Aviva 2009 Annual Report Download - page 19

17
Performance review
Aviva plc Asia Pacific
Annual Report and Accounts 2009
Committed to building a high-
growth and value-creating region
We operate in eight countries across the Asia
Pacific region through both joint ventures and
wholly-owned operations. India and China,
both with large populations and relatively high
economic growth, are ‘must-win’ markets
capable of generating a significant proportion
of our future expansion within Asia. Throughout
the rest of the region, our focus is on developing
the strength of our bancassurance business with
joint venture partners.
Strategy
Our ambition is to build a high growth and value-creating
region driven by the ‘must-win’ markets of China and India.
We will achieve this by:
— securing strong organic growth across all our markets
— leveraging our multi-distribution platforms and core
capabilities in bancassurance
— exploring new growth opportunities in particular health
and general insurance
— expanding our regional footprint in fast-growing, high
potential insurance markets
— investing in the Aviva brand.
Market environment
Trading conditions were difficult in 2009. Long-term savings
sales were affected by the economic climate as investors turned
to low volatility investments such as bank deposits. The industry
also experienced an increase in lapses and clients exercising
their premium holiday options.
Performance
Total sales were £2,712 million in 2009, down 22% on 2008.
IFRS operating profit for the year improved 114% to £77 million
reflecting the improved long-term and savings result. Our
financial results are discussed in more detail on page 48 of
this report.
During 2009, customers’ increased caution has led to
a growing demand for protection and health products and
those savings products with guarantee features. We have
strengthened our proposition in these areas which, together
with our investment product capabilities, will enable us to
harness the expected economic rebound.
We made substantial efforts to conserve capital and control
costs, reducing the sale of capital intensive products in Hong
Kong, Malaysia and Taiwan and implementing a region-wide
cost-reduction programme. The sale of our Australian business
in October also realised a £0.4 billion contribution to capital.
As part of our commitment to achieving ‘One Aviva, Twice
the Value’, we launched a number of new initiatives in the
region. These included our wrap platform in Hong Kong and
new protection, savings and investment products, both
conventional and Takaful (Islamic insurance), in Malaysia
through our shared services platform.
We expanded our customer reach in local markets during
the year with a particular focus on bancassurance: we renewed
our partnership with DBS Bank in Singapore and Hong Kong
until 2015, extended to additional markets in India, China and
Taiwan, and also agreed extended terms with key partners in
Corporate responsibility
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
India. We opened our tenth provincial branch in China, ahead
of our 2010 target; achieved encouraging sales through Woori
Bank in South Korea and opened 13 new branches around the
Seoul area.
Outlook
Looking forward, we expect recovery in Asia Pacific to be ahead
of other regions. Prospects for 2010 are more optimistic with
the Asia Development Bank predicting GDP growth of 6.6%
for emerging Asia versus 4.3% in 2009. We are committed
to building a high-growth and value-creating region and
establishing Aviva as a leading international player in Asia.
Joint venture in Malaysia
We signed a joint venture partner deal with CIMB, the second
largest bank in Malaysia in 2007 to capitalise on its distribution
network by providing market leading insurance products and
excellent servicing capability. To achieve this we drew on our
regional shared services capability and technical infrastructure
in Singapore to deliver and administer the product set. We
successfully launched a portfolio (EasyLife Solutions) of 10
investment-linked products within a six-month timeframe.
Sales of EasyLife Solutions have gone from strength to strength,
contributing to our position as fourth in the industry for single
premium business in 2009. This has also strengthened our
partnership with CIMB at all levels.
Total sales £m
09 2,712
08 3,499
07 4,283
06 3,059
05 1,990
Operating profit £m
MCEV* IFRS
09 86
77
08 69
36
07 101
37
06 92
50
05 89
15
* On an MCEV basis from 2007. Prior years presented on an EEV basis.
Performance review