Aviva 2007 Annual Report Download - page 8
Download and view the complete annual report
Please find page 8 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.Aviva plc
Annual Report and
Accounts 2007
4
Overview
Chairman’s statement
Dear Shareholder,
It has been a busy year for Aviva. I am
pleased to report that the group has
performed well and made great progress in
pursuit of our ambition to provide prosperity
and peace of mind for our customers.
Our new group chief executive,
Andrew Moss, leads a management team
based on a global structure of four regions –
the UK, Europe, North America and Asia
Pacific. We have refocused our strategic
vision as “one Aviva, twice the value”.
This expresses our commitment to embark
upon the next stage of our development
from an international group into a truly
integrated, global business. We aim to
derive the maximum benefit from all
parts of the group by sharing our resources
and expertise widely and by operating
as a single organisation.
At the same time, we achieved a robust
set of results for 2007 while dealing with
the floods in the UK. We have completed
the integration of AmerUs in the United
States and Ark Life in Ireland, and undertaken
a cost and efficiency review in the UK.
We have also set new cost saving
targets for our UK and European businesses
totalling £350 million. Our number one
priority is to manage our existing assets
effectively and efficiently, while continuing
to invest for growth.
External view
The economic picture during the last months of 2007 was
extremely volatile. Losses on sub-prime lending in the US
sparked a crisis in financial markets and share prices fell
as investors lost confidence. Although major central banks
have cut interest rates, an economic slowdown during
the first half of 2008 seems likely before the markets
begin to recover. We are also operating in an increasingly
difficult general insurance environment, with substantial
weather-related losses caused by floods in the UK,
and markets generally hardening.
However, many countries around the world are
becoming richer. People are living longer, in better health,
and are becoming wealthier. They want to put aside
money for their future, and will look for a trustworthy
provider such as Aviva. In addition, as people become
better off, they become more conscious of protecting
what they have. They want to insure their motor cars
and their homes and their property. Again, that creates
business for Aviva.
There are still significant long-term growth opportunities
in the mature markets of the UK, Europe and the
United States, but there are other big markets emerging.
Not just in Asia, but also in central and eastern Europe.
That, I think, is a very exciting prospect. It will be good
for the insurance industry generally, but for Aviva in
particular, because I think we understand better than
most the nature of these tremendous opportunities and
how to take advantage of them.
Dividend
I am pleased to announce that our recommended final
ordinary dividend is 21.10 pence per share, bringing the
total dividend for the year to 33.00 pence, an increase of
10% against last year (2006: 30.00 pence). This increase
reflects our intention to increase the dividend on a
progressive basis, while retaining capital to support
future business growth. As a guide, we use dividend
cover in the 1.5 to 2.0 times range, based on IFRS
operating earnings after tax.
Board developments
Richard Harvey stepped down as group chief executive
in July. I wish him all the best for his retirement and
extend the thanks of everyone at Aviva for the substantial
part he played in the success of the group over the
past 15 years. The board is delighted that Andrew Moss
has succeeded Richard, having made an impressive
contribution since joining the company as group finance
director in 2004. We are equally pleased that Philip Scott
has brought his considerable experience to the role of
group finance director.
We welcomed Nikesh Arora to the board as an
independent non-executive director in July. Nikesh is
president of Europe, Middle East and Africa operations
at Google, with responsibility for the company’s business
in more than 25 countries. He brings great experience
in managing international businesses, combined with
cutting-edge understanding of technology, innovation
and marketing.
Scott Wheway was appointed to the board as a
new independent non-executive director with effect from
5 December 2007. Scott was most recently managing
director of Boots the Chemist at Alliance Boots and
prior to that he was CEO of Tesco in Japan where
he established the business and shaped the long-term
strategy for the country. I’m delighted that Scott is
joining us. He brings a wealth of retail experience to
Aviva, and in particular he has championed first rate
customer service, putting the customer at the heart
of the businesses he’s worked for. I am confident he
will be a real asset to the Aviva board.
During the course of the year group executive
directors Patrick Snowball and Tidjane Thiam left the
group. I would like to thank both of them for their
important contribution to our strategic thinking on the
board and most recently for their leadership of our UK
and European businesses. I would also like to pay tribute
to Richard Whitaker, who has retired after serving the
board as company secretary since 1998.