Aviva 2009 Annual Report Download - page 15

13
Performance review
Aviva plc Aviva UK continued
Annual Report and Accounts 2009
Long-term and savings operating profit £m
MCEV* IFRS
09
672
787
08
751
883
07 822
723
06 744
629
05 589
327
* On an MCEV basis from 2007. Prior years presented on an EEV basis.
UK general insurance business
Market environment
2009 has been a challenging year, with strong competition and
the recession impacting all lines of business. More customers
are searching for cheaper deals, while fewer are making
discretionary purchases such as breakdown cover. A significant
fall in creditor volumes, resulting from lower lending, was
compounded by a sharp rise in creditor claims. Fewer start-ups,
more business failures and reduced exposures have resulted in
shrinking commercial markets. However, there have been some
recent encouraging signs that more realistic pricing is emerging
in the market, particularly in personal motor.
Performance
The UK general insurance operation has significantly improved
the profitability of business written in 2009. By simplifying the
business, reducing costs, achieving scale benefits and taking a
disciplined approach to underwriting and distribution, we have
created a platform for future growth.
Progress on our transformation programme remains ahead
of plan, with all business now being undertaken in our new
‘centres of excellence’. We are on track to deliver annualised
savings of more than our £150 million target from this phase by
2010, in addition to savings of £200 million already delivered.
We have refocused our brands to offer our customers the
best price when they buy direct from Aviva supported by our
‘Get the Aviva Deal’ marketing campaign, complemented by
the RAC panel which is available on all major online price
comparison sites and supported by 17 insurers. The impact has
been extremely positive: we sold more direct personal motor
policies in the fourth quarter than in the same period in the
previous three years and the RAC panel had gained a share of
around 3.5% of new business in the UK personal motor market
by the end of 2009.
Overall business volumes have fallen reflecting the action
we have taken to exit unprofitable business and the challenging
market conditions. We continue to support independent brokers
through a range of initiatives including customised networks
(such as the Broker Independence Group and Club 110) as well
as providing easy and fast access to our best prices. In addition,
we were delighted to renew the Barclays homeowner account.
Outlook
In the general insurance market, quality of earnings remains our
priority and we aim to increase profitability through enhanced
risk selection and tightly controlling our costs. Whilst there are
some encouraging signs in personal motor, we continue to see
intense competition in many segments of the market and we
await the significant shift in attitude that the market requires.
Corporate responsibility
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
This is particularly true in the case of Commercial lines and there
is little evidence that the market is hardening significantly.
RAC insurance
RAC continues from strength to strength as a leading UK service
brand, coming fifth in the Institute of Customer Service’s 2009
survey, comparable with John Lewis, Waitrose and M&S. In its
core breakdown category it won the JD Power survey for an
unprecedented fourth consecutive year. The service culture is
not just delivered by our patrol staff either: RAC’s membership
call centre entered the Times Top 50 UK call centres at 14th.
In January 2009 we launched our car insurance panel under
the iconic RAC brand to complement our existing direct offering
from Aviva. This ensures that almost every customer that calls us
can be provided cover at competitive prices. The panel is on all
the major online price comparison sites and it is writing growing
volumes of business through this channel of distribution.
General insurance and health net written premiums £m
09 4,298
08 5,413
07 5,897
06 6,000
05 6,127
General insurance and health IFRS operating profit £m
COR
1,200 108
960 104
100
720
96
480
92
240
0 88
%
05 06 07 08 09
Performance review