Aviva 2001 Annual Report Download - page 29

General insurance Worldwide general insurance net premium
income, from continuing operations, decreased to £8,433 million
(2000: £8,990 million) reflecting a rigorous approach to pricing and
the consequent impact on policy volumes.
In the UK we have secured average, annualised rating increases
for personal motor and homeowner of 13% and 6% respectively,
and for commercial motor and property of 18% and 11%
respectively. The total net written premium has remained broadly
stable, but the number of policies has declined as we pursue our
focused underwriting strategy.
We withdrew from a number of operations during the year, and
announced our intention to sell the CGU Courtage operation in
October 2001. We are committed to our strategy of taking a focused
approach to general insurance operations, and acquired the
Australian business of Fortis in the second half of the year.
Together with our existing Australian operations, we now have
a leading position in key motor dealer and financial institution
distribution channels.
General insurance: combined operating ratio1
2001 2000
Year ended 31 December % %
UK 102 108
France 104 133
Netherlands (including Belgium
and Luxembourg) 104 108
Other Europe 103 108
Australia and New Zealand 99 101
Canada 107 106
Other international 102 103
Group – ongoing business 102 109
1. Combined Operating Ratio (COR) – expresses the extent to which expenses
and claims cover insurance premiums. It is the sum of expenses, including
commissions, as a percentage of net written premiums, and claims as a percentage
of net earned premiums.
It was our aim to achieve a COR of 102% by the end of this year
across our businesses, and it is satisfying to see this delivered.
Improvements have been made in all segments, with particular
success in France where the ratio has fallen from 133% to 104%,
due to the absence of large storm losses in 2001.
A key medium-term objective for our general insurance business
is to deliver a COR at this level across the underwriting cycle.
Although market conditions are favourable, the achievement of
102% this year is an excellent result.
In the UK, we have sacrificed some volume to achieve the
improvement in product ratings, which are contributing significantly
to the COR as the increases earn through.The result in Canada, at
107%, was disappointing and, in line with the market, reflects claims
deterioration on the older years in the liability account.
General insurance: operating result
2001 2000
Year ended 31 December £m £m %
UK 590 296 99
France 58 (115) (150)
Ireland 48 21 129
Netherlands (including Belgium
and Luxembourg) 19 (4) (575)
Other Europe 41 20 128
Australia and New Zealand 69 82 (12)
Canada 72 78 (9)
Other international 48 34 45
Total 945 412 133
The operating profit reflects the improvement in the underwriting
performance to £224 million loss from £821 million loss, together
with the normalised investment return of £1,169 million (2000:
£1,233 million).
Normalised investment returns have declined slightly during 2001,
as a result of general insurance disposals over the last two years and
changes to the asset mix.
Asset management The CGNU asset management businesses had
a mixed year, with good performance in France tempered by falling
market values leading to depressed fund management fees.
In the UK, Morley continued to invest in the developing retail
funds business, with some £32 million spent during the year
(2000: £21 million).In spite of poor market conditions, and the sale
of Quilters, the group finished the year with over £209 billion assets
under management (2000: £220 billion).
Integration We have met our challenging objective for completing
integration by the end of 2001, and have exceeded our annualised
cost savings target of £275 million.
The group-wide annualised cost base has benefited by £317 million,
of which £225million was reflected in the results of the year.
Integration savings
General UK Fund
Life Business Management Corporate Total
Year ended 31 December £m £m £m £m £m
Annualised
– target 91 116 27 41 275
– realised 96 144 31 46 317
Included in 2001 results 76 76 28 45 225
Some of these savings are being invested in business growth, new IT
platforms, UK general insurance claim process improvements and a
global finance change programme.
27 CGNU plc