentation to Investors May 2017 (2017 Q1 Results)
AvivaSA at a Glance: Unique Positioning and Attractive Business Model 2
Blue- chip “Sponsoring” Shareholders: A Unique Blend of Expertise and Reputation Established in 2007 as a joint venture, after the merger of Ak Emeklilik and Aviva Hayat Global diversified insurer with presence in One of the largest 17 countries and over Turkish “multi -business 100 bancassurance company” with wide partners franchise of consumer brands and networks Best practice policies based on UK Unparalleled local trust international standards and reputation on governance / audit 3
Leading Life and Pension Player in Turkey Unique demographic profile: second largest country in Europe (78million) with almost 50% under 30 years old Turkey’s attractive • 19,4% market share growth and • ~876 k participants; 11,8 billion TL AUM (2016) demographics #1 • 31% CAGR in terms of AUM (2012-2016 CAGR) Pension • Market Leadership at Corporate Pension • 5% market share (2016) #9 • TL 254 m GWP (2016) and ~1.5m customers Life Protection • 17% CAGR in terms of GWP (2012-2016 CAGR) • 15% market share (2016) #3 • TL 52 m GWP (2016) and ~0.5m customers Personal Accident • 13% CAGR in terms of GWP (2012-2016 CAGR) 4 Source: HAYMER, EGM, TBB.
Solid Sales Culture through a Multidistribution Platform to Expand Scale and Penetration in Pension and Life Distribution Platform At a Glance Fastest Exclusive 15- Bancassurance growing Agencies year distribution distribution # Branches Akbank: ~ 1000 agreement # Agencies: ~ 350 channel Akbank sales coaches: ~ 400 Total PVNBP: 925 m (20%) 2016 Total PVNBP: 2656 m (58%) 2016 Corporate Direct sales force (DSF) # Corporate Sales Team: ~ 80 Key Distribution Channels # Total PVNBP: 304 m (7%) 2016 # FAs: ~ 450 (covering 17 cities) Total PVNBP: 681 m (15%) 2016 #1 in employer- sponsored group Largest direct sales pension contracts force in the sector Direct (web+call center) by market share (Developing) Total PVNBP: 7 m (0.1%) 2016 5
Strategic Objectives Built on AvivaSA Strengths Solid financial and operational foundation: “Focus on Profitable Growth” Maintain Leadership and Improve Penetration of Profitability in Pension Akbank Deliver Customer Enhance Competitive Diversifying and Value Positioning & Market Strengthening Non-bank Share in Life Distribution Optimise Operational Excellence 6
Solid Financial Foundations and Historical Track Record of Value Creation YOY /Δ Q1 2017 Pension Contributions 385 mTL 45% ● AvivaSA has maintained #1 position in terms of AuM and net contribution Pension AUM 12,7 bTL 28% ● Growing Life & PA business supporting both by credit and non- credit linked products Total GWP (Life+PA) 112 mTL 68% Total Technical Profit 83 mTL 15% ● Steady increase thanks to pension scalability and protection segments ● Mainly due to increase in both pension contribution and GWP Expense Ratio (1) 13.1% -2.7 pts ● 15% increase in technical profit. Also financial and other income Profit for the Period 28 mTL 14% is higher than prior year due to higher exchange rates. ● One of the leaders in the sector ROE 26.3% -1 pts ● High ROE level VNB (2016) 209 mTL -12% ● Lower VNB mainly due to price change at the beginning of 2016 ● Continued the double digit MCEV growth in 2016 reaching to the MCEV (2016) 1.475 mTL 18% 1.5bn TL mark Note: Segmental reporting data (1) General expenses, as % of insurance GWP and pension net contributions. 7
Leading Fast Growing Pension and Life Franchise 8
Pension – Sustainable Growth and Scale Ambitions Underpenetrated Pension Market Fast Growing Pension AUM (TLbn) 408 Total pop.: 78m CAGR: +31% Working-age pop.: 53m (15-64 ages) Workforce: 29m CAGR: +35% Employment: 26m 48 Social Sec.Participants: 38 26 19m 20 14 Pension 2011 2012 2013 2014 2015 2023E participants: 5,8 m Drivers of Strong Government Support Strong Government Support for Pensions To support the Social Security System • %25 state contribution • To improve & deepen capital markets • Defered tax in terms of pension investment • To increase the saving rate (up to %19) • income To reduce Current Account Deficit • 9 Source: EGM, TSB vision 2023 report, Turkstat.
Pension – Sustainable Growth and Scale Ambitions Technical Profit (TLm) Pensions AUM including State Contribution (TLm) 28% CAGR: +12% 12,732 CAGR: +31% 155.7 11,792 138.7 9,938 9,212 114.2 98.8 91.8 7,127 32% 5,019 4,049 48.6 36.9 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 Number of Participants (x1000) Market Share Of AvivaSA % (in terms of AUM) 5% 2012 2013 2014 2015 2016 Q1 Q1 CAGR: +16% 2016 2017 882 876 837 825 733 19,9 19,1 18,8 19,2 19,4 19,2 19,5 617 492 Average Monthly Contribution Size / Policy (TL) 2012 2013 2014 2015 2016 Q1 Q1 2016 2017 179 202 217 261 288 271 253 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 10
Life Protection – Sustainable and Resilient Growth Model Fuelled by Bancassurance GWP (TLm) Technical Profit (TLm, %) CAGR: +20% CAGR: +17% 254.2 111.8 103.4 196.9 181.0 178.3 86.8 86.1 82% 134.1 93.7 54.3 -1% 51.4 28.9 28.5 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 (restated) (restated) 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 (restated) (restated) Sector GWP (TLm) (Excluding state companies) Claims and Commission Ratios (%) (Excluding Life Savings) CAGR: 20% 2,904 Q1 Q1 2012 2013 2014 2015 2016 2,286 2016 2017 1,936 1,755 Claims 18,5 14,8 17,7 22,3 20,4 16,8 17,2 27% 1,421 Ratio* % % % % % % % Comm. 23,1 18,8 17,2 17,9 18,4 13,4 30,1 Ratio** % % % % % % % * Total Claims (exc. Surrender) / NEP 2012 2013 2014 2015 2016 ** Commission expenses net of income / NEP Source: Company information, Haymer Note: (1) Technical Margin calculated as Technical Profit over NEP. 11
Personal Accident – A Complementary Profit Pool for the Group GWP (TLm) Technical Profit (TLm) CAGR: +10% CAGR: +13% 22.2 52.1 45.7 45.4 16.7 15.2 32.3 32.4 13.9 -5% 26% 11.4 16.0 12.7 4.8 5.1 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 Claims & Commission Ratio (%) Sector GWP (TLm) (Excluding state companies) CAGR: +23% 271 Q1 Q1 2012 2013 2014 2015 2016 2016 2017 232 17% 192 Claims 16,6% 10,0% 12,3% 5,1% 19,4% 11,7% 16,5% 147 Ratio 118 Comm 44,7% 46,1% 46,1% 46,0% 46,0% 44,0% 45,0% Ratio* * Commission Expenses, net of income / NEP 2012 2013 2014 2015 2016 Source: Company information, TSB Note: (1) Calculated as % of NEP. 12
New Action Plan to Expand Life Protection + Personal Accident Q1 2017 / Q1 2016 YoY Total Premium Growth Rate DSF+Agency * 56% 31,5 mTL (29%) Non-Credit Linked 81% 30,2 mTL (27%) Bankasurance Non-Credit Linked 77% 48,0 mTL (44%) Bankasurance 109,7 mTL 71% Credit Linked (100%) (Total Company) (Total Company) * Including Corporate and Telemarketing (non bancassurance) 13
Robust Financial Performance 14
A Story of Solid Profitable Growth Profit for the Period (TLm) Shareholders’ Equity and Solvency Ratio (TLm) Solvency Ratio CAGR: +21% 291% 237% 225% 139% 150% 144% 137% 16% CAGR: +15% 92,0 431.5 427.7 29.1 371.4 14% 355.5 333.7 105 87.1 271.7 71.6 62.9 242.1 49.4 28.2 24.8 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 (restated) (restated) 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 (restated) (restated) Technical Profit After G&A (TLm ) ≈EBIT 2015 Q1 2016 CAGR: +16% 2012 2013 2014 2016 Q1 2017 (restated) (restated) ROE 79.9 67.7 22% 28% 29% 18%* 26% 27% 26% 65.8 51.3 2% 44.7 *RoE after one-off asset write-off is 18%. Before write-off, it is 26% 20.9 20.5 Steady increase in shareholders’ equity reflects active 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 management of capitalization to fund business growth (restated) (restated) Capital- light business, which benefits from AvivaSA’s measured approach to risk and new product introduction Source: Company information. Note: Analysis on profitable growth derives from segmental information on this and following pages of the section, unless otherwise stated. 15
… Solid and Resilient Technical Profitability with Operating Leverage Potential… Technical Profit (TLm) Expense Ratio (%) As % of net contributions (for pensions) and gross written premiums (for insurance segments) 18.0 15.9% 15.8% 16.0 13.1% 13.4% 14.0 12.5% 12.1% 12.0 10.0 CAGR: 14% 8.4% 8.0 6.0 287.8 CAGR: 13% 2012 2013 2014 2015 2016 Q1 Q1 249.9 2016 2017 235.6 15% 207.9 194.9 Breakdown of Gen. Expenses, IFRS (Q1 2017) 184.0 172.0 21% 168.0 Marketing Other 143.6 Expenses 23% 127.4 3% 82.8 71.7 62.0 51.2 Sales Personnel Expenses 35% 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 (restated) (restated) HO Technical Profit G&A Personnel IT Expenses Expenses 27% Sales 7% Expenses Source: Company information. 5% 16
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