Aviva 2009 Annual Report Download - page 25

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Performance review
Aviva plc Information on the company continued
Corporate responsibility
Annual Report and Accounts 2009
Delta Lloyd is one of the top five financial services providers
in the Netherlands, with a significant operation in Belgium. In
November 2009, Aviva successfully completed an IPO of Delta
Lloyd which is now listed on NYSE Euronext Amsterdam. Aviva
retains 58.3% of the ordinary share capital and 54.0% of the
voting rights in Delta Lloyd after having raised £1 billion of gross
disposal proceeds. Its listing enables Delta Lloyd to strengthen
its profile and brand, as well as more effectively pursue its
growth strategy in the Netherlands and Belgium, in particular,
ahead of anticipated sector consolidation in those countries.
Aviva Europe
As the leading bancassurer in Europe we have sustained our
performance by leveraging our unique bancassurance model,
serving customers through our 50 bancassurance agreements.
We also have a significant retail franchise, operating through
more than 8,000 brokers and agents, and a direct sales force
of over 10,000 consultants.
Our pan-European distribution model aims to exploit our
market leading bancassurance model by leveraging existing
banking relationships, by expanding our product mix into higher
margin products such as protection and general insurance and
by reducing the cost per policy through the roll out of a pan-
European shared platform. The shared platform will also give us
the ability to meet the demands of each prospective partner’s
requirements, in a rapid and efficient way, creating value for
both Aviva and our partner.
We are also building a single retail operating model with
common tools and methods supported by centralised sales
support and a pan-European customer retention centre of
excellence. This strategy will enable us to increase our sales
force productivity, improve customer retention and create
economies of scale through pan-European retail cost
management.
Our Aviva Europe business has substantial operations in
France, Ireland, Italy, Poland and Spain, with significant long-
term insurance businesses. Following early success in Poland,
we have been building our long-term insurance and savings
business in developing markets in Central and Eastern Europe,
and now have businesses in the Czech Republic, Hungary,
Lithuania (which for financial reporting purposes we include in
Poland), Romania, Russia, Turkey and a distribution capability
in Slovakia (which for financial reporting purposes we include
in Hungary).
In addition, we have large general insurance businesses
in Ireland and France, as well as developing general insurance
businesses in Italy, Poland and Turkey. Fund management
operations exist in France, Ireland, Poland and Romania. The
fund management operations in France, Ireland and Romania
are managed by Aviva Investors, and since 1 January 2010 the
fund management operation in Poland has transferred to Aviva
Investors.
Since January 2010, Aviva Europe has also had
responsibility for developing Aviva’s business interests in the
Middle East, based in the United Arab Emirates.
Market and competition
The region is split between mature Western European markets
with high wealth and insurance penetration and the developing
markets of Central and Eastern Europe. We expect to see
growth of the European long-term insurance and savings
market above GDP growth over the next decade as a result
of a growing ageing population and the developing markets
in the Central and Eastern Europe region.
Competitive intensity and market consolidation varies
across the region depending on the size and stage of
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
development of each market. Our competitors comprise a
mixture of large pan-European insurers, such as Allianz and
AXA, and local insurers, such as Powszechy Zaxlad Ubezpieczan
(PZU) in Poland and CNP Assurances (CNP) in France. Across the
region consolidation is low; based on total insurance premiums
from the CEA the top five insurers hold only 35% of the
market. The CEA data shows that Aviva has a 4.8% share of
the market (including UK, excluding business written outside
of Europe, non primary insurance and inaccessible markets
eg compulsory healthcare) which makes us the fourth largest.
The largest insurers are Allianz, Generali and AXA. If the UK
is excluded, Aviva’s market share on the same basis is 4.1%.
We consider our competitive factors in the European region
(with such factors to a greater and lesser extent for mature and
rapidly developing markets) to be:
— Bancassurance partnerships
— Existing retail franchise
— Pan-European distribution model
— Position in large emerging markets (Russia, Poland, Turkey)
— Customer-centric range of products and services
— Global scale
— Depth of technical expertise across region and ability to
transfer to developing business units
— Europe-wide approach to distribution management,
product development and support functions
— Pricing
— Brand strength and customer advocacy
— Focus on customer and quality of service
— Financial strength and ratings
— Investment management performance
France
Business overview and strategy
Aviva France is one of the top 10 long-term insurance and
savings businesses in France based on 2008 new business
premiums, according to L’Argus de L’Assurance. We offer a
range of long-term insurance and savings products, primarily
for individuals, which focus on the unit-linked market. We
have a partnership with the Association Française d’Epargne
et de Retraite (AFER), which is the largest retirement savings
association in France. Aviva France operates through two main
companies: Aviva Vie and Aviva Direct.
Our general insurance business in France has a 2.3% share
of the market as based on 2008 premium income according to
L’Argus de L’Assurance. We predominantly sell personal and
small commercial lines insurance products through an agent
network and our direct insurer, Eurofil. We believe Eurofil is
the second-largest direct sales insurer in France, based on
total written premiums, and it sells motor, home and health
insurance. Direct sales to private customers are conducted
through the internet and by telephone.
Our strategy for Aviva France is to continue the
diversification and growth of our business and to maintain our
profitability at a high level. We seek to accomplish these goals
through our distribution expertise, innovation of products and
services, greater communication and brand visibility.
Market
We believe that the long-term insurance and savings market
in France has long-term growth potential due to the ageing
population and need for private pensions. We believe that
the recent volatility in the market has affected sales as some
consumers are lacking confidence in long-term investments,
preferring safer forms of investment while they await a recovery
in financial markets.
Performance review