Aviva 2007 Annual Report Download - page 11
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Aviva plc
Annual Report and
Accounts 2007
7
Overview
Our customers are the reason we have a business.
Constant attention to meeting the needs of our customers
will create extra sales momentum and deliver growth.
By eliminating unnecessary complexity and drawing our
operations across the world closer together, we can share
services, cut costs, boost productivity and produce tailored
products at affordable prices for our 45 million customers
in different markets.
Regionalisation
We are becoming a truly global organisation, starting from
our historic roots as a UK-based company, developing a
major European presence and now growing in Asia Pacific
and North America. The regional structure that we have
now put in place reflects this development and gets more
of our people closer to our customers, making it easier to
offer products and services that are relevant in today’s
changing markets. For example, some 400 people are
moving out of the group centre and closer to the
businesses.
My new senior management team bring energy
and fresh thinking to Aviva, together with a great deal of
experience and expertise. They are crucial to the successful
running of our business, and I intend that they should be
both visible and accountable. You can find out more about
each of them on page 78 of this report.
Growth
Insurance is a growth business. Demographics show there
will be an increasing need for people to invest for their
future well-being, not only in mature economies but
also in developing markets. In this context, we have
set demanding growth targets for each of our regions
which are set out in the regional sections of this report.
To achieve these ambitious targets, it is important
that we continue to invest in ways to
reach new customers,
whether by direct sales, bancassurance,
independent agents
or a multi-distribution approach.
In particular, bancassurance
has proved to be a very successful
channel for us. During the
course of 2007 we signed multiple new agreements
with partners in the UK, Europe and Asia Pacific regions,
giving us access to over 50 million potential new
customers. Our relationship management and partnering
expertise remains a core competence of Aviva.
Efficiency
Alongside our growth targets, we have also announced
new cost savings initiatives. These aim to save £350 million
by 2009 from our UK and mature European businesses.
During 2007 we successfully achieved the UK cost and
efficiency targets we set in 2006, realising annualised
savings of £250 million. We have now also realised the
integration savings announced when we acquired AmerUs
towards the end of 2006.
Financial results
On an EEV basis, our pre-tax operating profit of
£3,286 million (2006 restated: £3,251 million) reflects
the strength of our diversified business model. Return on
equity shareholders’ funds was 11.3% (2006: 13.1%).
Earnings per share (based on IFRS total return) was
49.2 pence (2006: 87.5 pence) mainly reflecting the impact
of adverse weather and market conditions in 2007.
On an IFRS basis, the group delivered an overall profit
before tax attributable to shareholders of £1,842 million
(2006: £2,977 million).
People
We have 57,000 people employed around the world,
and it is vital that they all understand the part they have
to play in attaining our objectives. Our new structure
encourages a greater sense of teamwork, and provides
more clarity about how our people contribute towards
our overall goals. I am very grateful for the support and
commitment of all our employees. During periods of
uncertainty and challenge they have continued to work
with great professionalism and dedication to achieve the
best possible results for our customers and shareholders.
Based on feedback from our global staff opinion
surveys, we are actively managing our talent across the
group to provide more opportunities for people to develop.
If we succeed in our aims and ambitions over the next few
years, this will be a company that grows – and growing
companies are exciting places to work, with interesting
jobs and fantastic career opportunities for staff.
Outlook
The UK remains the largest of our businesses. It is
responsible for 42% of our sales and is the bedrock
of the group’s success. We intend to maintain
a market leadership position in the UK in both our
long-term savings and general insurance businesses.
Europe continues to be a big success story. We are the
number one writer of life and pensions business across
Europe (including the UK), based on multi-distribution
channels in the larger, more developed, markets, and
through successful partnering with banks, notably in
Spain, Italy and our new market-leading agreement
with Akbank in Turkey. Growth prospects across Europe
remain excellent.
In North America, our presence took a step change
when we bought AmerUs in 2006. Overnight we went
from a business on the margin of the US market to
one that was five times bigger and right at the heart
of an important part of the savings sector. With the
baby-boomer generation heading for retirement,
we see exciting further potential.
Our presence in Asia Pacific is growing fast, and we
want it to be even bigger. We have good businesses in
Singapore, Hong Kong and Australia, and have made
a great start with joint venture partnerships in India and
China. We have now entered new markets in Malaysia
and Taiwan, and recently announced our entry into the
South Korean market.
“One Aviva, twice the value” signals our plan to
increase growth and improve efficiency. I am delighted
to be leading Aviva at such an important stage of its
development, and am confident that we have created
an excellent platform for future success.
Andrew Moss
Group chief executive