Aviva 2002 Annual Report Download - page 24

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Long-term savings continued
10 Aviva plc
Annual report + accounts 2002
France
Aviva France is the group’s second-largest long-term savings
business. We have a top-10 market position and are ranked
among the top five traditional insurers, with some 1.5 million
customers.
We have a broad product offering, focused on individual savings,
protection and unit-linked products. These are sold through a
mixture of distribution channels, including tied agents, brokers, a
salaried sales force, direct operations and an agreement with the
AFER savings association. AFER is the largest retirement savings
organisation in France, with around 560,000 members.
During the year we reached important agreements that extend our
distribution and create significant customer opportunities. We are
setting up a joint venture with Médéric, a provident institution, to
sell life products to Médéric’s client base of 75,000 companies,
representing one million people. This new partnership will start in
the second quarter of 2003. We have also formed a bancassurance
partnership which will make Aviva the sole partner of Crédit du
Nord, a federation of eight regional banks and a subsidiary of
Société Générale, for all new life business sold from November
2004. We regard this agreement, which will give us access to
1.3 million customers through more than 600 branches, as a
unique opportunity, making us the only life insurer present in all
distribution channels in France.
During 2002, sales of unit-linked and other savings products were
lower at £699 million (2001: £892 million). This was in a unit-
linked market that fell by an estimated 32%. Sales of single
premium fixed interest AFER products were £983 million
(2001: £930 million). Operating profit was £228 million
(2001: £227 million).
Looking forward, pressure is increasing to reform the pensions and
healthcare system in France. We are well placed to benefit from
such changes. We shall continue to develop the business through
our increased range of distribution channels and key partnerships.
A key priority for us is improving our customer service.
We recognise that, despite our efforts over the past year, our
service has not always been of the required standard. We are
determined to improve our service levels over the coming year and,
for example, an upgrade of our call centre telephone systems has
already been completed. We were pleased to win provider of the
year awards from each of the two largest IFA networks, Misys and
Bankhall, which shows the strength of our total proposition.
During the year a number of industry regulatory reports were
published, including the Sandler and Pickering reviews, the
Financial Services Authority’s report on with-profit business, and a
Government Green Paper on pensions. We broadly support the
core proposals to improve consumer awareness of the need to
save, create a range of simplified products and wider access to
advice, remove overlapping regulation and provide greater
understanding of with-profit products. Such initiatives should help
to increase demand in the UK long-term savings market and favour
providers such as ourselves with scale, multi-distribution expertise
and strong product offerings. But it is important to assess how we
could operate profitably under these principles. We have publicly
stated that we will not sell products that are not commercially
viable for us.
Our business remains fundamentally strong. Despite the current
financial uncertainty and pressures in the market, people still need
to save for the future. There is an estimated £27 billion annual
shortfall in the UK between actual savings and the amount
individuals should be putting aside for a comfortable retirement.
As a major provider in the UK market we would expect to play
a key role in developing the products and services that will
narrow this gap, provided the returns available to shareholders
are attractive.