Aviva 2009 Annual Report Download - page 29

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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
Other Europe
Business overview and strategy
Aviva’s other European businesses are in Turkey, the Czech
Republic, Hungary, Romania, Russia and Slovakia.
In 2007, our Turkish long-term insurance and savings
business merged with Ak Emeklilik, the long-term insurance and
savings company of Sabancı Holdings, to form a joint venture
company, AvivaSA. The new company merged on 31 October
2007 to become the largest pensions’ provider in the market,
with a market share of 22% in 2008 according to the Turkish
Pensions Monitoring Centre, and the fourth largest life insurer
with a market share of 6% in 2009 according to the Association
of Insurance and Reinsurance Companies of Turkey. Under the
merger, AvivaSA has a bancassurance agreement with Akbank
T.A.S. (Akbank), Turkey’s second largest privately-owned
bank based on total assets according to the Banks Association
of Turkey.
In the Czech Republic we are the 13th largest life insurer,
with a 1.6% market share in 2008 according to the Czech
Insurance Association. We have more than 46,000 customers
and 117 staff as at 31 December 2009.
In Hungary, we are the sixth largest life insurance business,
measured by 2008 gross written premiums, with an 8% market
share, according to the Association of Hungarian Insurers. We
have a tied agent sales force consisting of more than 600
agents and 22 agencies nationwide.
Aviva Romania is the eighth largest life insurer as measured
by premium income in 2008 according to the local insurance
regulator, CSA. We were also the fourth largest voluntary
pensions' provider in 2008 as measured by fund value according
to the Private Pension Regulator (CSSPP). Aviva Romania has
over 550 direct sales force agents and 157 staff. We have
established a new company to sell newly created mandatory
pensions.
In Russia, we started trading in early 2006, with a strategy
to position the business to take advantage of the growth
expected to occur as the life insurance industry develops. We
were the fourth largest life insurer in 2009 compared to 21st in
the prior year, with a 5% market share based on Aviva Russia’s
estimates based on statistics from the insurance market
regulator and Interfax news agency.
Our strategy in the “Other Europe” region is to grow our
direct sales force numbers and productivity, whilst continuing
development of other distribution channels, including
bancassurance, to enhance our product range and to continue to
investigate profitable opportunities in new markets. In all of these
markets, pension reform continues to offer long-term potential.
Market
Across these new European markets there are countries at
different stages of development. Hungary and Czech Republic
are the most developed markets although they still have a gap
as compared to Western European markets.
We believe that Russia and Turkey, with their large
populations and rapid economic growth, are highly attractive
markets for the medium term. Countries such as Romania
represent longer-term potential. With pension reform starting
later in these countries, markets are at an early stage of
development.
Competitiveness varies by country depending on its size
and stage of development. In more developed markets
competition is with regional players (eg AXA/Allianz), ex-state-
owned insurers and new entities. The less developed markets do
not have the same competitive intensity, although competition
is growing.
Products
Aviva Turkey’s products include unit-linked pensions,
supplemented by protection insurance and other savings
products, which are aimed at high-net-worth customers and
leading national and multinational corporations. The general
insurance segment offers motor, household, fire, marine,
personal accident, travel and liability insurance.
Our Czech Republic business offers individual unit-linked
savings, protection insurance, term insurance, other savings
products, group life schemes for corporate clients and credit
insurance for our own bancassurance partners.
In Hungary, we offer flexible unit-linked and traditional life
products. Aviva also acts as a distributor for various banking
products, such as mortgage loans and current accounts, as well
as selling a combined product.
In Romania, we provide traditional life insurance products
and started to offer pension products to customers following
government reforms introducing compulsory pensions in 2008.
In Russia, we focus on individual accident insurance,
group non-state pensions, accident and sickness insurance.
Distribution
In Turkey, we have a multi-channel distribution strategy through
brokers, agencies, a direct sales force, corporate sales and
bancassurance through an agreement with Akbank, which
gives us access to their approximate six million retail customers
through 868 branches. Our general insurance business is
predominantly sold through agents, with the remainder coming
through direct sales, a call centre and bank agents.
In the Czech Republic, our sales force is made up of over
450 agents operating across 14 branches, with 24 independent
distributors and two bancassurance partners.
In Hungary, in addition to the direct sales force we also
sell through brokerage partners. We commenced cross-border
sales into Slovakia in August 2008, selling a single product
through Brokernet Slovakia, which has increased our
geographical coverage.
In Romania, we distribute through a direct sales force
branch network and have bancassurance partners, which
include local units of Piraeus Bank and ABN AMRO.
At the end of 2009 Aviva Russia had 43 financial
consultants, servicing approximately 390,000 clients.
Agreements with 13 leading retail banks have been signed
and bancassurance sales are growing rapidly.
Delta Lloyd
Business overview and strategy
Delta Lloyd operates in the long-term insurance and savings,
general insurance and the fund management markets in the
Netherlands, Belgium and Germany. The group employs about
6,300 staff as of 31 December 2009.
In November 2009 Aviva successfully completed an IPO of
Delta Lloyd which is now listed on NYSE Euronext Amsterdam.
Aviva retains 58% of the ordinary share capital and 54% 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. Delta Lloyd is considering its strategic options
in Germany.
On 24 March 2010 Delta Lloyd Germany has announced
the intention to discontinue writing new business. This is in line
with the decision, as indicated in the prospectus for the initial
public offering, to discontinue Germany as a core market.
Delta Lloyd was one of the top five providers of life and general