Aviva 2009 Annual Report Download - page 27

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Performance review
Aviva plc Information on the company continued
Corporate responsibility
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
Performance review
Italy
Business overview and strategy
Aviva Italy is the country’s seventh-largest life insurer, with a
market share of 5% in terms of 2008 gross written premiums
according to Associazione Nazionale fra le Imprese Assicuratrici
(ANIA) and has over 1.3 million customers. We also have a stake
in Banca Network Investimenti, a 900-member financial adviser
network. Aviva is the 13th largest general insurance company in
Italy with a market share of 1% according to the Associazione
Nazionale fra le Imprese Assicuratrici (ANIA).
Our strategy is to continue to work with our partners on
new products, suited to the current markets, to develop our
bancassurance relationships and to expand our customer
reach, through customer penetration and expanding our
distribution reach.
Market
In the Italian life market, large groups dominate the market,
with the top four providers writing more than 50% of the
life premium income in 2007 according to AXCO Insurance
Information Services. While the market has been reasonably
stable over the last five years, it shrank in both 2007 and 2008
(by 11.2% and 11.7% respectively) , with total market premiums
at about €55 billion for the year, according to ANIA.
In the Italian market, we believe that many consumers
prefer investment products from well established long-term
insurance companies as long-term savings vehicles. We also
think that consumers prefer developing a personal relationship
with the bank distributing products through one-to-one
contact. Internet and telephone channels are not widely used
in Italy.
In the last few years the Italian government has introduced
legislation to break the exclusive relationship between general
insurance companies and their ‘tied’ agents and therefore widening
the availability of general insurance products from different insurers.
This has opened up the general insurance marketplace and
increased competition from different channels.
Products
Our long-term insurance and savings business offers a wide
range of products covering protection, bonds and savings and
pensions. The largest segment is single and regular premium
savings and investment products. These include unit-linked
policies linked to a range of investment funds and profit-sharing
policies where there is a minimum annual return credited to
the policy, with the potential for an additional bonus. Also we
provide index-linked products where there is typically some
protection of capital at the end of the policy term and a pay-out
linked to the performance of an index or basket of shares.
A growing area of the market is credit protection insurance,
where protection on death and disability is provided for mortgages
and credit loans. Individual and group pension plans are also
available and this part of the market is expected to grow in the
long-term given the ageing population and government reforms
to reduce the cost of state retirement provision.
Our general insurance business in Italy mainly provides
motor and home insurance products to individuals, as well as
small commercial risk insurance, including marine, to businesses.
For reporting purposes the Italian general insurance business is
shown within “Other Europe” in the general insurance segment.
Distribution
Our products are distributed principally through bancassurance
partnerships with UniCredit Group, Banco Popolare Italiana
Group (BPI), Banca Popolari Unite (BPU) and Unione di Banche
Italiana (UBI). Our partnership with Banca Delle Marche ended in
May 2009. These partnerships give us access to more than
6,200 branches and additionally we also have 650 insurance
agents and access to approximately 5,800 sales advisers.
In December 2007, Aviva Italy entered into an exclusive
long-term partnership with Banco Popolare and acquired a 50%
interest in Avipop Assicurazioni, a general insurance company,
for a total consideration of £188 million. This replaced our
previous agreement with BPI to distribute long-term insurance
and savings products.
In 2007, we also purchased, together with other investors,
a stake in Banca Network Investimenti, a 900-member financial
adviser network, from BPI. We believe that this network will
further extend and diversify our distribution reach in the market
for long-term insurance and savings business.
In 2008, we acquired 50% plus one share in UBI
Assicurazioni Vita S.p.A. (UBI Vita). UBI Vita distributes life
insurance products through Banca Popolare di Ancona and
other channels and further expands our distribution capability
and customer base.
We distribute general insurance products primarily
through agents and brokers, with a growing proportion
of bancassurance sales.
Poland (including Lithuania)
Business overview and strategy
Our operations in Poland and Lithuania provide long-term
insurance and savings products. Our businesses have a 4,200-
member direct sales force, with 66 sales offices across the
country as at 31 December 2009. Completing the move to
a global brand, our Polish business, currently known as
Aviva Commercial Union, will commence trading as Aviva
in June 2010.
Our Polish life operation is the second-largest overall life
insurer, with a market share of 10% based on total premium
income in 2008 according to the Polish Financial Supervision
Authority (KNF). It has more than 900,000 individual and group
customers and manages over £2.5 billion of customers' assets.
The pension business has been leading the second-pillar pension
fund market since its launch in 1999, with a market share
of around 26% and almost 3 million customers and over
£9.8 billion of assets under management, according to KNF.
Second pillar pension funds are those privately managed,
first pillar are the pay-as-you-go state pensions and third
pillar are voluntary contributions.
Our long-term insurance strategy is to expand our
distribution network, particularly in the direct channel, and to
also develop other alternative points of contact for potential
clients, for example, bancassurance. We seek to capitalise
on our new product launches and maximise cross-selling
opportunities. Our product strategy for pensions is to retain our
status as the market leader in terms of customers and assets.
Our general insurance business in Poland commenced in
1997 and continues to develop. In 2007 we launched a direct
motor insurance product in order to pursue further potential
for growth in this dynamic market. For reporting purposes the
general insurance business is shown within “Other Europe”
in the general insurance segment.