Aviva UK: Morgan Stanley European Financials Conference, March 2011

8/7/2019 Aviva UK: Morgan Stanley European Financials Conference, March 2011

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Morgan StanleyEuropean Financials Conference

31 March 2011


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Disclaimer

Cautionary statements:

This should be read in conjunction with the documents filed by Aviva plc (the Company or Aviva) with the United States Se curities and Exchange

Commission (SEC). This announcement contains, and we may make verbal statements containing, forward-looking statements with respect to certain

of Avivas plans and current goals and expectations relating to future financial condition, performance, results, strategic i nitiatives and objectives.

Statements containing the words believes, intends, expects, plans, will, seeks, aims, may, could, outlook, estimates and anticipates,

and words of similar meaning, are forward-looking. By their nature, all forward-looking statements involve risk and uncertainty. Accordingly, there are or

will be important factors that could cause actual results to differ materially from those indicated in these statements. Aviva believes factors that could

cause actual results to differ materially from those indicated in forward-looking statements in the presentation include, but are not limited to: the impact of

difficult conditions in the global capital markets and the economy generally; the impact of new government initiatives related to the financial crisis; defaults

and impairments in our bond, mortgage and structured credit portfolios; changes in general economic conditions, including foreign currency exchange

rates, interest rates and other factors that could affect our profitability; the impact of volatility in the equity, capital and credit markets on our profitabilityand ability to access capital and credit; risks associated with arrangements with third parties, including joint ventures; inability of reinsurers to meet

obligations or unavailability of reinsurance coverage; a decline in our ratings with Standard & Poors, Moodys, Fitch and A. M. Best; increased competition

in the U.K. and in other countries where we have significant operations; changes to our brands and reputation; changes in assumptions in pricing and

reserving for insurance business (particularly with regard to mortality and morbidity trends, lapse rates and policy renewal rates), longevity and

endowments; a cyclical downturn of the insurance industry; changes in local political, regulatory and economic conditions, business risks and challenges

which may impact demand for our products, our investment portfolio and credit quality of counterparties; the impact of actual experience differing from

estimates on amortisation of deferred acquisition costs and acquired value of in-force business; the impact of recognising an impairment of our goodwill or

intangibles with indefinite lives; changes in valuation methodologies, estimates and assumptions used in the valuation of investment securities; the effect

of various legal proceedings and regulatory investigations; the impact of operational risks; the loss of key personnel; the impact of catastrophic events on

our results; changes in government regulations or tax laws in jurisdictions where we conduct business; funding risks associated with our pensionschemes; the effect of undisclosed liabilities, integration issues and other risks associated with our acquisitions; and the timing impact and other

uncertainties relating to acquisitions and disposals and relating to other future acquisitions, combinations or disposals within relevant industries. For a

more detailed description of these risks, uncertainties and other factors, please see Item 3, Risk Factors, and Item 5, Op erating and Financial Review

and Prospects in Avivas Annual Report Form 20-F as filed with the SEC on 24 March 2011. Aviva undertakes no obligation to update the forward

looking statements in this announcement or any other forward-looking statements we may make. Forward-looking statements in this presentation are

current only as of the date on which such statements are made.

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Resilient & diversified with growing earnings

Delivering against the targets

At least 1.5 billion operational capital in 2011

Life IRR of at least 12% with payback of 10 years or less

2011 general insurance COR of 97% or better

Additional cost savings of 200 million and 200 million efficiency gains by 2012

A clear strategy

Increase focus and depth in 12 countries

Excelling in Life & GI, driving out composite value

1. A strong customer base, with a growing franchise

2. Tight cost control

3. A strong balance sheet

Valuation upside

Dividend yield of over 5.5%

Valued at only 8.5x IFRS earnings

Trading on only 70% of EEV NAV

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4

Significant growth in all key performance metrics

IFRSoperating profit

Net operatingcapital generated

FY10

1.0bn

1.7bn

FY09FY10FY09

2,550m

2,022m

NAV

IFRS

EEV374p

621p

FY10FY09

IFRS

454p

FY10

Dividend

25.5p

FY10FY09

6%24p

IFRS Return on Equity

FY10

10.9%

14.8%

FY09

26%70%

80p

Funds under management

402bn

FY10FY09

23bn379bn


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Strong growth in Life & GI

Life IRR

10.0%

12.5%2.5ppt

FY10FY09

Life sales (PVNBP)

33.4bn

32.0bn4%

FY10FY09

Life operating profit

1,887m

2,318m

23%

FY10FY09

GI & Health sales (NWP)

9.2bn

9.7bn

GI COR

99%

97%6%

FY10FY09 FY10FY09

960m

GI & Health operating profit

1,050m

FY10FY09

9%


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Growing income whilst controlling expenses

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Expenses

Income

m


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Strong profit growth vs competitors

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66%

26% 24%

22%17%

7%5%

(13%)

(18%)

(10%)

Aegon Aviva Prudential ING** Allianz StandardLife

AxaZurich RSAL&G

2010 growth in IFRS operating profit*

12%

Generali

* Year on year growth in operating profit or underlying earnings before tax and minority interests at reported exchange rates** ING insurance operations only


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A clear strategy


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Continued growth in third party assets

Focus on growing franchise value

Focus on growing profits organically

Hold for value

Invest and deepen presence inpriority markets 5 plus 2

Invest and deepen presence

DeltaLloyd

NorthAmerica

AsiaPacific

AvivaInvestors

Europe

UK

Gross capitalgeneration

IFRS operatingprofit contribution

0.91.4

0.80.9

0.4*0.5

0.60.4

--

-0.1

Strategic direction

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FY 2010 (bn)

Strategy: Increasing focus & depthin our chosen countries

* Excluding Delta Lloyd longevity reserving of 0.2 billion post tax & MI


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A strong life customer base with a growing franchise

10

bn

33bn

36bn

FY10FY09

Increased future life cash flows Increasing life IFRS operating profit


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11

m

FY10FY09

9%960m

1,050m

Rolling 12 month GI & Health net written premiums GI & Health operating profit

A strong GI customer base with a growing franchise


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4%

11%

63%

39%

33%

10%

29%

20%

0%

10%

20%

30%

40%

50%

60%

70%

Dec '08 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

53%

55% Direct Line

29% Scottish Widows

16% Standard Life17% Legal & General

27% Prudential26% More Than

13% Esure

Growing the franchiseAviva brand awareness in the UK

YouGov Brand Index data a Nationally representative daily sample of over 2000 people

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Tight cost control

13% reduction in costs since 2008

500 million cost savings achieved and more to come

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m


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A strong balance sheet: asset & liability matchingensures predictable in-force earnings

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Clear benefits of asset and liabilityduration matching at point of sale

21.0bn

Assets and liabilities are well matched

Duration in years (HY 2010)

Shareholderfunds

31bn 15.8bn0.8bn

Limited guarantee risk

Limited impact from interest ratemovements

Assets held to maturity

Track record of minimal defaults


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A strong balance sheet: further progress in 2010with the reduction of the pension scheme deficit

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Actions Result (bn)

1.7

ZeroPensionschemeaccounting

basisdeficit(bn)

0.3 0.6

0.3

0.4

0.2

0.5

Aviva and RAC schemes closed reducingliabilities

Aviva scheme

Long-term funding agreement in place

378 million deficit funding paymentin 2010

Updated mortality assumptions favourablein the UK with offset in DL

Ongoing further ALM improvements andvolatility mitigation strategies underway-

covering longevity, equity, interest rate,inflation and credit exposure


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Delivering against the targets:remaining fully focused on financial commitments

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Deliver at least 1.5 billion operationalcapital in 2011

2011 general insurance COR to be 97%or better

Deliver a Life IRR of at least 12% withpayback of 10 years or less

Additional cost savings of 200 millionand a further 200 million efficiency

gains by end 2012

1.7 billion operational capitalgenerated in 2010,

a 70% increase on 2009

97% COR delivered in 2010

Life IRR of 12.5% delivered in 2010 witha payback period averaging 8 years

Original 500 million target achievedone year early in 2009

Track recordTarget


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Resilient & diversified with growing earnings


At least 1.5 billion operational capital in 2011

Life IRR of at least 12% with payback of 10 years or less

2011 general insurance COR of 97% or better

Additional cost savings of 200 million and 200 million efficiency gains by 2012

A clear strategy

Increase focus and depth in 12 countries

Excelling in Life & GI, driving out composite value

1. A strong customer base, with a growing franchise

2. Tight cost control

3. A strong balance sheet

Valuation upside

Dividend yield of over 5.5%

Valued at only 8.5x IFRS earnings

Trading on only 70% of EEV NAV

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Aviva UK: Morgan Stanley European Financials Conference, March 2011

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