Aviva 2007 Annual Report Download - page 43
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Please find page 43 of the 2007 Aviva annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.This year we have increased the productivity and size of
our direct sales force, while continuing to develop other
distribution channels. We recently announced the creation
of a joint venture with Bank Zachodni WBK (a subsidiary
of Allied Irish Banks) to sell both life and general insurance
products through the bank’s network of 400 branches.
This will significantly enhance our distribution network,
providing access to 1.4 million customers.
A new flagship life insurance product “Nowa
Perspektywa” was launched during the final quarter,
offering individual unit-linked life insurance. This has
been designed to offer a modern product that combines
protection with investment and the flexibility to vary the
contract as life circumstances change.
Our life EEV operating return grew strongly to
£206 million (2006: £162 million) with favourable lapse
and mortality experience boosting profitability of the
in-force book. Our life and pension sales grew by 53%
to £844 million (2006: £534 million) with both life
and pensions business showing strong performances.
New business contribution was £35 million (2006:
£28 million), with a margin of 4.1% (2006: 5.2%).
The outlook for 2008 remains promising, despite
more unstable market conditions, and we expect
continued profitable growth. Through our product
initiatives and the development of distribution channel
capabilities we are very well positioned in this rapidly
growing market.
General insurance
Our general insurance business in Poland continues
to develop. Late in 2007 we launched a direct motor
insurance product to provide further potential for growth
in this dynamic market. IFRS operating profit is reported
within Other Europe.
Spain
Aviva Spain is the country’s third-largest life insurer,
with a market share of 9.5%. The life insurance market
is dominated by bancassurance distribution and Aviva
has partnerships with Bancaja, Caja España, Caixa Galicia,
Unicaja, Caja de Granada and, more recently, Cajamurcia.
We also distribute through an agency based network via
Aviva Vida y Pensiones (AVP).
In June 2007 we announced a new joint venture
with the Spanish savings bank Caja de Ahorros de Murcia
(Cajamurcia) to form a joint venture life company. The new
life company will distribute life and pensions products via
Cajamurcia’s network of 413 branches.
Earlier in the year we successfully launched a new
savings product (PIAS), which is optimised to the new
tax environment and in which Aviva Spain is the market
leader. Sales of savings products, including PIAS,
were very strong, and offset lower sales of mortgage
linked protection business, which were affected by the
slow down in the Spanish housing market. Pension sales
were boosted by the efficient transfer late in the year
of a portfolio of pension policies into the new joint
venture with Cajamurcia.
Life EEV operating return increased to £239 million
(2006: £221 million) reflecting overall growth in new
business together with good returns on the in-force book
of business. Total sales continued to show strong growth,
up 15% to £2,392 million (2006: £2,059 million).
Increased sales of savings products which offset the
decline in protection products, led to an overall increase
in new business contribution to £189 million (2006:
£184 million) with a new business margin of 7.9%
(2006: 8.9%).
The outlook for 2008 is more cautious, with the
bancassurance market expected to continue to be impacted
by the slowdown in the mortgage market and the
Europe-wide credit squeeze. Long-term growth potential,
however, remains strong in the market and Aviva Spain
continues to develop its bancassurance relationships.
Other Europe
Life
Aviva’s other European businesses are in Turkey,
the Czech Republic, Hungary, Romania and Russia.
In 2007, our Turkish life and pensions business
merged with AK Emeklilik, the life and pensions company
of Sabancı Holdings, to form AvivaSA. The new company
merged on 31 October 2007 to become the largest
pensions provider in the market, with a market share
of 25%, and the third largest life insurer with a market
share of 11%. Under the merger, AvivaSA has an
exclusive long-term bancassurance agreement with
Akbank, Turkey’s second largest privately-owned bank.
In the Czech Republic and Hungary, sales through
the broker and direct sales force channel have increased
during the year. In Romania, we have established a new
company to sell newly created mandatory pensions.
In all of these markets, pension reform continues to
offer a long term potential.
Following the launch of operations in Russia during
the latter part of 2006, rapid sales growth has been
achieved in 2007, especially in corporate protection
business. Agreements with ten leading retail banks have
been signed and bancassurance sales are growing rapidly.
We generated an EEV operating loss of £5 million
(2006: £13 million loss) reflecting the developing nature
of these businesses. Total life and pensions sales increased
strongly to £418 million (2006: £308 million) with notable
contributions from Hungary, which benefited from an
increase in demand for savings products, and Turkey
where higher agent numbers generated larger case
sizes and strong sales.
General insurance
Our other European general insurance businesses
are in Italy, Poland and Turkey. Our Turkish operation
continues to progress well through geographical
expansion. IFRS operating profit for our other European
operations fell to £41 million (2006: £43 million).
Aviva plc
Annual Report and
Accounts 2007
39
Business
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