Aviva 2006 Annual Report Download - page 50

Aviva plc
Annual Report and Accounts 2006 46
International and Morley continued
USA
Aviva’s presence in the United States market increased four-fold*
with the completion of the acquisition of AmerUs on
15 November 2006. AmerUs ranks in the top three in the fixed-
indexed segment of the annuity markets and is number one in the
indexed life segment, reflecting our strong customer focus and
pioneering product development. We are currently integrating the
operations of AmerUs with our long established operations based
in Boston and generating economies of scale. We plan to grow the
combined business by leveraging the knowledge, relationships,
products and expertise of both constituent companies.
Our life EEV operating return increased to £32 million (2005:
£25 million) including £22 million from AmerUs, which mainly
represented contribution from new business and expected return
on opening embedded value. In our operations based in Boston,
the operating profit was lower at £10 million affected by some
one-off negative lapse variances and operating assumption
changes. 2006 full year pro forma new business contribution and
life EEV operating return for AmerUs amounted to £94 million
and £205 million, respectively.
Total new business amounted to £884 million (2005: £527 million)
of which £324 million was generated by AmerUs in the six weeks
following acquisition. Sales in our operations based in Boston
increased by 7% as a result of strong growth of structured
settlement products following the A.M. Best rating upgrade to A+
in November 2005. Full year sales by the AmerUs business were
£2,261 million (2005: £1,882 million) including £330 million of
funding agreement sales (2005: £38 million).Excluding the impact
of funding agreements, which areirregular by nature, sales of the
underlying life and annuity products showed strong quarter on
quarter growth throughout 2006, with the final quarter recording
the best ever sales performance.
The medium-term outlook for this market is strong. The US is
expected to be the main source of world savings growth in the
next 15 years as the “ baby boomer” generation of over 70 million
people approach and enter retirement. The products of AmerUs,
in particular,aretailored to appeal to this market. In the short term
there is some disruption to the market, caused by high short-term
bond yields and uncertainty regarding the future regulation of fixed-
indexed annuities. Wedo not expect that these factors will diminish
the medium- and long-term growth potential.
Russia
Aviva Russia was granted its licence in March 2006 and trading has
commenced in corporate sales on a limited scale. Our strategy is to
position the business to take advantage of the rapid growth
expected to occur as the life insurance industry develops. We aim to
achieve at least a top-five market position and a 10% shareof the
life insurance market within five years.
Business review continued
iAustralia: Navigator
helps UK pensions move
down under
Navigator, our online fund administration system, has
improved the process involved in UK pension transfers.
Now, Australian residents w ith money in UK pension
schemes can transfer their funds quicker and
more easily.
Navigator is one of the first providers internationally
to register w ith UK regulators as a qualifying regulated
overseas pension scheme, which allows UK pension
plan members to transfer benefits overseas.
As a leading Australian retirement solutions provider
and the UK’stop insurer,we have many customers
who will benefit from this new development, including
many of the Australians who have worked in the UK,
either beforemigrating or w hen visiting.
We are one of the first businesses in the world to offer
this flexibility to our customers.
UFor more information on Navigator visit
www.navigator.com.au
*Measured in terms of proforma PVNBP.
Rest of the World – General insurance
and health premium and profit
2004 2005 2006
Net written premium (£m)
Operating profit (£m)
1,600
1,200
800
600
400
200
0
200
160
120
80
40
0
1,000
1,400
Net written premium
Operating profit