Aviva 2006 Annual Report Download - page 51

Overview Business review Governance Financial statements Other information
Aviva plc
Annual Report and Accounts 2006 47
Rest of the w orld – General insurance and
health
2006
IFRS IFRS Combined Net
profit operating operating written Underwriting
before tax profit ratio* * premium result
£m £m % £m £m
Canada 169 148 98 1,389 27
Other 48 40 85 86 11
Rest of the w orld 217 188 97 1,475 38
2005
IFRS IFRS Combined Net
profit operating operating written Underwriting
before tax profit ratio* * premium result
£m £m % £m £m
Canada 178 147 97 1,324 35
Other 86 40 97 106 3
Rest of the w orld 264 187 97 1,430 38
** General insurance business only.
Canada
Aviva Canada is the second-largest general insurer in Canada, with
a 9% market share and is the leading insurer in Ontario, Canada’s
largest general insurance market. Supported by 3,200 employees,
in 40 locations and by more than 3,000 independent broker
partners, we provide innovative home, motor and business
insurance, and a healthcare claims service to over three million
personal and commercial customers.
Our business in Canada continues to meet the needs of
customers through innovative, market-leading products and
services. Where required, the “ Premiere Healthcare” claims service
provides quality medical services for customers delivered through
anetwork of preferred healthcare providers and this service is also
an effective method of managing the cost of claims. We are also
continuing the expansion of Autograph, Canada’s first pay-as-you-
drive motor insurance product.
Our multi-channel, multi-distribution strategy is underpinned
by relationships with independent brokers, combined with a
commitment to developing corporate partnerships as well as new
schemes offered to groups and affinity partners. We continue to
develop our e-commerce portal capability, with online quotation
and automated workflow tools, and are focused on making it
easier for customers and brokers to do business with us.
Weare increasing levels of customer and broker satisfaction by
leveraging our scale and creating greater efficiencies through investment
in claims supply-chain initiatives and in technology platforms.
Our operating profit was stable at £148 million (2005: £147 million)
and our COR was 98% (2005: 97%).Our results benefited by
£11 million from lower than average weather-related claims.
However, this benefit has been offset by lower premium rates on
commercial lines and flat rates on personal lines, driven by
legislative rate changes. Additionally, rising claims inflation has
caused a deterioration in the claims ratio. Although the number of
policies written increased in 2006, small decreases in premium rates
and high retention levels, which have resulted from customers’
lower propensity to switch insurer, have led to net written
premiums remaining stable on a local currency basis at
£1,389 million (2005: £1,324 million).
We expect 2007 to be another competitive year and we expect that
rates will fall slightly. Retention levels are high in the market given
stable insurance rates and this is leading to consolidation in the
broker channel driven by insurers seeking to buy distribution.
During 2006, we have invested in two market-leading group
brokers in Quebec, consolidating our position in this key market.
The focus for 2007 is to increase our long-term value by
broadening our distribution with innovative products, maintaining
underwriting discipline and writing only profitable business.
Other
Our other international operations are a health insurance business
in Asia, a captive reinsurer in Bermuda and a market-leading
general insurer in Sri Lanka, which was acquired in February 2006.
The operating profit from our other general insurance and health
businesses was £40 million (2005: £40 million).
M orley and rest of the w orld – Fund management
Operating profit IFRS basis Operating profit EEV basis
12 months 12 months 12 months 12 months
2006 2005 2006 2005
£m £m £m £m
Morley 76 49 44 26
Rest of the w orld 12 712 7
M orley and rest
of the w orld 88 56 56 33
Our fund management businesses are a key element of the group’s
strength and balance. They manage the assets of our internal funds
and provide fund management services to financial services
companies, external pension funds, public sector organisations and
specialist distributors of retail financial products. It is important for
our customers that we are able to offer funds that are directly
invested for the customer in addition to more traditional insurance
products, and that we are able to offer a diverse range of funds
that meet our customers’ individual preferences.
Overleaf, we discuss the results of our largest fund management
business, Morley, and our international operations. We have other
significant fund management businesses that are reported in the
UK and Europe business reviews on pages 31 and 41 respectively.