Aviva 2005 Annual Report Download - page 28

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Aviva plc 2005 Business review
Business review continued
During 2005, we have had continued success with limited-period
savings offers. We had strong growth in unit-linked sales through
AFER and achieved healthy growth in unit-linked sales across other
distribution channels. The regulatory environment is entering a
period of change, including tighter regulations surrounding the
sales process and the “Fourgous” amendment, which will enable
conversion from earlier generation euro funds to unit-linked funds
without the loss of tax benefits. We have anticipated these changes
and we are well placed to respond to customers wishing to convert.
Greater use of intranet and extranet tools to communicate with the
sales network has produced service improvements and cost savings.
Additionally, efficient administration procedures supporting our
Crédit du Nord partnership are being introduced to other
distribution channels.
Our life EEV operating return rose to £321 million (2004:
£286 million) including £33 million from our bancassurance
partnership with Crédit du Nord (2004: £4 million). This performance
primarily reflects the increased contribution from new business sales.
Higher expected returns and experience variances were offset by
lower operating assumption variances. The favourable experience
variance of £32 million (2004: £22 million) includes mortality profits
of £29 million (2004: £21 million). We generated strong sales
growth of 26% to £3,530 million (2004: £2,782 million). Within this
total, unit linked sales increased by 73% to £1,423 million (2004:
£818 million) and we are well positioned for continued growth in
unit-linked business. Our bancassurance partnership with Crédit
du Nord recorded sales of £728 million in its first full year (2004:
£127 million) and AFER unit-linked sales grew substantially by
78% to £367 million (2004: £205 million). Our strategic focus on
more profitable unit-linked sales resulted in a 41% increase in new
business contribution to £135 million (2004: £95 million) giving a
higher full year new business margin of 3.8% (2004: 3.4%).
We expect to see overall market growth slowing in 2006. However,
we have built a strong base from which to grow while seeking to
retain our focus on the higher-margin unit-linked market.
France
Aviva France is one of the top 10 long-term savings businesses
in France with a market share of 5%. It focuses on higher-margin
unit-linked products in which its market share is 8%. We offer a
comprehensive range of life and savings products for both private
and corporate clients. Distribution is multi-channel, including
a direct sales force, brokers, AFER (the largest retirement savings
association in France), the UFF network of financial advisers,
Aviva Direct, Aviva Assurances agents and our bancassurance
partnership with Crédit du Nord. The centralisation of operations
in the outskirts of Paris in the first half of 2005 is expected to yield
benefits through closer co-operation and operating efficiencies.
We aim to generate organic growth with a specific focus on
our strength in the unit-linked market while also taking advantage
of attractive opportunities that arise for non-organic growth.
Our efforts are focused on achieving greater efficiency in sales,
administration and the management of our key business
partnerships. We will, as always, seek to maintain high levels of
customer service and market leading investment performance
through our fund manager Aviva Gestion d’Actifs.
Business segment performance: Long-term savings
and fund management continued
+22%
Growth in bancassurance PVNBP
Worldwide sales by distribution channel
1 Financial advisers
2 Partnerships
3 Direct
4 Bancassurance
46%
4%
25%
25%
1
2
3
4
Worldwide sales by country
1 UK
2 Europe
3 International
41%
53%
6%
1
2
3