Aviva 2006 Annual Report Download - page 10

Aviva plc
Annual Report and Accounts 2006 6
Chairman’s statement
Dear Shareholder,
As I come to the end of my first year as chairman of Aviva, I am delighted to be able to report on a thriving
business. We have made progress towards our stated aim of providing prosperity and peace of mind for our
customers. Our record financial results are proof that we are in the right markets, at the right time, and are
providing the products and services that our customers want.
During the year, we completed the purchase of AmerUs in the US, giving us greater access to the world’s
largest savings and capital market. Our challenge is now to integrate and grow this business quickly and
to demonstrate the value that we believe it brings to our Group. We also completed major new bancassurance
partnerships in Ireland (with Allied Irish Banks) and in India (with Centurion Bank of Punjab). Already, we are
seeing strong performances from both partnerships. In March, we approached the board of Prudential plc
with a proposal to merge our respective companies on an agreed basis. The proposal set out the significant
commercial benefits and value-creation potential of the merger. The board of Prudential plc declined to enter
into discussions with us and the proposal was consequently withdrawn.
External view
Across the world, the need for individuals to provide adequately for their retirement is being recognised as an
increasingly important issue. The situation is particularly severein Western countries where an ageing population
is placing a greater strain on national purses and we are shortly to see the retirement of the “baby boomer”
generation. Additionally,people in rapidly developing countries such as China and India arestarting to pick
up the savings habit. These conditions present a sizeable opportunity for us, and we arefully committed to
working with customers, governments, the insurance industry and regulatory bodies to provide innovative
and practical solutions.
Richard Harvey
In January 2007, RichardHarvey announced his intention to retireas our group chief executive and to move on
to other charitable and business challenges. Richardis a class act by anyone’s standards. He has led the Group
through numerous challenges and merger activity with professionalism, skill, and foresight. He has made a
lasting impression on Aviva and on the wider international insurance industry. I wish him an enjoyable and
relaxing break when he leaves us in July, and great success with whatever he chooses to do next. Furthermore,
Iam delighted that Andrew Moss, our group finance director has agreed to succeed Richard. Andrew has an
extensive knowledge of the insurance industry and a strong track record in international financial services.
Iam looking forwardto working with him as he leads Aviva through its next phase of growth.
Legal reforms
Ihave recently been involved with the development of the Companies Act 2006 and its progress through
Parliament in the UK. The Bill is one of the largest ever to be passed and is a significant step towards a
far-reaching reform of UK company law. It clarifies the requirements being placed on public companies and
pushes them to consider further their internal governance and their social and economic impacts. I strongly
support the reforms and am certain that Aviva is in excellent shape to handle the upcoming changes.
Dividend
Iam pleased to announce that our recommended final ordinary dividend is 19.18 pence per share, bringing
the total dividend for the year to 30.00 pence, an increase of 10% against last year (2005: 27.27 pence).
This increase reflects our intention to increase the dividend on a basis judged prudent, while retaining capital
to support future business growth, using dividend cover on an IFRS operating earnings after tax basis in the
1.5 to 2.0 times range as a guide.
Board developments
During 2006, we held the first meetings of the newly formed risk and regulatory committee and corporate
social responsibility committee. The board remains committed to maintaining the highest levels of governance
and compliance particularly in light of the increasing demands in this area. We are also keenly aware of the
need to develop our business to be sustainable and responsive to the needs of customers, staff and the wider
community. Both committees will provide clear leadership and give the board oversight of the work we are