Aviva 2001 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2001 Aviva annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

Long-term savings On an annual premium equivalent basis
(the sum of new regular premiums and one tenth of new single
premiums) new business has increased by 12% in 2001 to
£2,475 million. This includes substantial contributions from our
expanding European bancassurance operations in Spain and Italy
together with considerable organic growth in our other businesses.
The life and pensions products contributed £2,319 million, a growth
of some 20% over last year, while investment business declined to
£156 million (2000: £267 million) reflecting reduced consumer
appetite for equity-related products.
The UK Life new business has been influenced by our very strong
position in the emerging stakeholder pension market, where we have
achieved first position in the influential IFA market since the products
were launched in April.The alliance with The Royal Bank of Scotland
Group plc has provided £228 million of single premium sales for the
first time this year.
The decline in equity-related business contributed to a sales
slowdown in Ireland and the Netherlands, the latter seeing
investment production fall from £1,025 million last year to
£85 million in 2001.
Long-term savings: new business contribution1
2001 20002
Year ended 31 December £m £m
UK 327 280
France 79 57
Ireland 29 19
Italy 28 20
Netherlands (including
Belgium and Luxembourg) 38 9
Poland 11 39
Spain 63 22
Other Europe –2
International 16 6
Total 591 454
1. Excludes retail investment sales and is stated before the effect of solvency margin.
2. Stated using 2001 assumptions.
New business contribution was up 30%, at £591 million for the year
with strong growth in all of our major businesses.
In the UK, in spite of a particularly competitive market, an increasing
proportion of which comprises products with a 1% charging
structure, we have been able to increase our new business
contribution as a result of excellent sales growth.
The group’s operating profit before tax from continuing operations,
including life achieved profit, increased to £2,004 million
(2000: £1,407 million).On a modified statutory basis operating
profit before tax from continuing operations was £1,533 million
(2000: £1,028 million).
The increase in operating profit was driven by returns on our
expanding European life operations and improved underwriting
performance from the general insurance business together with lower
weather-related claims in 2001.The fund management operations
suffered from reduced fee income, especially in the third quarter, as
equity markets fell significantly, and as we have continued to invest
in growing our retail operations.
During the year we have completed the sale of our US general
insurance operation, and announced our intention to dispose CGU
Courtage, the broker-based French general insurance operation, while
expanding significantly in Spain, Italy, Singapore and other
overseas life markets. This represents a significant focus on our
core operations, and places us in a strong position for 2002.
Financial highlights
2001 2000
Year ended 31 December £m £m
Profit/(loss) before tax:
– achieved profit basis (546) (1,312)
– modified statutory basis 514 (1,406)
Earnings per share based on
profit/(loss) for the financial year:
– achieved profit basis (33.1)p (73.8)p
– modified statutory basis 0.7p (77.0)p
Dividends per share 38.0p 38.0p
Profit before tax on a modified statutory basis of £514 million was
depressed by a £1 billion shortfall in the actual investment return
compared to the group’s longer-term assumptions.This reflects
unrealised losses on equities held by the group’s non-life operations,
particularly in the UK and Europe where the major markets fell
between 16% and 22%.
On an achieved profit basis, the loss before tax of £546 million
includes a further investment return shortfall of £1.6 billion, reflecting
the impact of these market falls on the group’s life embedded value.
Over £1 billion of this shortfall arose in the UK.
The 2000 results were severely depressed by the cost of withdrawal
from our London Market and US general insurance operations.
The taxation charge of £102 million (2000: £263 million) on an
achieved profit basis, includes £631 million (2000: £437 million) in
respect of operating profit from continuing operations, equivalent to
an effective rate of 31.5% (2000: 31.1%).
25 CGNU plc