Andrew Moss NUL18.11.08
UK Life, Driving value through excellence Investor and Analyst Event, - - PowerPoint PPT Presentation
UK Life, Driving value through excellence Investor and Analyst Event, - - PowerPoint PPT Presentation
UK Life, Driving value through excellence Investor and Analyst Event, Wednesday 6 th May 2009 Andrew Moss NUL18.11.08 Disclaimer This presentation may include oral and written forward-looking statements with respect to certain of Avivas
Andrew Moss NUL18.11.08
Disclaimer
This presentation may include oral and written “forward-looking statements” with respect to certain
- f 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
- ther 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 2008 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 presentation should not place undue reliance on forward-looking statements. Aviva undertakes no obligation to update the forward-looking statements made in this presentation
- r 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.
3
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
4
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
5
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
6
Context for strategy: factors shaping the mid term
Industry past
- Growth funded by
capital
- Single premium driving
volume
- IFA channel pre-
dominant
- A Day boom in
personal pensions
- Steady growth in
retirement needs Distributor consolidation DB / DC NPSS Recession Demographics RDR & TCF Forces for change Threats & opportunities
- Capital conservation
- Margin squeeze
- Smaller IFA shop
window
- IFA channel orphans
- Growing role of
workplace in retirement
- Acceleration in at-
retirement provision The next 3 - 5 years presents a mixture of opportunity and challenge
7
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
8
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 proposition strength Unrivalled data and capability Scale of Aviva customer base opportunity
9
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
10
Purpose Prosperity & peace of mind Vision One Aviva, twice the value
- Manage composite
portfolio
- Build global Asset
Management
- Allocate capital
rigorously
- Increase customer
reach
- Boost productivity
- 98% meet or beat COR
- £500m cost savings by
2010
- Double IFRS EPS by
2012 at the latest
- 1.5 – 2 x dividend cover
- n IFRS post tax
- perating 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 growth
- pportunities
- Leverage scale
- Generate capital
- N. America
- Optimise business mix,
growth & margin
- Generate net capital
returns
- Contribute to doubling
IFRS EPS by 2012 Asia Pacific Scale, growth
- Prioritised portfolio
- Regional operating
model
- Investment required
Strategic priorities Targets
UK Life, Driving Value Through Excellence
Driving differentiation
- A distinctive customer heartland
- 5 areas of strategic focus & action
- Summary of strategic direction
UK Life Market leadership
Drive up profitability Generate capital Operational excellence
Competitive advantage
11
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 wealth management Wealth managers Banks, insurers Distributors Fund managers Performance Advice Planning Middle market £30k – £100k Mass market £0 – £30k Packaged solutions Building wealth Protection Retirement income Insurers Retail banks Scale Reach Product range Brand
Aviva UK Life customer heartland
Loans Short 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 Comfortable Wealthy Achievers G e t t i n g B y L
- w
E a r n e r s 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 match
- pportunity
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
- pportunities
- Via on-sell and up-sell
- Aviva UK-wide opportunity
UK GI Customers 9m RAC Customers 9m
Aviva Life ~7m Customers
9% 4% Protection 33.2% Pension 23.1% Annuity 7.9% 0.4% 1.6% 1.9% 1.1% <0.1% Investment 29.1% Healthcare Customers 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
16
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, BPA and healthcare
Aviva UK Life PVNBP £m
(1) (1) Aviva UK Life PVNBP on an EEV basis
500 1,000 1,500 2,000 2,500 2005 2006 2007 2008
Corporate pensions
BPA
17
Opportunity from our distribution reach post RDR
Independents
- c. 10,000
General Advisors 10,000 Banks, direct 19,000 IFA
- c. 21,000
Tied / multi tied 9,000 Banks, direct 15,000 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
Corporate Bulk acquisition (eg BPA) RBS JV Banks / building socs Post Office Other 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 margin IFRS 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
- n our
distinctive customer heartland
Global re-brand Distribution reach and flexibility All round proposition strength Unrivalled data and capability Scale of customer base opportunity
21
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
Focussing
- n our
distinctive customer heartland Global re-brand Distribution reach and flexibility All round proposition strength Unrivalled data and capability Scale of customer base opportunity
Trading through the recession Brand re-launch Commercial mortgages Re-attribution of the inherited estate
22
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
Andrew Moss NUL18.11.08
Questions & answers
Andrew Moss NUL18.11.08
Thank you and lunch
Andrew Moss NUL18.11.08