Aviva 2009 Annual Report Download - page 24

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Aviva plc Information on the company continued
Annual Report and Accounts 2009
Our savings and investment products include ISAs, investment
bonds, funds, base rate trackers, capital protected plan and
with-profits products.
The pensions and retirement products we offer include
stakeholder, personal pensions, equity release, annuities,
income drawdown and with-profits products. Our annuity
offerings include immediate life, enhanced, and with-profit
pension annuities.
Distribution
We are a leading provider in the UK financial adviser market
and also have a successful joint venture with the Royal Bank of
Scotland Group, strong relationships with a number of banks
and building societies, distribution deals with the Co-operative
Insurance Society and the Post Office, and growing corporate
and direct channels.
The majority of our sales are through independent financial
advisers (IFAs). This is particularly the case for our savings and
investment products as customers seek advice due to the
complex nature of the products, the regulation surrounding
them and the need for these products to meet the individual
circumstances of the customer.
United Kingdom Aviva General Insurance
Business overview and strategy
Our UK general insurance business currently operates in the
UK through two major brands, Aviva (which was changed from
Norwich Union in June 2009) and the RAC. The combined
business was the leading general insurer in the UK for 2008,
with a market share of 13%
(2007: 14%) according to
Datamonitor. We focus on personal and commercial insurance
and are also a leading provider of roadside assistance through
the RAC, as voted by the JD Power survey since 2006. We operate
from a number of locations in the UK, India and Sri Lanka.
We aim to maintain our market leading position through
underwriting excellence and product and distribution leadership.
Our strategy is to focus on insurance fundamentals to maximise
returns through the insurance cycle. We seek to control the
impact of claims inflation, provide excellent customer service
and maintain disciplined underwriting and pricing. To this end,
we are nearing completion of the process to transform our
customer service centres and simplify our policy range.
Market and competition
The UK is the third largest insurance market in the world
according to the ABI based on data for 2008. In 2008, the top
four companies had approximately 38%
(2007: 35%) of the
general insurance market share, based on Datamonitor figures
for gross written premiums.
Insurance profits in the UK general insurance market are
cyclical in nature and after a lengthy period of soft market
conditions in commercial lines, characterised by high
competition and falling prices, we have seen some tentative
signs of hardening since late 2008. There are also signs of
market rating increases in personal lines, particularly within
personal motor.
In 2009, we believe the proportion of customers buying
insurance online has continued to increase and this is now a
major distribution channel. In particular we believe that internet
price comparison sites for personal motor and homeowner
insurance have again grown their market share as customers
seek price transparency.
We consider our main competitors to be RBS, RSA, AXA,
Zurich, Lloyds Banking Group, Allianz, and Admiral Group. The
principal competitive factors for our general insurance business
in the UK are:
— Range and quality of products
— Access to distribution
— Pricing and underwriting discipline
— Brand association
— Customer satisfaction, claims handling
— Cost management
Products
We provide a range of general insurance products focused on
personal and commercial customers. We held top one or two
positions in all our major classes of business for 2008, according
to Datamonitor. Our general insurance business mix is
approximately 60% personal lines and 40% commercial lines.
Our general insurance products include personal motor,
home, travel insurance, payment protection, commercial motor,
commercial property, and commercial liability insurance.
We also offer a range of breakdown cover through the RAC.
Our personal motor insurance product range includes cars,
motorcycles and vans. For businesses we offer cover for fleets
and commercial vehicles.
Our home insurance products include building and contents
insurance and home emergency cover.
Our commercial products focus on insurance for small to
medium enterprises and, from 2010, we plan to expand our
product range in the larger UK corporate risk market.
Distribution
We have a multi-distribution strategy. Our personal products
are sold directly to customers over the phone and through
our website www.aviva.co.uk, via brokers, through over 100
corporate partnerships and our RAC Insurance offering is also
available through price comparison sites. For commercial
insurance, we focus on broker distribution and believe that
independent brokers remain the best source of the advice
required by business customers.
Europe
Regional overview and strategy
Aviva operates in 15 countries across Europe (excluding the
UK) offering a range of life, pensions and insurance products
distributed through a wide range of channels. We are one of
the leading providers of life and pension products in Europe,
based on 2007 gross written premiums according to the
Comité Européen des Assurances (CEA), a European insurance
and reinsurance federation.
In 2009, we announced a clear two-part strategy to exploit
the considerable opportunities in Europe.
Aviva Europe
In 2009 we announced a new strategy to make a ‘Quantum
Leap’ in performance by integrating the operations of 12
previously separate businesses (excluding the operations of
Delta Lloyd), under a single pan-European executive team.
The Quantum Leap transformation plan will build a pan-
European approach to operations, governance and product
development. Distribution has been centralised into two pan-
European channels, bancassurance and retail, allowing us to
take advantage of the significant growth potential in Europe,
build competitive advantage and shorten time to market.
A single holding company has been established in Ireland
which, subject to regulatory approval, will deliver economic,
operational and regulatory benefits to Aviva.
Delta Lloyd
As a result of the IPO, the strategic management of our
investment in Delta Lloyd is now managed independently from
our other operations.