Presentation to Investors June 2015 – (2015Q1)
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 (76million) with almost 50% under 30 years old Turkey’s attractive #2 • 19% market share growth and Pension • ~761k participants; 7,6 billion TL AUM (Q1 2015) demographics #1 • 34% cagr in terms of AUM (2011-2014 / last 3 year) Corporate • #1 Corporate Pension: Market leader in corporate pensions Pension with %27 market share • 7% market share (2014) #6 • TL197m GWP (2014) and ~1.5m customers Life Protection • 33% GWP cagr (2011-2014 / last 3 year) • 19% market share (2014) #2 • TL45m GWP (2014) and ~0.5m customers Personal • 19% GWP cagr (2011-2014 / last 3 year) Accident Source: HAYMER, EGM, TBB. 4 Note: Data as of December 2014
Solid Sales Culture through a Multidistribution Platform to Expand Scale and Penetration in Pension and Life Distribution Platform At a Glance Fastest Exclusive 15-year Bancassurance growing Agencies distribution distribution # Branches Akbank: 973 agreement # Agencies: ~ 190 channel Akbank sales coaches: ~ 400 Total PVNBP: 192m (16%) Q1 2015 Total PVNBP: 637m (52%) Q1 2015 Corporate Direct sales force (DSF) # Corporate Sales Team: ~ 30 Key Distribution Channels # Total PVNBP: 179m (15%) Q1 2015 # FAs: ~ 620 (covering 17 cities) Total PVNBP: 201m (17%) Q1 2015 #1 in employer- sponsored group Largest direct sales pension contracts force in the sector Direct (web+call center) by market share (Developing) Total PVNBP: 2m (0.1%) Q1 2015 5 Source: Data as of 2014
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
Excellent Corporate Governance Overview Governance Structure Haluk Dincer David McMillan AvivaSA Board Excellent corporate (Board Chairman) (Board Vice-Chairman) governance framework established at the creation of the JV in 2007 Board Advisory Corporate Board Level Audit Risk Operations Governance Committees Committee Committee Committee Committee Top tier governance Operational principles Risk & Executive Management ALCO Reputation Committee Committees Well-balanced and Committee experienced board with domestic and international expertise Functional Product Regulatory Disciplinary 2 INEDs have been Sub-Committees Committee Committee Committee appointed post-IPO 7
Solid Financial Foundations and Historical Track Record of Value Creation YOY /Δ 2015 Q1 Pension Contributions 437mTL 108% ● Top line volumes of both pension and life growing at rapid pace in the past 3 years ● Pension contributions driving business to profitable scale Total AUM 7.6bTL 41% ● Increasing penetration of life driven by Akbank partnership Total GWP (Life+PA) 54mTL 4% ● Steady increase thanks to pension scalability and life segments Total Technical Profit 67mTL 24% 5,2 pts Expense Ratio (1) 8.9% ● Steady fall in cost ratio from 14.1% in 2014Q1 to 8.9% as efficiency improves (yoy) Profit for the Period 29mTL 35% ● Track-record of profitable growth ● One of the leaders in sector ROE at 34% ( annualized) ROE 34% ● Strong solvency I position with capital-light product model Solvency 195% ● Consistent dividend payment VNB (Q1 2015) 50mTL 34% ● VNB has grown 34% in q1 2015 yoy basis ● MCEV has grown 26% in 2014 yoy basis MCEV (2014) TL1.204m 26% Note: Segmental reporting data (1) General expenses, as % of insurance GWP and pension net contributions. 8
Leading Fast Growing Pension and Life Franchise 9
Pension – Sustainable Growth and Scale Ambitions Underpenetrated Pension Market Fast Growing Pension AUM (TLbn) 408 Total pop.: 76m CAGR: +30% Working-age pop.: 52m CAGR: +38% Workforce: 25m 31 Social Sec.Participants: 16 21 11 15m 7 4 5 3 Pension 2011 2012 2013 2014 2023E participants: 5m AvivaSA AuM Industry AuM 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 • 10 Source: EGM, TSB vision 2023 report, Turkstat.
Pension – Sustainable Growth and Scale Ambitions Technical Profit (TLm) Pensions AUM including State Contribution (TLm) 7.607 CAGR: +13% 7.130 114,2 CAGR: +34% 98,8 91,8 5.386 5.019 78,5 4.049 41% 2.957 34,3 24,9 38 % 2011 2012 2013 2014 Q12014 Q12015 2011 2012 2013 2014 Q1 2014 Q1 2015 Number of Participants (x1000) Market Share Of AvivaSA % (in terms of AUM) 761 733 CAGR: +20% 2011 2012 2013 2014 Q1 2014 Q1 2015 649 617 20,6 19,9 19,1 18,8 19,0 19,0 492 421 Average Monthly Contribution Size / Policy (TL) 17% 2011 2012 2013 2014 Q1 2014 Q1 2015 210 219 237 256 241 266 2011 2012 2013 2014 Q12014 Q12015 11
Life Protection – Sustainable and Resilient Growth Model Fuelled by Bancassurance GWP (TLm) Technical Profit & Margin (1) (TLm, %) 103,4 CAGR: +32% 86,8 CAGR: +33% 196,6 178,3 -1% 3% 134,1 54,3 45,3 83,2 25,3 25,1 60,4% 64,3% 58,5% 43,3 44,4 55,0% 61,2% 68,2% 2011 2012 2013 2014 Q1 2014 Q1 2015 2011 2012 2013 2014 Q1 2014 Q1 2015 Claims and Commission Ratios (%) Sector LP (TLm) (Excluding state companies) CAGR: 20% 25,0% 1936 20,7% 19,8% 1755 18,6% 17,7% 18,0% 1421 22% 1129 11,1% 18,5% 17,1% 17,6% 17,7% 14,8% 5,1% 3,7% 4,2% 2,2% 346 282 0,5% 7,2% 2011 2012 2013 2014 Q1 2014 Q1 2015 2011 2012 2013 2014 2014 Feb 2015 Feb Claims Ratio* Commission Ratio Surrender Ratio * Exc. Surrender ratio Source: Company information. Note: (1) Technical Margin calculated as Technical Profit over NEP. 12
Personal Accident – A Complementary Profit Pool for the Group Technical Profit & Technical Margin (1) (TLm) GWP (TLm) CAGR: +10% 15,2 CAGR: +19% 45,4 13,9 58,1% 11,5 11,4 32,4 32,3 26,8 6,5 32,0% 43,4% 9% 38,7% 39,4% 41,5% 2,6 9,8 9,0 155% 2011 2012 2013 2014 Q1 2014 Q1 2015 2011 2012 2013 2014 Q1 2014 Q1 2015 Commission & Claims Ratio (%) Sector PA (TLm) (Excluding state companies) 0,9 0,8 CAGR: +28% 0,7 192 0,6 46,1% 46,2% 45,1% 44,7% 43,5% 0,5 46,8% 147 0,4 118 24% 22,9% 0,3 92 17,2% 16,6% 12,3% 10,0% 0,2 0,1 32 26 -4,9% 0 -0,1 2011 2012 2013 2014 2014 Feb 2015 Feb 2011 2012 2013 2014 Q1 2014 Q1 2015 Claims Ratio Commission Ratio Source: Company information. Note: (1) Calculated as % of NEP. 13
New Action Plan to Expand Life Protection + Personal Accident 2014 / 2013 Q1 2015 / Q1 YoY Total 2014 YoY Total Q1 2015 Premium Premium Growth Rate Growth Rate DSF + Agency 42% 41% 16 mTL (30%) 42% Non-Credit Linked 32% 6% 6% 12 mTL (22%) Bankasurance Non-Credit Linked 4% -13% 26 mTL (48%) Bankasurance 15% 3% 54 mTL (100%) Credit Linked (Total Company) (Total Company) (Total Company) 14
Production by Distribution Channel and by Products Life + PA Pension (by distribution channel) (by distribution channel) GWP AUM AUM GWP 242 mTL 54 mTL 3% 0% 0% 2% 2% 3% 7% 16% 16% (2014) (Q1 2015) 4% 7,1 bTL 7,6 bTL 10% (2014) (Q1 2015) 5% 5% 15% 30% 29% 50% 83% 71% 49% Bancassurance DSF Bancassurance DSF Bancassurance DSF Bancassurance DSF Agencies Corporate Agencies Corporate Agencies Corporate Agencies Corporate Direct Direct Direct Direct PVNBP PVNBP PVNBP PVNBP 0% 6% 2% 0%2% 2% 85 mTL 5% 0% 347 mTL 15% 3381 mTL (Q1 2015) (2014) 11% 1126 mTL 16% (2014) (Q1 2015) 28% 16% 52% 56% 68% 30% 22% 53% 16% Bancassurance DSF Bancassurance DSF Bancassurance DSF Bancassurance DSF Agencies Corporate Agencies Corporate Agencies Corporate Agencies Corporate Direct Direct Direct Direct 15 Source: Company information.
Robust Financial Performance 16
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