Aviva 2013 Annual Report Download - page 267

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Aviva plc
Annual report and accounts 2013
265
Information on the Company continued
assurance, mortgage life insurance, flexible whole life and
critical illness cover.
 Bonds and savings – are accumulation products with single
or regular premiums and unit-linked or guaranteed
investment returns. Our product ranges include single
premium investment bonds, regular premium savings plans,
mortgage endowment products and funding agreements.
 Investment sales – comprise retail sales of mutual fund type
products such as unit trusts, individual savings accounts
(ISAs) and open ended investment companies (OEICs).
 Other – includes equity release.
Some of our insurance and investment contracts contain a
discretionary participation feature, which is a contractual right
to receive additional benefits as a supplement to guaranteed
benefits. These are referred to as participating contracts.
General insurance and health insurance
General insurance and health insurance accounted for 26%
of our total worldwide sales for the year ended 31 December
2013. In the year ended 31 December 2013, we reported
general and health insurance net written premiums of
£8.7 billion.
Market position
We are a leading general insurer in the United Kingdom and
Canada and also have general insurance operations in France,
Italy, Ireland, Poland and Turkey. We sell health products in the
UK, Ireland, France, Singapore and Indonesia. In the year ended
31 December 2013, 50% of our total general insurance and
health new business from continuing operations was written in
the UK.
Brands and products
Our general insurance business operates under the Aviva brand
globally and concentrates on the following products:
 Personal lines – motor, household, travel and creditor;
 Commercial lines – fleet, liability and commercial property
insurance;
 Health insurance – private health insurance, income
protection and personal accident insurance, as well as a
range of corporate healthcare products; and
 Corporate and specialty risks – products for large clients or
where the risk is specialised.
Distribution
Customers can buy our products through a range of distribution
channels, including:
 Direct – In many of our markets, customers can buy our
products over the telephone or via the internet. This method
of distribution is most commonly available for simple, low
cost products which do not require advice.
 Direct sales force – In some of our European and Asian
markets we operate direct sales forces that only sell Aviva’s
products and the sales forces receive commission on the
products they sell.
 Intermediaries – We offer a range of long-term insurance,
savings, retirement, general insurance and health insurance
products which can be bought through an intermediary,
such as an independent financial adviser or an insurance
broker. Intermediaries receive a commission on sales of
Aviva’s products.
 Corporate partnerships, bancassurance and joint ventures –
Aviva is a corporate partner for many organisations,
including banks and other financial institutions, who wish to
offer their customers insurance products. We have various
distribution agreements with bancassurance partners and
joint ventures across the markets in which we operate. In
return for offering our products to their customers, the bank
or joint venture partners receive a commission as a
percentage of sales and in some cases achieve extra
commission if agreed target levels of sales are met. Certain
agreements have a profit sharing element based on a
predetermined percentage. In some cases, if the agreed
targets are not met, certain terms of the contract can be
renegotiated. Under the joint venture agreements, the cost
of running the venture are often split between the partners.
Further details of the distribution channels specific to each
market are included in the following market analysis.
Fund management
Aviva Investors, our fund management business, provides fund
management services to Aviva’s long-term insurance and
savings and general insurance operations as well as to third-
party investors. The main fund management operations are in
the UK, North America, Europe and Asia Pacific. All sales of
retail fund management products are included in our long-term
insurance and savings business sales.
In October 2013 we completed the sale of the internal asset
management operations of Aviva Investors North America, as
part of the sale of our United States life business.
Market position
Aviva Investors was ranked 40th globally by assets under
management, according to the Towers Watson World 500
largest asset managers study 2012 ranking of asset managers by
assets under management. Total worldwide funds managed by
Aviva Investors at 31 December 2013 was £241 billion. The
substantial majority of this relates to Aviva’s insurance and
savings operations.
Brands and products
Aviva Investors operates under a single brand across our
markets. Our business invests in most significant asset classes on
behalf of institutional, pension fund and retail clients. In the US,
Aviva Investors also own an asset management company called
River Road Asset Management LLC.
UK & Ireland life
Business overview and strategy
The UK and Irish businesses are managed under a single
management structure and work is progressing to leverage the
scale and expertise that we believe exists in the UK to benefit
the Irish business.
The UK business is a leading long-term insurance and
savings provider with an overall market share of 8%, based on
annual premium equivalent (APE) data3 as at 30 September
2013. The Irish business is a large life and pension provider
in Ireland.
Our strategy in the UK is to continue to improve cash
generation and deliver profitable growth. We will exploit what
we believe is our market leading expertise in risk products to
build leading positions in annuities, equity release, life
protection and private medical insurance. In addition, we are
managing our savings back book for value with selective new
savings business sales where financial returns achieve a return in
excess of Group targets, overall and at a product level.
Our Irish long-term business is now focused primarily on
distribution through intermediaries, following the disposal of its
bancassurance joint venture, Ark Life Assurance Company
Limited, to Allied Irish Bank (AIB) on 8 March 2013.
Market and competition
The UK industry has entered a period of significant regulatory
change with the Retail Distribution Review (RDR) and Auto-
Enrolment transforming the way that long-term savings
products are bought and sold. The UK long-term savings market
is highly competitive and we consider our main competitors to
3 ABI Stats Q3 2013.