Aviva 2009 Annual Report Download - page 28

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Aviva plc Information on the company continued
Annual Report and Accounts 2009
Market
The Polish market for protection products has seen significant
growth since 1999, although penetration rates remain relatively
low according to our analysis of KNF statistics. Insurance
companies in Poland are either state-owned or private, with the
public sector companies continuing to have a strong share of
the market. The private companies are often under the control
of international insurers.
In 1999, Poland launched a comprehensive reform of its
state pension system and created privately managed funds. This
enabled private companies to offer pension products and made
it obligatory for all employees under 30 years of age to join one
of the competing pension funds.
In 2009 the Polish government agreed further pension
legislation changes which restrict the fees that pension fund
management companies can charge. This is effective from
1 January 2010.
The general insurance market is continuing to grow,
although at a slower rate than the long-term insurance and
savings market. The general insurance market is mainly driven
by the motor insurance market. Distribution has been
dominated by direct sales force and agents, however direct
sales are now growing.
Products
Our life business in Poland provides a broad range of protection,
annuities and bonds and savings products. For individuals it
offers unit-linked life policies, annuities, single premium savings
and, for institutions, group life insurance and employee pension
programmes, which are both unit-linked products.
Our pension business offers a standard product for all
customers as part of the privately managed pensions market.
We offer general insurance products to both institutions
and individuals in Poland. For institutions we offer selected
commercial lines risks such as fire and loss-of-profit insurance,
technical insurance, insurance against loss of property during
transportation, civil liability insurance and commercial health
insurance. For individuals we offer home, accident and travel
insurance, which are primarily sold by tied agents, whilst motor
insurance is sold through our direct operation.
Distribution
The direct sales force is the main distribution channel for most
of the Poland group and is made up of 4,200 tied insurance
agents whose work is co-ordinated by a network of our sales
offices run by sales managers.
In 2008 we increased the productivity and size of our direct
sales force and entered a joint venture with Bank Zachodni WBK
(a subsidiary of AIB) to sell both life and general insurance
products through the bank’s network of over 500 branches.
We also co-operate with independent insurance agencies
and brokers. We believe that these insurance brokers play a key
role in selling commercial lines general insurance. Our mutual
funds are also sold in brokerage houses and our individual
products are supported by call centre and website sales.
Spain
Business overview and strategy
Aviva Spain sells long-term insurance and savings, health and
accident insurance in Spain through a bancassurance network
based on joint ventures with six banks (Bancaja, Caja España,
Caixa Galicia, Unicaja, Caja de Granada and Cajamurcia) and
through Aviva Vida y Pensiones, the wholly owned Aviva-
branded long-term insurance company. Aviva Spain is the
country’s fifth-largest long-term insurer by gross written
premiums with a market share of 6% in 2009 according
to Investogación Cooperativa entre Entidades Aseguradoras y
Fondos de Pensiones (ICEA).
In February 2008, we exercised an option to acquire an
additional 45% shareholding in our joint venture with the
Spanish savings bank Caja de Ahorros de Murcia, Cajamurcia
Vida, which brings our total shareholding to 50% and enables
the migration of the majority of the Cajamurcia protection
products to this joint venture company. The new company
distributes long-term insurance and savings products via
Cajamurcia’s network of over 400 branches.
Our strategy in Spain is to further develop our
bancassurance relationships and attract new partners if the
opportunities arise. We hope to develop our general insurance
offerings through our existing partnerships. Overall, we want to
continue to be customer-focused, react quickly to market trends
and maximise the sales of our core products, such as pensions
and savings.
Market
Spain’s financial market has a strong banking tradition, and as
such customers are accustomed to receiving advice through
traditional banking channels. We believe that customers have a
high level of financial understanding and require comprehensive
advice on products and services. The top positions in the long-
term insurance market are dominated by bank-owned or bank-
insurer joint ventures, with the overall bancassurance channel
accounting for more than 70% of new business premiums in
2007 in the Spanish life insurance market according to ICEA.
Products
We offer a wide range of bonds and savings, and protection
products. Investment products include both unit linked and
traditional plans, where profit sharing is regularly used to
increase the policy return. Our traditional plans include savings
schemes and income products. Pension savings products have
valuable tax advantages each year for such contributions within
permitted limits and we offer a flexible range of individual and
group plans with alternative investment choices. We also offer
protection products, covering both mortgages and credit loans
typically providing cover for the family in the event of death or
disability.
The PIAS ‘pension’ product was launched in 2007: this is a
savings contract with attractive tax benefits if the policy remains
in force for at least 10 years and if an annuity is purchased at
the maturity of the product.
Distribution
Through bancassurance partnerships we have established
subsidiaries to distribute our products with each of the banks
as set out below:
— Aseval – in conjunction with Bancaja since 2000
— Unicorp Vida – in conjunction with Unicaja since 2001
— Bia Galicia – in conjunction with Caixa Galicia since 2001
— Caja España Vida – in conjunction with Caja España
since 2001
— General Vida – in conjunction with Caja de Granada
since 2002
— Cajamurcia Vida – in conjunction with Cajamurcia since 2007
Aviva Vida y Pensiones distributes our products through
professional intermediaries (financial advisers, agents and
brokers) and a direct sales force, supported by a branch office
network and call centres.