Aviva 2006 Annual Report Download - page 46

Aviva plc
Annual Report and Accounts 2006 42
International and M orley
Business review continued
Dear Shareholder,
We have made great progress during the past year with our rapidly expanding businesses across the
Asia-Pacific region and in North America. The strong growth of profits and sales across the majority of our
businesses demonstrates the effectiveness of our highly diversified distribution network and our ability to
deliver results from new opportunities.
The purchase of AmerUs in the US has transformed our business in that country, giving us greater access
to the world’s largest savings market. AmerUs is a leader in the indexed market, ranking number one in sales
of indexed life insurance and third in sales of indexed annuities. The combined Aviva USA business is now
the fourth-largest long-term savings operation in the Aviva group.
During 2006 we completed a major new bancassurance agreement in India with Centurion Bank of
Punjab, and are already seeing a strong performance from this partnership. Aviva India greatly strengthened
its market presence, with nearly 200 branches across the country and over 30 bancassurance partnerships.
In February we acquired a 51% stake in Eagle Insurance, the third-largest insurer in Sri Lanka.
Through Eagle, we have entered into bancassurance agreements with National Development Bank
and Standard Chartered Bank.
Our business in China is now licensed in 15 cities across six provinces. We are on course to achieve our
vision of 10% new business market shareacross ten cities by 2010. Weare ranked fifth among foreign joint
venture insurance companies in China.
We received a licence to operate in Russia from March 2006, and plan to build a leadership position,
with a 10% market shareand a top-five position, within the next five years.
Our general insurance business in Canada has broadened its distribution and has introduced innovative
products during 2006.
Our confidence in our International long-term savings businesses is highlighted by our expectation that,
combined with our European businesses, we shall achieve double-digit organic sales growth over the next
five years, while growing new business contribution at least as quickly. Wearealso committed to meeting
or beating the group COR target of 98% .
Strategic developments
Customers in our key markets show an increasing appetite to save for the future. They also want a choice
of how to do business with us. These market conditions present a sizeable opportunity, and we are fully
committed to working with governments and business partners to satisfy our customers’ expectations.
We plan to grow our existing channels. This includes the successful integration of AmerUs into Aviva
USA, acceleration of our bancassurance and direct sales success in India and China, deepening our relationship
with DBS in Singapore and Hong Kong, and delivery of additional corporate partnerships in Canada.
During 2006, Morley, our largest fund management business, agreed to establish a single investment sales
team with our UK long-term savings business, Norwich Union. This agreement will strengthen our presence
in the retail and wholesale UK distribution channels. Additionally, Morley acquired ORN Capital, a hedge fund
manager,accelerating the development of our alternative investment business. It is vital to the overall strength
of the group that we have capacity to offer customers investment products that meet their individual needs.
We intend to diversify our distribution network. For example, we are exploring the development of our
bancassurance business in the US by taking advantage of expertise gained elsewherein the Aviva group
and are looking to develop the broker channel in China.
Outlook
Through the acquisition of AmerUs we have created a dynamic and thriving business in the US. The developing
markets of the Asia-Pacific region and Russia represent a substantial longer-term area of opportunity for us.
Weshall be looking to accelerate growth through our strong market positions and key capabilities, notably
diversified distribution and product innovation, while continuing to explorethe potential of other markets.
Philip Scott
Group executive director