4th Feb 2009 07:00
News release
4 February 2009
Aviva plc
Worldwide long-term savings new business 12 months to 31 December 2008
Andrew Moss, Aviva's chief executive, commented:
"In a year of unprecedented turbulence, our sales have continued to grow. Operating across 27 markets with a range of products and varied distribution has served us well and has brought us an additional real benefit from currency appreciation.
"Growth in developing economies such as Asia and central and eastern Europe has offset difficult conditions in more mature markets such as Ireland and Italy.
"Our capital position remains strong and Aviva continues to be attractive to customers seeking security for their long-term savings.
"Our priorities are to maintain our financial strength and continue to transform Aviva for the benefit of customers and shareholders"
|
12 months 2008 £m |
Restated1 12 months 2007 £m |
Sterling growth % |
Local currency growth % |
|
|
Life and pensions business (PVNBP)2 |
||||
|
United Kingdom |
11,858 |
11,797 |
1 % |
1 % |
|
Europe |
16,990 |
15,684 |
8 % |
(7)% |
|
North America |
5,715 |
3,646 |
57 % |
45 % |
|
Asia Pacific |
1,720 |
1,595 |
8 % |
(1)% |
|
Total life and pensions |
36,283 |
32,722 |
11 % |
2 % |
|
Total investment sales3 |
3,995 |
6,983 |
(43)% |
(47)% |
|
Total long-term savings |
40,278 |
39,705 |
1 % |
(7)% |
1 Restated numbers reflect the move from European Embedded Value (EEV) to Market Consistent Embedded Value (MCEV) basis
2 All references to sales in this announcement refer to the present value of new business premiums (PVNBP) unless otherwise stated. PVNBP is the present value of new regular premiums plus 100% of single premiums.
3 Investment sales are calculated as new single premium plus the annualised value of new regular premiums.
Enquiries:
|
Andrew Moss |
Group chief executive, Aviva |
+44 (0)20 7662 2286 |
|
Philip Scott |
Chief financial officer, Aviva |
+44 (0)20 7662 2683 |
|
Analysts |
||
|
Charles Barrows |
Investor relations director, Aviva |
+44 (0)20 7662 8115 |
|
Jessie Burrows |
Head of investor relations, Aviva |
+44 (0)20 7662 2111 |
|
Susie Yeoh |
Senior investor relations manager, Aviva |
+44 (0)20 7662 2117 |
|
Media: |
||
|
Hayley Stimpson |
External affairs director, Aviva |
+44 (0)20 7662 7544 |
|
Sue Winston |
Head of group media relations, Aviva |
+44 (0)20 7662 8221 |
|
Vanessa Rhodes |
Senior group media relations manager, Aviva |
+44 (0)20 7662 2482 |
|
Danielle Anthony |
Senior group media relations manager, Aviva |
+44 (0)20 7662 9511 |
|
Ed Simpkins/Matthew Newton |
Finsbury |
+44 (0)20 7251 3801 |
MEDIA: There will be a conference call today for real-time media covering the long-term savings new business announcement at 0745 hrs (GMT) on +44 (0)20 7162 0125 (quoting "Aviva, Andrew Moss"). There will be a conference call for print media at 1200 hrs (GMT) on +44 (0)20 7162 0025. Each of these conference calls will be hosted by Andrew Moss, group chief executive and attended by Philip Scott, chief financial officer, and Mark Hodges, chief executive Norwich Union Life.
ANALYSTS: A presentation to investors and analysts, covering both the long-term savings new business announcement and the restatement of 2007 results onto an MCEV basis, will take place at 1000 hrs (GMT) at St Helen's, 1 Undershaft, London, EC3P 3DQ. The investor and analyst presentation is being filmed for live webcast and can be viewed on the group's website at www.aviva.com or on www.cantos.com. In addition, a replay will be available on these websites later today. There will also be a live teleconference link to the investor and analyst meeting on +44(0)20 7138 0818. A replay facility will be available until 17 February 2009 on +44 (0)20 7806 1970. The pass code for the whole presentation, including the question and answer session, is 5463049# and for the question and answer session only the pass code is 4478829#.
The presentation slides will be available on the group's website, www.aviva.com/investors/presentations.cfm from 0930 hrs (GMT).
The Aviva media centre at www.aviva.com/media includes images, company information and news release archive. Photographs are available on the Aviva media centre at www.aviva.com/media.
Page 1
Overview
In 2008 Aviva delivered a solid new business performance with life and pension sales up 11% to £36,283 million (2007 restated: £32,722 million) and total long-term savings up 1% to £40,278 million (2007 restated: £39,705 million). Because Aviva is a global group, with over 65% of sales coming from outside of the UK, our performance has benefited from currency movements, such as the appreciation of the euro. On a local currency basis, long-term savings sales were down 7%.
On 15 January 2009 we announced that these results would be presented on a market consistent embedded value (MCEV) basis for the first time, because of Aviva's early adoption of MCEV methodology. Further details of the effect of our move to the MCEV basis are given in the separate announcement that we've issued today. On a European Embedded Value (EEV) basis, our 2008 life and pensions sales grew by 9% to £34,581 million (2007: £31,600 million). On a local currency basis, EEV life and pension sales were in line with the prior year.
Our 2008 sales performance is a testament to the benefit of Aviva's geographic spread and diverse distribution. Notable highlights included our highest ever life and pensions sales result in the UK. In the United States we have achieved our goal of doubling new business sales a year ahead of target1 and our sales performance in central and eastern Europe was excellent. The continued success of our joint venture in China and the contributions from new operations in South Korea and Taiwan were key to life and pensions growth in Asia Pacific.
Given the uncertain economic outlook we expect the UK and European markets to be more subdued in 2009. In North America, while demand for equity indexed annuity products is expected to continue, we do not anticipate the levels of growth seen in 2008. We expect steady growth in the Asia Pacific markets.
We continue to work closely with banking partners and, while we have seen a decrease in bancassurance sales, particularly in Ireland and Italy, our sales increased in other countries, particularly in central and eastern Europe and in Asia Pacific. We believe that bancassurance earnings will become even more important to banks in the future as they concentrate on their retail operations. We now have more than 90 bancassurance partnerships around the world and in 2008 they generated around 23% of Aviva's long-term savings sales.
In the current economic climate, top-line sales growth targets are not our priority. In 2009 we aim to maintain a strong franchise in each of our markets, but with an increased emphasis on capital efficiency. We will aim to perform in line with the market, but will prioritise profitability and efficient use of capital.
Our IGD solvency position2 remains strong. At 31 December 2008 our estimated IGD surplus was £2.0billion. Our equity hedges are still in place and even if the equity markets were to fall a further 40% from 31 December 2008 levels, our solvency surplus would still be approximately £1.3 billion.
In our general insurance business we expect to have achieved a COR of 98% for the group. We will provide a full update on our general insurance businesses in our 2008 full year results on 5 March 2009.
1. The USA growth target was to double 2006 pro forma sales within three years of the acquisition of AmerUs. Pro forma sales are calculated as the combined sales of the former Aviva business based in Boston and the former AmerUs group, on a local currency basis
2. IGD solvency position is the group regulatory capital position based on the EU Insurance Groups Directive
Page 2
Long-term savings
United Kingdom
In 2008 Aviva UK achieved its highest ever life and pensions sales of £11,858 million (2007 restated: £11,797 million). Total long-term savings sales were 8% lower than the previous year, in line with the UK market, which is expected to have contracted for the first time in five years.
Our compelling combination of balanced distribution, broad product choice and continued innovation was evident in the 2008 performance. Our results were underpinned by higher sales through the joint venture with the Royal Bank of Scotland Group, with sales up 1% to £1,639 million (2007 restated: £1,615 million), the success of our pensions strategy, which enabled us to recapture market share and excellent progress in the corporate sector, which accounted for 17% of the total UK sales (2007:8%).
At the start of last year we refreshed our strategy for the retirement savings market. As a result, total pension sales increased by 14% to £4,753 million (2007 restated: £4,156 million). We introduced products which can be better tailored to the changing life stages of individual customers, with increased fund choice, flexible drawdown capability and significantly enhanced e-commerce functionality. These enhancements have already enabled us to shape our commission terms to increase profitability, and will continue to do so.
The mortgage market bore the brunt of the economic crisis with a 61% decline in mortgage approvals last year. However, our protection sales fell by 9% to £1,126 million (2007 restated: £1,241 million). This is a relatively strong performance and shows both the strength of our partnerships and the popularity of the new, simpler protection products. E-commerce has played an important part in our success in this market and currently nearly 30% of applications are through this on-line channel.
Total annuity sales increased by 24% to £2,433 million (2007 restated: £1,965 million), reflecting strong growth in our bulk annuity business. Last year Aviva UK won 39 new bulk purchase annuity (BPA) schemes and BPA sales rose to £826 million (2007 restated: £118 million). We are benefitting from a 'flight to quality' in this sector, because of our well-developed, market-leading products. In individual annuities, enhanced pricing capability helped us to deliver good growth in the open market with improved profitability. However, stock market falls have impacted this market because customers' pension fund values have been eroded, causing them to delay retirement decisions3.
Overall bond sales fell 21% to £3,296 million (2007 restated: £4,192 million). In 2008, we continued to reshape our approach to this market, by moving away from lower margin products and focusing on improving returns through targeted commission reductions. Consequently, sales of unit-linked bonds were 67% lower, compounded by the effect of capital gains tax changes and investment market turbulence. However, this was offset by 62% growth in sales of with-profit bonds at £1,952 million (2007 restated: £1,208 million) and 34% growth in sales of off-shore bonds at £375 million (2007 restated: £280 million).
The property, fixed interest and equity markets all faced challenging economic conditions throughout the year and, consequently, our collective investment sales decreased by 46% to £1,485 million (2007: £2,751 million).
The uncertain economic outlook for the UK makes it difficult to forecast what the market growth rate will be in the short to medium term. We expect the trends experienced in 2008 to continue throughout 2009. In the current environment we will maintain our focus on rigorous capital discipline and on driving higher returns through operational efficiency, product innovation and targeted commission changes. Our approach to targeted commission reductions is complementary to the direction that the Financial Services Authority's
Retail Distribution Review is taking, for both pensions and investments.
We are optimistic that we can deliver profitable growth in these turbulent times because of the resilience of our business model and our confidence in the strategy that we have been pursuing in recent years.
3. A recent survey (carried out by Life Trust Insurance in December 2008) indicated that nearly a quarter of people can no longer afford to retire at the age they had planned
Page 3
Europe
Our European region comprises the mature markets of France, Spain, Italy and Ireland, together with the central and eastern European, higher growth markets of Poland, Russia, Turkey, Hungary, Romania and the Czech Republic. In addition, we operate in the Netherlands, Belgium and Germany through our Dutch business Delta Lloyd. Our European business is an excellent example of Aviva's diversity; we meet customers' long-term savings needs in 15 markets, with a broad range of products, through a range of distribution channels. In France and Poland the majority of our sales are through retail channels, while bancassurance channels dominate sales in Spain and Italy. Customers in Ireland are served evenly through both retail and bancassurance.
Bancassurance is an important element of our distribution strategy and we are confident that it will play a significant part in Aviva's future growth, although in 2008 it has been particularly impacted by the current economic uncertainty and liquidity concerns in the banking sector.
Our European life and pensions sales increased by 8% to £16,990 million (2007 restated: £15,684 million), buoyed by the strong euro. On a local currency basis sales were down 7%. Turbulent equity markets made customers reluctant to invest. This has also resulted in investment sales that were lower at £764 million (2007: £1,572 million).
In France sales were up 2% including the beneficial effect of the euro. On a local currency basis sales were down 12%, in line with the market. The decline in the French market was a consequence of volatility in the equity markets, which reduced consumer demand for unit-linked contracts. However, this impact was offset by growth in our euro-based business4, particularly in products with guarantees which offer customers a safe and attractive investment option in the current market conditions.
In Poland our life and pension sales increased by 64% driven by the success of the individual regular premium product we launched in late 2007 and significant volumes of short-term endowment policies sold through Deutsche Bank in the first half of the year. The impact of the current challenging conditions and volatile investment markets adversely impacted growth in the second half of the year.
Sales in Italy were down 22% but our acquisition of Avipop5 and UBI Vita 6 helped to lift sales of protection and pension products respectively. In Spain, our sales increased by 4%, boosted by the distribution agreement with Cajamurcia, which came on stream in the last quarter of 2007 and contributed £304 million in 2008, including one-off transfers of £151 million.
In Ireland our sales were down 27% because of reduced demand for unit-linked products across both our retail and bancassurance channels. Consumers were deterred by volatile equity markets, the slowdown in economic growth and property market uncertainty.
Other Europe includes a number of markets which have high potential for future growth, comprising Russia, Turkey, Hungary, Romania and the Czech Republic. Sales in these markets increased by 124%. Romania's performance was significantly higher, largely due to a one-off payment of £545 million as part of the introduction of compulsory pensions.
Sales through Delta Lloyd were up 31% including the beneficial effect of the euro. This performance includes a significant increase in corporate pension sales, as a result of Delta Lloyd's success in securing five large group contracts which contributed a total of £1,106 million. Sales of annuity products were lower due to increased competition from the banking sector, which is now allowed to offer unit-linked savings and pension products on the same terms as insurers.
In 2009 we will manage growth in sales consistent with our focus on prudent capital management and seeking the greatest returns on capital. In line with contracting new business markets across much of the region, we expect our new business sales to be more subdued in 2008.
4. Euro funds are savings products that receive an annual bonus declaration based on the investment performance of the underlying funds.
5. 14 December 2007
6. 18 June 2008
Page 4
North America
In the United States, sales increased by 57% to £5,715 million (2007 restated: £3,646 million). On a local currency basis sales were up 45%. This is the second consecutive year of record volumes despite the significant challenges in the financial markets, which have changed the competitive landscape and shaken consumer confidence. We retained our number one sales position in both the indexed annuity7 and the indexed life8 insurance markets in the third quarter and have already doubled the sales in our US business within two years of the acquisition of the former AmerUs business, which is one year ahead of the stated target9
Sales of annuities increased by 63% to £4,244 million (2007 restated: £2,600 million); a significant accomplishment given the challenging economic environment, volatile equity markets and changing interest rates. This growth is equivalent to a 51% increase on a local currency basis and reflects our expanded distribution, new product launches and successful marketing programmes. In times of economic uncertainty customers look for guarantees and we responded by enhancing our products to meet their needs, by improving guaranteed income withdrawal benefits and introducing a new bonus index deferred annuity.
The U.S. Securities and Exchange Commission (SEC) has adopted a new rule (Rule 151A) which classifies equity indexed annuities as securities for federal regulatory purposes (on contracts issued on or after 12 January 2011). The ruling creates additional administration for companies providing these products and requires agents to be licensed to sell them. We actively participated in the SEC consultation process and have already taken preliminary steps to ensure that we will be ready for the new rule. We currently anticipate that the cost of completing these steps and the impact on our business will be minimal. Indexed products meet an important customer need and they will continue to be part of our product suite for the foreseeable future.
Sales of life products, which mainly include indexed and non-indexed universal life and term assurance products, totalled £623 million (2007 restated: £617 million), which is equivalent to a 7% fall on a local currency basis. This result is a reflection of our tactical decision to exit certain markets in late 2007, because we wanted to focus on selling higher margin products. New product launches, marketing programmes and growth in the indexed life insurance market have all had a positive impact on our results. In particular, our "Wellness for Life" programme has been well received. This is a first-of-its-kind life insurance product which rewards healthy behaviour and supports the customer with wellness products and services from Mayo Clinic Health Solutions, a division of the world-renowned Mayo Clinic. In addition, the new term assurance products we launched in the third quarter of 2008 have been well received and are starting to gain momentum.
Funding agreement sales were very strong at £848 million (2007 restated: £429 million), which represents an increase of 98% over the previous year. Volatile investment markets created a favourable environment for funding agreements, which are large corporate transactions.
In 2008 we were focused on an aggressive growth agenda. In 2009, the priorities will be profitability, productivity and capital efficiency. Aviva will put emphasis on retaining customers and key distributors and will focus on high-value products which meet consumers' needs, such as those with guarantees. While we plan to remain a market leader in the annuities market, growth is expected to be more in line with the overall market in 2009. We also expect to maintain our market leadership position in the indexed life insurance market. While they will not be a primary focus for 2009, we will evaluate funding agreement opportunities on a case-by-case basis.
7 An index ed annuity is a type of deferred fixed annuity with its credited interest linked to an equity index. It guarantees a minimum interest rate if held to the end of the surrender term and protects against a loss of principal.
8 Indexed life products are fixed products that include a savings element linked to an equity index. Minimum guarantees exist on the indexed life products and generally range from 1% to 3%.
9. The USA growth target was to double 2006 pro forma sales within three years of the acquisition of AmerUs. Pro forma sales are calculated as the combined sales of the former Aviva business based in Boston and the former AmerUs group, on a local currency basis
Page 5
Asia Pacific
Our life and pension sales grew by 8% to £1,720 million (2007 restated: £1,595 million), driven by strong growth in China and first-time contributions from new joint ventures in South Korea and Taiwan. On a local currency basis these sales were in line with the prior year. In common with our other regions, total long-term savings sales in Asia Pacific were 19% lower at £3,466 million (2007 restated: £4,255 million), reflecting consumers' reticence to buy investment products in the current volatile market conditions.
We achieved a 66% increase in sales through our joint venture in China, Aviva-COFCO. In 2008, we expanded our distribution network there significantly and are now in nine provinces, with a total of 39 city branches (2007: eight provinces, 25 city branches). Aviva is the second largest foreign life insurer in China10.
In India, we've changed our assumptions with regard to lapses following regulatory changes to a large number of products and current economic conditions. Sales were 7% down on the previous year reflecting market conditions and merger activity in bancassurance partnerships.
Life and pensions sales in Singapore were up 2% when taking the benefit of exchange rate movements into account. Changes in pension legislation during the year limited sales of certain products in Singapore, but we have partly offset this impact by introducing new products. Investment sales were dampened by the economic climate and a change to local pension laws which restricts external contributions from the government pension fund.
In Australia, life and pension sales were down 19%, against a 2007 result which included the benefit of a one-off transfer of group pensions business of £64 million and a £21 million benefit from a favourable change to superannuation legislation. The 2007 changes to superannuation legislation boosted prior year investment sales by £227 million. Together with the difficult economic climate, this resulted in investment sales being 28% down on the prior year.
Our products In Hong Kong are mainly investment-related and cautious investor sentiment in the face of volatile investment markets, plus a highly competitive environment, resulted in a 42% decrease in our sales in that market.
Despite the global economic and financial turbulence, Asia remains an attractive growth region. In 2009, while we will continue to grow the business in line with the market we will also focus on the efficient use of our capital. Aviva has a sound business in Asia Pacific with successful, established partnerships and a strong financial position and we remain committed to building a strong presence in this region.
10. Aviva-COFCO ranked second among 26 foreign life insurers in terms of total premium income in January to November 2008 (source: China Insurance Regulatory Commission).
Page 6
Additional information
Solvency
Insurers are required to hold a financial buffer over and above statutory solvency levels, known as the capital resource requirement. The IGD surplus is the amount of capital held in addition to this regulatory requirement. Aviva has a strong capital position. As at 31 December 2008, the group's estimated IGD surplus was £2.0 billion (30 September 2008: £1.9 billion). Following individual guidance from the FSA we now recognise surpluses in the non-profit funds of our UK life and pensions business which is available for transfer to shareholders of £0.4 billion, the benefit of which is offset by reserve strengthening elsewhere in the group.
In the current economic conditions we are proactively managing balance sheet risk. In addition to the de-risking exercise we undertook in 2007 we have taken out further equity hedges during 2008 which will remain in place for the foreseeable future. As a result of these and other actions, we expect that our IGD surplus would be approximately £1.3 billion in the event of a 40% fall in equity markets from the 31 December 2008 position.
Liquidity
The group and its subsidiaries have a strong liquidity position with significant cashflows generated by its businesses and remitted to Aviva plc. At 31 December 2008 Aviva plc had direct access to £1.4 billion of liquid assets which are sufficient to meet our operational requirements for the foreseeable future without having to borrow externally. In addition, the first call date on Aviva plc's hybrid debt is not until November 2011.
Aviva plc also has a commercial paper programme (£536 million outstanding) which continues to be re-financed in the normal course of business and £2.1 billion of undrawn committed credit facilities which are provided by a range of leading international banks.
Proposed inherited estate reattribution
Since we agreed an offer with the policyholder advocate in July 2008, the estate has reduced significantly as a result of substantial reductions in the value of equity and property investments. Continuing market volatility and uncertainty means that the original reattribution offer for the inherited estate no longer meets our critical test of being fair to both policyholders and shareholders. We are working closely with the policyholder advocate to see how we can restructure our offer. While we realise this will be disappointing for our eligible policyholders, it does reflect the nature of the current exceptional investment market conditions. We expect to be able to update policyholders in the next few months.
Page 7
Notes to editors
Aviva is the leading provider of life and pension products in Europe (including the UK) with substantial positions in other markets around the world, making it the world's fifth largest insurance group based on gross worldwide premiums at 31 December 2007.
Aviva's principal business activities are long-term savings, fund management and general insurance, with worldwide total sales* of £49.2 billion at 31 December 2007 and funds under management of £359 billion at 30 June 2008.
* Based on 2007 published life and pensions PVNBP on an EEV basis, total investment sales and general insurance and health net written premiums, including share of associates' premiums.
The Aviva media centre at www.aviva.com/media includes images, company and product information and a news release archive.
All figures have been translated at average exchange rates applying for the period. The average rates employed in this announcement are 1 euro = £0.80 (12 months to 31 December 2007: 1 euro = £0.68) and £1 = US$1.85 (12 months to 31 December 2007: £1 = US$2.00).
Growth rates in the press release have been provided in sterling terms. The supplements following present this information on both a sterling and local currency basis.
Definition: Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums.
Cautionary statements:
This announcement may include oral and written "forward-looking statements" with respect to certain of Aviva's plans and its current goals and expectations relating to its future financial condition, performance and results. These forward-looking statements sometimes use words such as 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe' or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which may be beyond Aviva's control, including, among other things, UK domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, the possible effects of inflation or deflation, the timing impact and other uncertainties relating to acquisitions by the Aviva group and relating to other future acquisitions or combinations within relevant industries, the impact of tax and other legislation and regulations in the jurisdictions in which Aviva and its affiliates operate, as well as the other risks and uncertainties set forth in our 2007 Annual Report to Shareholders. As a result, Aviva's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Aviva's forward-looking statements, and persons receiving this announcement should not place undue reliance on forward-looking statements.
Aviva undertakes no obligation to update the forward-looking statements made in this announcement or any other forward-looking statements we may make. Forward-looking statements made in this announcement are current only as of the date on which such statements are made.
Aviva plc is a company registered in England No. 2468686. Registered office St Helen's 1 Undershaft London EC3P 3DQ
Page 8
Statistical supplement
Contents
Analyses
1. Geographical analysis of life, pension and investment sales
2. Present value of life new business premiums
3. Analysis of sales via bancassurance channels
4. Detailed worldwide investment sales analysis
5. Regional analysis of life and pension sales on an EEV basis
Page 9
Long-term savings new business sales
1 - Geographical analysis of life, pension and investment sales
|
Present value of new business premiums1 |
||||
|
12 months 2008 £m |
Restated 12 months 2007 £m |
% Growth |
||
|
Sterling |
Local currency |
|||
|
Life and pensions business |
||||
|
UNITED KINGDOM |
11,858 |
11,797 |
1 % |
1 % |
|
France |
3,880 |
3,790 |
2 % |
(12)% |
|
Ireland |
1,299 |
1,780 |
(27)% |
(38)% |
|
Italy |
2,331 |
2,975 |
(22)% |
(33)% |
|
Netherlands (including Germany and Belgium) |
4,097 |
3,133 |
31 % |
12 % |
|
Poland |
1,842 |
1,120 |
64 % |
32 % |
|
Spain |
2,527 |
2,433 |
4 % |
(11)% |
|
Other Europe |
1,014 |
453 |
124 % |
107 % |
|
EUROPE |
16,990 |
15,684 |
8 % |
(7)% |
|
NORTH AMERICA |
5,715 |
3,646 |
57 % |
45 % |
|
Australia |
369 |
454 |
(19)% |
(26)% |
|
China |
296 |
178 |
66 % |
40 % |
|
Hong Kong |
248 |
430 |
(42)% |
(45)% |
|
India |
141 |
152 |
(7)% |
(10)% |
|
Singapore |
316 |
309 |
2 % |
(12)% |
|
Other Asia |
350 |
72 |
386 % |
374 % |
|
ASIA PACIFIC |
1,720 |
1,595 |
8 % |
(1)% |
|
Total life and pensions |
36,283 |
32,722 |
11 % |
2 % |
|
Investment sales2 |
||||
|
UNITED KINGDOM3 |
1,485 |
2,751 |
(46)% |
(46)% |
|
Netherlands |
304 |
811 |
(63)% |
(68)% |
|
Poland |
64 |
268 |
(76)% |
(81)% |
|
Other Europe3 |
396 |
493 |
(20)% |
(31)% |
|
EUROPE |
764 |
1,572 |
(51)% |
(59)% |
|
Australia3 |
1,411 |
1,961 |
(28)% |
(34)% |
|
Singapore |
335 |
699 |
(52)% |
(59)% |
|
ASIA PACIFIC |
1,746 |
2,660 |
(34)% |
(41)% |
|
Total investment sales |
3,995 |
6,983 |
(43)% |
(47)% |
|
Total long-term savings |
40,278 |
39,705 |
1 % |
(7)% |
1. All references to sales in this announcement refer to the present value of new business premiums (PVNBP) unless otherwise stated. PVNBP is the present value of new regular premiums plus 100% of single premiums.
2. Investment sales are calculated as new single premium plus the annualised value of new regular premiums.
3. Investment sales include sales from the retail operations of Aviva Investors.
Page 10
2 - Present value of life new business premiums
The present value of new business premiums (PVNBP) is derived from the single and regular premiums of the products sold during the financial period and is expressed at the point of sale. The PVNBP calculation is equal to total single premium sales received in the year plus the discounted value of regular premiums expected to be received over the term of the new contracts. The discount rate used reflects the appropriate risk-free rate for the country and duration of business. The projection assumptions used to calculate PVNBP for each product are the same as those used to calculate new business contribution. The discounted value of regular premiums is also expressed as annualised regular premiums multiplied by a Weighted Average Capitalisation Factor (WACF). The WACF will vary over time depending on the mix of new products sold, the average outstanding term of the new contracts and the projection assumptions. The table below sets out the factors required to derive PVNBP by business units.
|
12 months 2008 |
|||||||||
|
Regular premiums |
Single premiums |
PVNBP |
|||||||
|
£m |
Local currency growth |
WACF |
Present value £m |
£m |
Local currency growth |
£m |
Local currency growth |
Sterling growth |
|
|
United Kingdom |
|||||||||
|
Individual pensions |
399 |
3 % |
4.5 |
1,792 |
1,930 |
12 % |
3,722 |
10 % |
10 % |
|
Group pensions |
77 |
(7)% |
4.6 |
358 |
673 |
9 % |
1,031 |
31 % |
31 % |
|
Annuities |
- |
- |
- |
- |
2,433 |
24 % |
2,433 |
24 % |
24 % |
|
Bonds |
- |
- |
- |
- |
3,296 |
(21)% |
3,296 |
(21)% |
(21)% |
|
Protection |
184 |
40 % |
5.6 |
1,030 |
96 |
(55)% |
1,126 |
(9)% |
(9)% |
|
Equity release |
- |
- |
- |
- |
250 |
3 % |
250 |
3 % |
3 % |
|
UNITED KINGDOM |
660 |
9 % |
4.8 |
3,180 |
8,678 |
(3)% |
11,858 |
1 % |
1 % |
|
France |
|||||||||
|
Euro funds |
26 |
29 % |
7.1 |
184 |
2,505 |
11 % |
2,689 |
12 % |
31 % |
|
Unit-linked funds |
45 |
(26)% |
6.5 |
294 |
719 |
(50)% |
1,013 |
(45)% |
(36)% |
|
Protection business |
24 |
5 % |
7.2 |
173 |
5 |
33 % |
178 |
(2)% |
15 % |
|
Total life and pensions |
95 |
(9)% |
6.9 |
651 |
3,229 |
(12)% |
3,880 |
(12)% |
2 % |
|
Ireland |
|||||||||
|
Life and savings |
35 |
(25)% |
5.0 |
176 |
336 |
(54)% |
512 |
(47)% |
(38)% |
|
Pensions |
94 |
(19)% |
4.1 |
381 |
406 |
(35)% |
787 |
(29)% |
(17)% |
|
Total life and pensions |
129 |
(21)% |
4.3 |
557 |
742 |
(45)% |
1,299 |
(38)% |
(27)% |
|
Italy |
132 |
6 % |
6.0 |
796 |
1,535 |
(45)% |
2,331 |
(33)% |
(22)% |
|
Netherlands (including Belgium and Germany) |
|||||||||
|
Life |
59 |
(25)% |
8.3 |
489 |
410 |
(19)% |
899 |
(21)% |
(8)% |
|
Pensions |
138 |
28 % |
9.3 |
1,286 |
1,912 |
24 % |
3,198 |
27% |
48 % |
|
Total life and pensions |
197 |
6 % |
9.0 |
1,775 |
2,322 |
13 % |
4,097 |
12 % |
31 % |
|
Poland |
|||||||||
|
Life and savings |
48 |
39 % |
6.0 |
288 |
491 |
49 % |
779 |
42 % |
77 % |
|
Pensions |
58 |
31 % |
15.4 |
895 |
168 |
(10)% |
1,063 |
25 % |
57 % |
|
Total life and pensions |
106 |
35 % |
11.2 |
1,183 |
659 |
28 % |
1,842 |
32 % |
64 % |
|
Spain |
|||||||||
|
Life and savings |
113 |
21 % |
5.8 |
657 |
1,093 |
(22)% |
1,750 |
(9)% |
6 % |
|
Pensions |
61 |
53 % |
6.3 |
385 |
392 |
(41)% |
777 |
(15)% |
(1)% |
|
Total life and pensions |
174 |
31 % |
6.0 |
1,042 |
1,485 |
(28)% |
2,527 |
(11)% |
4 % |
|
Other Europe |
117 |
48 % |
7.7 |
906 |
108 |
(30) % |
1,014 |
107 % |
124 % |
|
EUROPE |
950 |
9 % |
7.3 |
6,910 |
10,080 |
(20)% |
16,990 |
(7)% |
8 % |
|
North America |
|||||||||
|
Life |
68 |
(10)% |
8.8 |
600 |
23 |
(50)% |
623 |
(7)% |
1 % |
|
Annuities |
- |
(100)% |
- |
- |
4,244 |
51 % |
4,244 |
51 % |
63 % |
|
Funding agreements |
- |
- |
- |
- |
848 |
83 % |
848 |
83 % |
98 % |
|
NORTH AMERICA |
68 |
(10)% |
8.8 |
600 |
5,115 |
54 % |
5,715 |
45 % |
57 % |
|
Asia |
174 |
44 % |
5.4 |
941 |
410 |
(21)% |
1,351 |
8 % |
18 % |
|
Australia |
60 |
2 % |
3.6 |
217 |
152 |
(47)% |
369 |
(26)% |
(19)% |
|
ASIA PACIFIC |
234 |
30 % |
5.0 |
1,158 |
562 |
(30)% |
1,720 |
(1) % |
8 % |
|
Total life and pensions |
1,912 |
11 % |
6.2 |
11,848 |
24,435 |
(4)% |
36,283 |
2 % |
11 % |
Page 11
2 - Present value of life new business premiums continued
|
Restated 12 months 2007 |
|||||
|
Regular premiums |
Single premium |
PVNBP |
|||
|
£m |
WACF |
Present value £m |
£m |
£m |
|
|
United Kingdom |
|||||
|
Individual pensions |
389 |
4.3 |
1,653 |
1,717 |
3,370 |
|
Group pensions |
83 |
2.1 |
171 |
615 |
786 |
|
Annuities |
- |
- |
- |
1,965 |
1,965 |
|
Bonds |
- |
- |
- |
4,192 |
4,192 |
|
Protection |
131 |
7.9 |
1,028 |
213 |
1,241 |
|
Equity release |
- |
- |
- |
243 |
243 |
|
UNITED KINGDOM |
603 |
4.7 |
2,852 |
8,945 |
11,797 |
|
France |
|||||
|
Euro funds |
17 |
7.0 |
119 |
1,930 |
2,049 |
|
Unit-linked funds |
53 |
6.8 |
361 |
1,225 |
1,586 |
|
Protection business |
20 |
7.6 |
152 |
3 |
155 |
|
Total life and pensions |
90 |
7.0 |
632 |
3,158 |
3,790 |
|
Ireland |
|||||
|
Life and savings |
40 |
5.1 |
203 |
627 |
830 |
|
Pensions |
99 |
4.2 |
412 |
538 |
950 |
|
Total life and pensions |
139 |
4.4 |
615 |
1,165 |
1,780 |
|
Italy |
107 |
5.7 |
608 |
2,367 |
2,975 |
|
Netherlands (including Belgium and Germany) |
|||||
|
Life |
68 |
8.0 |
544 |
434 |
978 |
|
Pensions |
92 |
9.1 |
834 |
1,321 |
2,155 |
|
Total life and pensions |
160 |
8.6 |
1,378 |
1,755 |
3,133 |
|
Poland |
|||||
|
Life and savings |
28 |
6.3 |
177 |
264 |
441 |
|
Pensions |
35 |
15.1 |
530 |
149 |
679 |
|
Total life and pensions |
63 |
11.2 |
707 |
413 |
1,120 |
|
Spain |
|||||
|
Life and savings |
80 |
5.7 |
457 |
1,192 |
1,649 |
|
Pensions |
34 |
6.2 |
215 |
569 |
784 |
|
Total life and pensions |
114 |
5.9 |
672 |
1,761 |
2,433 |
|
Other Europe |
73 |
4.4 |
318 |
135 |
453 |
|
EUROPE |
746 |
6.6 |
4,930 |
10,754 |
15,684 |
|
United States |
|||||
|
Life |
70 |
8.2 |
575 |
42 |
617 |
|
Annuities |
1 |
4.0 |
4 |
2,596 |
2,600 |
|
Funding agreements |
- |
- |
- |
429 |
429 |
|
NORTH AMERICA |
71 |
8.2 |
579 |
3,067 |
3,646 |
|
Asia |
114 |
6.0 |
683 |
458 |
1,141 |
|
Australia |
54 |
3.5 |
191 |
263 |
454 |
|
ASIA PACIFIC |
168 |
5.2 |
874 |
721 |
1,595 |
|
Total life and pensions |
1,588 |
5.8 |
9,235 |
23,487 |
32,722 |
Page 12
3 - Analysis of sales via bancassurance channels
|
Present value of new business premiums1 |
||||
|
12 months 2008 £m |
Restated 12 months 2007 £m |
Local currency growth2 |
Sterling growth |
|
|
Life and pensions |
||||
|
UNITED KINGDOM |
1,211 |
1,173 |
3 % |
3 % |
|
France |
898 |
815 |
(6)% |
10 % |
|
Ireland |
653 |
892 |
(37)% |
(27)% |
|
Italy |
||||
|
UniCredit Group |
894 |
1,427 |
(46)% |
(37)% |
|
Banca Popolare |
234 |
306 |
(35)% |
(24)% |
|
Banca delle Marche |
22 |
69 |
(73)% |
(68)% |
|
Unione di Banche |
871 |
805 |
(7)% |
8 % |
|
2,021 |
2,607 |
(34)% |
(22)% |
|
|
Netherlands |
466 |
392 |
2 % |
19 % |
|
Poland |
441 |
108 |
250 % |
308 % |
|
Spain |
||||
|
Bancaja |
597 |
759 |
(33)% |
(21)% |
|
Caixa Galicia |
325 |
418 |
(34)% |
(22)% |
|
Unicaja |
683 |
521 |
12 % |
31 % |
|
Caja España |
218 |
210 |
(11)% |
4 % |
|
Caja de Granada |
117 |
115 |
(13)% |
2 % |
|
Cajamurcia |
304 |
179 |
45 % |
70 % |
|
2,244 |
2,202 |
(13)% |
2 % |
|
|
Other Europe |
47 |
17 |
158 % |
176 % |
|
EUROPE |
6,770 |
7,033 |
(18)% |
(4)% |
|
NORTH AMERICA |
11 |
35 |
(71)% |
(69)% |
|
ASIA PACIFIC |
674 |
459 |
33 % |
47 % |
|
Total life and pensions |
8,666 |
8,700 |
(12)% |
- |
|
Investment sales3 |
||||
|
UNITED KINGDOM |
428 |
442 |
(3)% |
(3)% |
|
Total bancassurance sales |
9,094 |
9,142 |
(12)% |
(1)% |
1. Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution.
2. Growth rates are calculated based on constant rates of exchange.
3. Investment sales are calculated as new single premium plus annualised value of new regular premiums.
Page 13
4 - Detailed worldwide investment sales analysis
|
Regular |
Single |
PVNBP |
|||||
|
12 months 2008 £m |
12 months 2007 £m |
Local currency growth |
12 months 2008 £m |
12 months 2007 £m |
Local currency growth |
Local currency growth |
|
|
UNITED KINGDOM1 |
77 |
81 |
(5)% |
1,320 |
2,531 |
(48)% |
(46)% |
|
Netherlands (including Belgium and Germany) |
- |
- |
- |
304 |
811 |
(68)% |
(68)% |
|
Poland |
7 |
4 |
50% |
57 |
264 |
(83)% |
(81)% |
|
Other Europe |
- |
- |
- |
396 |
493 |
(31)% |
(31)% |
|
EUROPE |
7 |
4 |
50% |
757 |
1,568 |
(59)% |
(59)% |
|
Australia |
- |
- |
- |
1,411 |
1,961 |
(34)% |
(34)% |
|
Singapore |
- |
- |
- |
335 |
699 |
(59)% |
(59)% |
|
ASIA PACIFIC |
- |
- |
- |
1,746 |
2,660 |
(41)% |
(41)% |
|
Total investment sales |
84 |
85 |
(2)% |
3,823 |
6,759 |
(48)% |
(47)% |
1. UK regular premium investment sales include SIPP products. These are similar in nature to pension products and their payment pattern is stable and predictable and accordingly they have been capitalised. Regular premium SIPP sales for the 12 months to 31 December 2008 totalled £22 million (2007: £35 million) and have been capitalised using a weighted average capitalisation factor of 5.0 (2007: 5.0). As such, regular premium SIPP sales have produced an overall contribution to investment sales of £110 million (2007: £174 million) out of the UK investment sales of £1,485 million (2007: £2,751 million).
Page 14
5 - Regional analysis of life, pension and investment sales on an EEV basis
|
Present value of new business premiums |
||||
|
12 months 2008 £m |
12 months 2007 £m |
% Growth |
||
|
Sterling |
Local currency |
|||
|
Life and pensions business |
||||
|
United Kingdom |
11,668 |
11,655 |
- |
- |
|
Europe |
15,695 |
14,914 |
5 % |
(10)% |
|
North America |
5,650 |
3,602 |
57 % |
45 % |
|
Asia Pacific |
1,568 |
1,429 |
10 % |
- |
|
Total life and pensions |
34,581 |
31,600 |
9 % |
- |
|
Investment sales |
||||
|
United Kingdom |
1,485 |
2,751 |
(46)% |
(46)% |
|
Europe |
764 |
1,572 |
(51)% |
(59)% |
|
Asia Pacific |
1,746 |
2,660 |
(34)% |
(41)% |
|
Total investment sales |
3,995 |
6,983 |
(43)% |
(47)% |
|
Total long-term savings |
38,576 |
38,583 |
- |
(8)% |
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