Aviva 2009 Annual Report Download - page 30

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Aviva plc Information on the company continued
Annual Report and Accounts 2009
insurance in the Netherlands in 2008 based on gross written
premiums according to an analysis of competitor press releases.
The sale of our health operations to O.W.M CZ Groep
Zorgverkeraar U.A (CZ) which was effective on 1 January 2009
realising a gain on sale of £31 million, has also given us an
opportunity to sell long-term insurance and savings, and general
insurance products to CZ’s existing customer base.
Delta Lloyd Asset Management manages investments both
for Delta Lloyd’s own insurance operations and for third parties,
including individual and institutional customers. In addition to
managing equity and fixed interest funds, our operations
include management of a property portfolio.
Delta Lloyd aims to be one of the leading financial service
providers in the Netherlands and Belgium. To achieve this goal,
our business is focused on achieving operating efficiencies and
product and distribution innovation, while building the trust
of our customers through improving customer service and
strengthening financial disciplines.
Market
We believe that the Dutch insurance market is mature and
that cost reduction and economies of scale are becoming
increasingly important. Customers are increasingly demanding
that suppliers provide value-for-money high-performing
products with transparent charges. The Dutch savings market is
extremely competitive with banks now able to offer retirement
products on the same terms as insurers.
In the general insurance market there has been stiff
competition on premium rates, particularly in the key motor
account, and increasing claims frequencies linked with the
economic downturn.
The credit crisis has resulted in a number of Delta Lloyd’s
competitors seeking state or shareholder support. We expect
this situation to result in further industry reorganisation and
consolidation in the coming years.
Products
The long-term insurance and savings business of Delta Lloyd
offers a range of protection, bonds and savings and pensions
services, including group pension schemes, annuities, unit-linked
bonds, savings products and protection insurance.
Our general insurance business sells a range of products
including personal, motor, travel and home insurance and
small to medium sized commercial policies.
Delta Lloyd also sells retail investment fund and mortgage
products in the Netherlands and retail banking products
in Belgium.
Distribution
Delta Lloyd distributes long-term insurance and savings and
general insurance products under three brands: Delta Lloyd,
OHRA and through a joint venture with ABN AMRO. In the
Netherlands the Delta Lloyd brand works exclusively with
independent insurance intermediaries, while OHRA focuses
on direct channels such as telephone, internet and mail. Delta
Lloyd’s third brand comprises a joint venture with ABN AMRO,
reaching customers through the extensive distribution networks
of ABN AMRO bank. In January 2009, Delta Lloyd and ABN
AMRO bank confirmed that the joint venture remains the
exclusive insurance partner for the current and future Dutch
banking operations of ABN AMRO, including Fortis branches
when they rebrand in 2010.
Mutual funds are primarily sold through third-party banks
such as ABN AMRO, ING and Rabobank.
North America
Regional overview and strategy
Aviva North America consists of two businesses: the life
insurance and annuity business in the US and the general
insurance business in Canada. Our strategic priorities for the
region are to improve margins and optimise capital usage, to
selectively expand into market adjacencies and to optimise the
regional operating model.
To enhance the growth in our existing businesses, we also
seek to increase Aviva’s profile in North America by building
on the strength of the global brand through concerted
communication efforts with financial analysts, key financial
and business media, consumers and distributors. We continue
to expand our distribution network with a focus on larger
brokerage general agents.
Market and competition
The North America region is home to two of the world’s largest
and richest economies. Aviva has two businesses that currently
serve their respective home markets and are led by our regional
headquarters in Chicago.
We view both the US long-term insurance and annuity
market and the Canadian property and casualty insurance
market as highly fragmented markets with a large number
of insurers, none of whom is in a truly dominant position.
Competitors for the products in which we specialise, include
global insurers such as AIG, Allianz, Royal & Sun Alliance,
Manulife Financial, Old Mutual and AXA. Local market
competitors also feature in various product segments.
We consider our competitive factors in the North America
region to be:
— Tailored products
— Product innovation
— Technical expertise
— Quality of distribution partnerships
— Financial strength and performance
— Strong financial ratings
— Investment management performance
— Global brand
USA
Business overview and strategy
Aviva USA is the largest provider to both the fixed indexed life
insurance and fixed indexed annuities according to reports on
2008 sales which were released by LIMRA and AnnuitySpecs in
early 2009. Our acquisition of the former AmerUs Group was
completed in late 2006. Following this we have achieved
significant growth and market penetration in the US market,
with more than one million customers.
Prior to the acquisition of AmerUs Group, the US business
was headquartered in Boston and had a niche strategy, focused
on retirement and estate planning with distribution through
independent agents, banks and structured settlement brokers.
Our new strategy is to improve margins, optimise capital
usage and to leverage our core life insurance and annuity
distribution and product capabilities into adjacent markets.
A key theme for Aviva is one of recognition; treating both
employees and customers as unique people with unique
circumstances.