Aviva 2009 Annual Report Download - page 16

14
Aviva plc Europe
Annual Report and Accounts 2009
Building a truly pan-European
business with a broad and
diverse portfolio
We have a clear strategy to exploit the
considerable opportunities in Europe. There
is significant growth potential in the region,
in both under-penetrated Western markets and
developing markets in Eastern Europe. With our
proven ability to operate across distribution
channels, we will be able to respond favourably
to market developments as customer confidence
begins to return.
Strategy
Our strategy is to capitalise on the significant opportunities
within Europe through:
— Aviva Europe’s Quantum Leap transformation plan,
creating one market leading pan-European business
from 12 federated businesses,
— the strategic development of our 58% investment in
Delta Lloyd following the IPO in November 2009.
Our principal financial objective is long-term, sustainable,
profitable growth.
Market environment
Europe is already the largest insurance market in the world with
an affluent population of over 800 million people, generating
31% of global insurance premiums1 and accounting for over
30% of global personal financial assets2. Europe offers
significant growth opportunities in both under-penetrated
Western markets and developing markets in Eastern Europe.
As elsewhere, the slowdown in economic growth has
impacted customer behaviour in the majority of the region
with customers favouring deposit bank accounts or guaranteed
insurance products. Customer confidence is beginning to return
particularly in France, Italy and Poland where customers are
starting to re-invest in more attractive insurance products such
as unit-linked bonds.
Aviva Europe performance
Aviva Europe operates in 12 businesses across Europe (excluding
the UK) with substantial operations in France, Italy, Ireland,
Poland and Spain. We also have a presence in the developing
markets in Central and Eastern Europe of Czech Republic,
Hungary, Lithuania, Romania, Russia, Turkey and Slovakia.
As part of our strategy, we are transforming our 12 federated
businesses through our Quantum Leap programme into one
market leading pan-European business.
1. Sigma (2008) – UK is excluded.
2. Aviva/Oliver Wyman research (2007) – UK is excluded.
3. Millward Brown Lansdowne study, Q3 2009.
4. Retail refers to the sale of insurance products outside of the bancassurance chanel through
our direct sales force, IFAs, brokers or internet sales.
Since January 2010, Aviva Europe has assumed responsibility
for developing Aviva’s business interests in the Middle East,
based in the United Arab Emirates. We expect this high-
potential market to grow, benefiting from Aviva Europe’s
experience and resources.
We achieved total sales of £16,258 million during 2009,
up 8% on 2008. IFRS operating profit for the year decreased
4% to £797 million, reflecting exceptional weather losses in
France and Ireland. These results are discussed in more detail
on page 45 of this report.
We have made significant progress in our migration to a
single Aviva brand. Having operated as Hibernian Aviva in 2009,
we adopted the Aviva name in Ireland at the start of 2010 and
we will complete our brand migration programme in June 2010
when we will operate as Aviva in Poland. Recognition of the
Aviva brand continues to grow in both markets, with Ireland
recording prompted awareness rates in excess of 90%3.
Our bancassurance franchise is the largest in Europe with
50 bank agreements and our retail4 channel accesses nine
million customers through 18,000 financial advisers. With this
proven ability to operate across distribution channels, we are
able to meet different customer preferences and respond
favourably to market developments.
Our business is performing strongly in both distribution
channels. In retail, our partnership with AFER, a leading savings
association in France, continues to be extremely successful
with customer numbers growing by 5% to 712,000 in 2009.
In bancassurance, our Italian partnership with Banco Popolare
that commenced in 2008 performed strongly in highly profitable
protection products, one of our key strategic objectives.
In 2009, we developed our suite of guaranteed products which
have proved attractive particularly in France, Spain and Italy.
Being there for customers in times of need is crucial:
following flooding and storms in France during 2009, we paid
out 90% of claims in the year. And to reinforce this, 94% of
our customers in France who were hit by Hurricane Klaus were
happy with the way we handled their claims.
Long-term and savings sales £m
Europe Delta Lloyd
09 18,704
08 17,716
07 17,256
06 14,525
05 12,827
Long-term and savings operating profit £m
Europe Delta Lloyd
09
MCEV*
2,235
IFRS
1,038
08
MCEV*
1,647
IFRS
881
07
MCEV*
1,503
IFRS
777
06
MCEV*
1,171
IFRS
648
05
MCEV*
1,126
IFRS
528
* On a MCEV basis from 2007. Prior years presented on an EEV basis.