Aviva 2007 Annual Report Download - page 53
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Annual Report and
Accounts 2007
49
Business
review
%
Total life and pensions sales (PVNBP)
1
3
4
2
1 Australia 31
2 Hong Kong 25
3 Singapore 20
4 Other 24
Total 100
%
Total EEV operating profit
1
3
4
2
1 Australia 64
2 Hong Kong 17
3 Singapore 17
4 Other 2
Total 100
Regional goals and objectives
We have continued to make great progress towards our
ambition of establishing Aviva as a leading international
player in the Asia Pacific region. We plan to grow the
business by at least 20% per year to 2010, aiming to
make Aviva Asia Pacific a more significant part of the
Aviva group.
During 2007 we added two new businesses to our
Asia Pacific footprint, Taiwan and Malaysia. In January
2008, we formed a partnership with Woori Finance
Holdings Company Ltd to enter the South Korean life
insurance market by acquiring a stake in LIG Insurance
Co Ltd which is expected to take place in the first half
of 2008 subject to regulatory approval.
We now have operations in nine markets.
Our businesses are all at different stages of development
and in tandem with the economic outlook for Asia,
which predicts growth rates of between 4.1% in Taiwan
to 8.6% in China for the next five years, our outlook is
very positive. We currently have the opportunity to actively
grow our existing businesses in the region, in particular
in the high growth markets of India and China and at the
same time, we are assessing the potential of other markets
in the region. In order to grow efficiently, we are also
focusing on maximising the use of shared services and
knowledge across the region.
Strategic developments
Aviva has a strong agenda for growth in the region,
aiming to build scale and expand into new markets.
A strong regional office, based in Singapore, has been
established to act as a hub of expertise and to provide
support to the region. The regional operating model will
provide cost savings and synergies as well as facilitate
the sharing of product expertise and transfer of ideas
between markets.
We operate a multi-distribution strategy, with
particular strength in bancassurance, and aim to continue
to harness the benefits of multi-distribution in all of our
markets. Initiatives to achieve this will see the growth
of channels beyond the dominant agency sales force,
which we expect to decline in the region over coming
years due to increased deregulation.
Our brand in Asia Pacific
Building our brand has become more important than ever
with commoditised products and increased competition.
In 2007, our customer advocacy scores across most of
our markets improved, meeting key performance targets.
Our focus to build brand awareness made further progress
as the operations in Singapore, Australia, Hong Kong
and India launched a shared brand campaign utilising
a common consumer theme, raising prompted brand
awareness scores across each of these markets.
Business results
Aviva Asia Pacific continues to achieve a strong rate
of growth with total new business sales 60% higher
at £4,089 million (2006: £2,546 million) driven primarily
by strong Navigator sales across the region.
In Australia, total sales grew by 46% to £2,400 million
(2006: £1,600 million) following strategic investment in
key independent financial adviser groups and favourable
changes to superannuation legislation. Within this total,
life and pension sales increased 44% to £439 million
(2006: £297 million) reflecting growth in protection
business and a strongly performing retail investment sector.
Sales for the rest of Asia Pacific of £1,689 million
(2006: £946 million) continued to grow as a result
of our expanding distribution and broadening
geographical presence.
Life and pension sales were up 51% to £990 million
(2006: £685 million). In Singapore, sales grew through
our strong relationships with key brokers and those in
Hong Kong through the continued good performance of
our partnership with the banking group DBS. In China we
have increased our presence in the country to eight provinces
and are now ranked second among foreign insurers
and in India, sales have increased through bancassurance
partnerships, ongoing expansion of the direct sales
force and the addition of new branches in the year.
Our performance to date demonstrates the
effectiveness of multi-channel distribution. Leveraging
this core capability in 2007, we have established a
further two new joint ventures in Malaysia and Taiwan,
giving Aviva access to nine million potential new
customers across these markets.
Life EEV operating profit for the region increased
by
6% to £91 million (2006: £86 million), with an
improvement in new business contribution to £62 million
(2006: £43 million)
reflecting the strong sales performance
in the year. New business margin remained strong
at 4.3% (2006: 4.4%). Operating profit in fund
management was £15 million (2006: £9 million) mainly
due to higher funds under administration following the
Navigator sales performance.