Aviva 2006 Annual Report Download - page 42

Aviva plc
Annual Report and Accounts 2006 38
Europe continued
Spain
Aviva Spain operates in the long-term saving, pension and
protection markets through a multi-distribution platform.
We are the second-largest life insurer with an 8% market
share at December 2006. Our distribution is dominated by five
bancassurance partnerships with Bancaja, Caja España, Caixa
Galicia, Unicaja and Caja de Granada. The majority of our products
are marketed through the brands of our bancassurance partners.
We use the Aviva brand in relation to our Aviva Vida y Pensiones
(AVP) business, which distributes products through an agency-based
network.
In January 2006, it was announced that there would be changes in
the effective tax rates relating to insurance savings and investment
policies on surrender or maturity. The detailed legislation remains
under discussion by the Spanish Congress but has already
introduced a new savings product, the Systematic Individual
Savings Plan (PIAS), in 2007. PIAS savings products have valuable
tax benefits if monies invested in the product are used to purchase
an annuity after ten years.
Business review continued
iAviva Spain won 1st
prize for their pension
plan Plusfondo Renta Fija
In Spain we won a top prize in the Expansión-Standard
&Poor’s Pension Plan Awards. Our Plusfondo Renta Fija
pension plan came first in the “ eurozone fixed income
over three years” category. The award measures
the profitability of funds versus the risk involved,
allowing customers to identify,with greater ease,
the funds, pension plans and agencies that offer more
stable profitability.
UFor more information on Aviva Spain please visit
www.aviva.es
During 2006, our protection sales have increased, buoyed by the
strong housing market, while sales of savings products were
adversely affected by uncertainty surrounding the details of tax
changes noted above. We have developed our PIAS savings
products that we launched at the start of 2007, which take
advantage of the more favourable tax regime. We continue to seek
opportunities to expand our distribution reach in Spain while
continuing to work with our existing bancassurance partners to
improve penetration of the customer base.
Our EEV operating return of £221 million (2005: £214 million)
reflected a higher contribution from new business. We achieved
underlying sales growth, excluding one-off sales, of 4% to
£2,059 million (2005: £2,013 million),benefiting from
concentrating on higher-margin protection and pension products.
This focus has also seen an increase in our new business
contribution to £184 million (2005: £175 million) and the
new business margin to 8.9% (2005: 8.7%).
Other Europe
Our other European operations consist of our top-five businesses
in Turkey, Hungary and Romania and our operation, ranked 13th,
in the Czech Republic.
In Turkey,our main products are unit-linked pension plans
supplemented by life, saving and protection policies, predominantly
sold through our direct sales force. We continue to develop our
direct sales force, exploiting pension opportunities as the market
continues to grow rapidly,while exploring options to expand our
distribution network.
In the Czech Republic, Hungary and Romania, we areseeking to
achieve growth with unit-linked and other saving products focused
on high net worth individuals. Programmes are underway to grow
the direct sales force and to improve further performance. We aim
to enhance our product range while developing further our
alternative distribution channels particularly bancassurance and
brokers. In Romania, we see the launch of new voluntary pension
scheme products in 2007 as a growth opportunity for the business.
Strong underlying life and pension sales growth of 60% (excluding
2005 sales in Portugal) was achieved in our other European
operations. Growth was principally generated by an increase in
sales through the broker channel in Hungary, which benefited
from high levels of new business, ahead of tax regime changes on
1September 2006. Despite these tax changes, sales continued to
be strong in the final quarter of 2006. In Turkey, we achieved higher
sales of regular premium pensions business, boosted by an increase
in the number of sales advisers and productivity in the final quarter
of 2006. The business also benefited from increased transfers from
existing life policies ahead of an October 2006 regulatory deadline.
Wegenerated a life EEV operating loss of £13 million (2005:
£6 million loss, including £3 million profit from Portugal) through
our other European operations. Total life and pension sales were
£308 million (2005: £240 million, including £45 million of sales
from our Portuguese business, which was sold in 2005).