Aviva 2005 Annual Report Download - page 26

24
Aviva plc 2005 Business review
Business review continued
Business segment performance: Long-term savings
and fund management
Long-term savings
2005
IFRS
profit IFRS EEV New New
before operating operating business business
tax profit profit PVNBP* contribution margin
£m £m £m £m £m %
UK 1,210 384 585 9,053 265 2.9
France 234 258 321 3,530 135 3.8
Ireland 56 28 20 665 16 2.4
Italy 35 53 96 2,294 59 2.6
Netherlands
(including
Belgium and
Luxembourg) 164 168 318 2,407 88 3.7
Poland 90 91 128 285 14 4.9
Spain 75 89 214 2,013 175 8.7
Other Europe (7) (4) 33 739 7 0.9
International 8 (2) 99 1,260 49 3.9
Long-term
savings total 1,865 1,065 1,814 22,246 808 3.6
2004
IFRS
profit IFRS EEV New New
before operating operating business business
tax profit profit PVNBP* contribution margin
£m £m £m £m £m %
UK 654 353 551 9,172 269 2.9
France 196 213 286 2,782 95 3.4
Ireland 52 31 40 561 19 3.4
Italy 28 49 79 1,799 48 2.7
Netherlands
(including
Belgium and
Luxembourg) 220 214 277 2,168 80 3.7
Poland 80 80 93 241 11 4.6
Spain 61 72 180 2,110 143 6.8
Other Europe (8) 5 22 804 5 0.6
International 102 99 83 1,024 36 3.4
Long-term
savings total 1,385 1,116 1,611 20,661 706 3.4
*Excludes investment sales. Investment sales totalled £2,399 million (2004:
£1,629 million) giving overall new business sales of £24,645 million (2004:
£22,290 million).
UK
Our UK business, operating as Norwich Union, provides a
comprehensive suite of long-term savings products, focusing
on competitive and sustainable investment returns. We are a
top-three player in all our chosen life and pensions market sectors.
Our business is mainly written through a network of financial
advisers and we have developed a strong distribution footprint
for the depolarised marketplace with major product multi-tie
agreements with Sesame, Barclays, Bankhall and Millfield Alliance,
together with protection multi-tie agreements with SimplyBiz and
Direct Life and Pensions and a single-tie agreement with CIS.
Additionally, we have a bancassurance joint venture with The Royal
Bank of Scotland giving us access to their large retail branch
network. We are regulated by the Financial Services Authority (FSA)
and are based in York, with significant operating sites in Norwich,
Sheffield, Stevenage and Pune and Bangalore in India.
We aim to be the leader in the UK long-term savings market,
achieving profitable growth while maintaining our leading
positions in our chosen sectors. We will achieve this objective by
differentiating ourselves from our competitors, continuing to earn
the trust of our customers, using a broad range of products and
distribution partners to give a full service and further increasing
our efficiency and effectiveness. In addition, we are committed to
helping our people enjoy their work while maximising the value
they create for the company.
In April, we launched a ”wrap” proposition through Lifetime,
which enables financial advisers to manage all of a client’s
portfolio. More than 100 firms and 800 advisers have signed up
to this. The popularity of this product underlines the desire for
innovation in the market and our view is that demand for wraps
will be significant. Increased focus and awareness in the RBS retail
branch network and upgrading our protection and investment
products has resulted in improved bancassurance performance.
We have also made significant progress in the collective investment
sales market, which we see as a growth area.
We are committed to delivering excellent service to our customers
and therefore a recent financial adviser service rating of 1 star is
very disappointing. In 2005, we put in place a customer feedback
programme that has given us regular insights into all aspects of
our service and has enabled us to carefully target and track
improvements. Customer service standards to policyholders have
increased throughout 2005 and to financial advisers, standards
have increased over the final quarter. Plans are in place for further
improvement during 2006, with an emphasis on service to financial
advisers. We have continued to develop our “process excellence”
capability, which has reduced both end-to-end service times and
costs. Our Indian operation continues to develop successfully.
We have around 1,000 employees in India, covering a full range
of processes. These activities have quickly achieved or exceeded
the target performance levels based on UK standards. We are also
seeing further benefits in cost, quality and operational flexibility.
Our life EEV operating return increased to £585 million (2004:
£551 million), primarily driven by increased expected returns from
in-force business and shareholders' net worth. The net impact of
experience variances and operating assumption changes amounted
to a loss of £150 million (2004: loss of £139 million).