Andrew Moss NUL18.11.08 Investor and Analyst Event, Wednesday 6 th May 2009 UK Life, Driving value through excellence
8/7/2019 Aviva UK: Investor and Analyst Event Part 2, May 2009
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Andrew Moss NUL18.11.08
Investor and Analyst Event, Wednesday 6th May 2009
UK Life, Driving value through excellence
8/7/2019 Aviva UK: Investor and Analyst Event Part 2, May 2009
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Andrew Moss NUL18.11.08
Disclaimer
This presentation may include oral and written “forward-looking statements” with respect to certainof 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 similarmeaning. By their nature, all forward-looking statements involve risk and uncertainty because theyrelate to future events and circumstances which may be beyond Aviva’s control, including, amongother things, UK domestic and global economic and business conditions, market-related risks suchas 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 impactand other uncertainties relating to acquisitions by the Aviva Group and relating to other futureacquisitions or combinations within relevant industries, the impact of tax and other legislation andregulations in the jurisdictions in which Aviva and its affiliates operate, as well as the other risksand uncertainties set forth in our 2008 Annual Report to Shareholders. As a result, Aviva’s actual
future financial condition, performance and results may differ materially from the plans, goals andexpectations set forth in Aviva’s forward-looking statements, and persons receiving thispresentation should not place undue reliance on forward-looking statements.
Aviva undertakes no obligation to update the forward-looking statements made in this presentationor any other forward-looking statements we may make. Forward-looking statements made in this
presentation are current only as of the date on which such statements are made.
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Agenda
• UK Life in excellent shape Mark Hodges, Chief Executive Officer
• Driving up profitability & generating capital John Lister, Finance Director
• Delivering operational excellence Toby Strauss, Chief Operating Officer
• Break and innovation demonstrations UK Life Management Team
• Strategic outlook Mark Hodges, Chief Executive Officer
• Strategic focus David Barral, Marketing Director
Questions & answers
Lunch
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UK Life: an evolving distinctive position
2001 – product positioning
Consistent strategy & ruthless execution has delivered a distinctive position
Pension 100%
Pension 0%
Risk 0%
Risk 100%
Savings 0%
Savings 100%
NU
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UK Life: an evolving distinctive position
2008 – product positioning
Consistent strategy & ruthless execution has delivered a distinctive position
Pension 100%
Pension 0%
Risk 0%
Risk 100%
Savings 0%
Savings 100%
NU
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Context for strategy: factors shaping the mid term
Industry past
• Growth funded bycapital
• Single premium drivingvolume
• IFA channel pre-dominant
• A Day boom inpersonal pensions
• Steady growth inretirement needs
Distributorconsolidation
DB / DC
NPSS
Recession
Demographics
RDR & TCF
Forces for change Threats & opportunities
• Capital conservation
• Margin squeeze
• Smaller IFA shopwindow
• IFA channel orphans
• Growing role ofworkplace in retirement
• Acceleration in at-retirement provision
The next 3 - 5 years presents a mixture of opportunity and challenge
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Our strategy will drive consistent outcomes
We are now in a position to make choices for the next 3 – 5 years
Successful outcomes
• Driving in-force value
• Improved capital efficiency• Cash generation
• Profitable growth
Choices on future
direction and focus
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Five key strengths
These advantages will form the basis of our strategic priorities
A large and distinctive customer base
Brand
Risk capability
Momentum in Corporate
Distribution strength and depth
Global re-brand
Distribution reach and
flexibility
All-round propositionstrength
Unrivalled data andcapability
Scale of Aviva customerbase opportunity
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Agenda
• UK Life in excellent shape Mark Hodges, Chief Executive Officer
• Driving up profitability & generating capital John Lister, Finance Director
• Delivering operational excellence Toby Strauss, Chief Operating Officer
• Break and innovation demonstrations UK Life Management Team
• Strategic outlook Mark Hodges, Chief Executive Officer
• Strategic focus David Barral, Marketing Director
Questions & answers
Lunch
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Purpose
Prosperity &peace of mind
VisionOne Aviva,twice the
value
• Manage compositeportfolio
• Build global AssetManagement
• Allocate capitalrigorously
• Increase customerreach
• Boost productivity
• 98% meet or beat COR
• £500m cost savings by2010
• Double IFRS EPS by2012 at the latest
• 1.5 – 2 x dividend coveron IFRS post taxoperating earnings
Aviva Investors• Globally integrated business • Transform the investment model • Increase third party business
UK
Market leadership
• Address legacy• Transform business
model• Exploit UK synergies
• Generate capital
Europe
Scale, growth, capital
• Seize unique growthopportunities
• Leverage scale• Generate capital
N. America
• Optimise business mix,growth & margin
• Generate net capitalreturns
• Contribute to doublingIFRS EPS by 2012
Asia Pacific
Scale, growth
• Prioritised portfolio• Regional operating
model• Investment required
Strategicpriorities
Targets
UK Life, Driving Value Through Excellence
Driving differentiation
• A distinctive customer heartland• 5 areas of strategic focus & action
• Summary of strategic direction
UK LifeMarket leadership
Drive up profitabilityGenerate capital
Operational excellenceCompetitive advantage
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We have a distinctive customer heartland
Targeting the mid market – plays to our strengths and less competitively crowded
High net worth£500k +
Mass affluent£100 – £500k
Complex wealthmanagement
Wealth managersBanks, insurers
Distributors
Fund managers
PerformanceAdvice
Planning
Middle market£30k – £100k
Mass market
£0 – £30k
Packaged solutions
Building wealthProtection
Retirement income
InsurersRetail banks
Scale
ReachProduct range
Brand
Aviva UK Life customer heartland
LoansShort term savings
Customers Main needs Competitors Basis of competition
Retail banks Reach
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Positioning based on deep insight
Our heartland is not only distinctive but also more profitable
Overweight for UK
Strong growth predicted
8.6m unserved
Higher average value
Poor Comforta
ble
Wealth
y
Achievers
Getting By
Low
Earners Super Rich
Family
Pre-retired
Retired
Non-Family
Life Stage
Wealth
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Opportunity from our existing customer base
Capitalise on untapped value from our existing customers
40% have no active adviser
Scaling back direct acquisition
Re-directing advisory resource Generating leads from existing
customers
Industrialise to matchopportunity
UK Life customers by source, m
Direct, 1.3
No current
advisor, 1.4
Partner
customers, 0.7
Have IFA, 3.5
Existing UK Life Customers (Millions)
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Opportunity from our existing customer base
Capitalise on untapped revenue from our existing customers
<1%
• Cross product holdings low
• Realistic cross holding
opportunities
• Via on-sell and up-sell
• Aviva UK-wide opportunity
UK GICustomers
9m
RACCustomers9m
Aviva Life ~7m Customers
9%
4%
Protection33.2%
Pension23.1%
Annuity7.9%
0.4%1.6%
1.9%
1.1%
<0.1%
Investment29.1%
HealthcareCustomers
2.5m
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Opportunity from our unique Risk capability
We will drive significant growth in our high margin Risk lines of business
Underlying market growth
Annuity
WP annuity
Life cover - underprovided UK
Unrivalled capability
Mortality and morbidity
Asset / liability expertise
Cutting edge risk science Combined understanding from
Life, GI and healthcare
Market share 2008
0% 5% 10% 15% 20%
PMI
Protection
WP Annuities
Annuities
Source: ABI.
Strong positions in key product sectors
Protection Annuities
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Opportunity from our momentum in Corporate sector
Drive profitable growth in the Corporate sector
Momentum• Proposition innovation
• Case and tender sizes up
• 82 schemes Q1
• BPA foothold• Global brand
• Full wind down solutions
• Unrivalled combined
capability pensions, BPAand healthcare
Aviva UK Life PVNBP £m(1)
(1) Aviva UK Life PVNBP on an EEV basis
0
500
1,000
1,500
2,000
2,500
2005 2006 2007 2008
Corporate pensions BPA
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Opportunity from our distribution reach post RDR
Independents
c. 10,000
General Advisors10,000
Banks, direct19,000
IFAc. 21,000
Tied / multi tied9,000
Banks, direct15,000
High net worth£500k +
Mass affluent£100k – £500k
Middle market
£30k – £100k
Mass market£0 – £30k
Advisers Today Advisers 2013
Provision gap
We will shape our distribution portfolio for value and low cost of acquisition
UK Life Strategy
Commercial focus
Leverage ‘One-to-many’channels
CorporateBulk acquisition (eg BPA)
RBS JVBanks / building socs
Post OfficeOther partners
Grow in-house channel
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We will seize re-brand opportunity to become the UK’s most recommended insurer
73%
28%
10%
9%
8%
6%
2%
1%
11%
Insurance (home or motor insurance)
Banking/ financial services
Life insurance
Mortgages
Pensions
Savings/ investments
Equity release / Lifetime mortgage
Transport/ travel
Other
What Does Norwich Union Do?
Opportunity for synergy from Aviva’s re-brand
Jan Mar Jul
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A strategy that delivers on economic realities
Brand
Growth above market
Capital efficiency
Margin and profitability
Distribution control
Back book value creation
% PVNBP growth
Strain / PVNBP
MCEV marginIFRS profit
Own customers
added
VIF per customer
3 year outcome Metric
2010 strategy will drive the same value outcomes as our 2006 focus
Customer base value
Risk businesses
Distribution portfolio
Corporate leadership
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Our strategic focus
We have clear strategic focus for 2010 - 2012
5. Seize opportunity to become most recommended insurer
4. Shape distribution portfolio for value & low cost acquisition
3. Drive significant profitable growth in Corporate sector
2. Drive significant profitable growth in our Risk business
1. Capitalise on untapped value from existing customers
Focussing
on ourdistinctivecustomerheartland
Global re-brand
Distribution reachand flexibility
All roundproposition strength
Unrivalled data andcapability
Scale of customerbase opportunity
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Delivery, positioning and a clear way forward
• Rationalise costs
• Simplify the legacy
• Value out of service
• Manage retention
• Develop the business
• Strong balance sheet
• Capital efficiency
Delivering our 2006 strategic promises
UK Life is in excellent shape – for now and the future
5. Seize opportunity to become most recommended insurer
4. Shape distribution portfolio for value & low cost acquisition
3. Drive significant profitable growth in Corporate sector
2. Drive significant profitable growth in our Risk business
1. Capitalise on untapped value from existing customers
Focussingon our
distinctive
customer
heartland
Global re-brand
Distribution reachand flexibility
All roundproposition strength
Unrivalled data andcapability
Scale of customerbase opportunity
Trading through the
recession
Brand re-launch
Commercial mortgages
Re-attribution of the
inherited estate
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Andrew Moss NUL18.11.08
Questions & answers
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Andrew Moss NUL18.11.08
Thank you and lunch