Aviva 2009 Annual Report Download - page 49

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Performance review
Aviva plc Financial and operating performance continued
Corporate responsibility
Annual Report and Accounts 2009
new bancassurance agreement with Banco Popolare. The Dutch
health business, which contributed sales of £1,250 million,
was sold with effect from 1 January 2009.
Net written premiums in 2008 increased by £1,935 million
or 15% to £15,066 million (
2007: £13,131 million ).
Net written premiums in our long-term insurance and
savings businesses were £10,976 million in 2008, an increase of
£1,077 million, or 11%, from £9,899 million in 2007. This
increase resulted from new product launches in Poland, securing
five corporate schemes in the Netherlands and the introduction
of compulsory pensions in Romania.
General insurance and health net written premiums were
£4,090 million in 2008, an increase of £858 million, or 27%,
from £3,232 million in 2007 as explained above.
Europe adjusted operating profit in 2008 was £1,141
million, a decrease of 5% or £56 million from £1,197 million.
Europe’s long-term insurance and savings business adjusted
operating profit was £881 million, an increase of £104 million,
or 13%, from £777 million in 2007. This result is partially
attributable to the strengthening of the euro, which has had
a positive impact on all our major markets. The main countries
contributing to the increase were Poland, reflecting higher
management fees and cost efficiencies and Spain, which earned
higher profits on protection business following growth in the
underlying portfolio from the acquisition of Cajamurcia in the
fourth quarter of 2007.
In Europe, adjusted operating profit of our general
insurance and health businesses was £397 million in 2008, a
decrease of £45 million, or 10%, over £442 million in 2007,
due to increased price competition across a number of
countries, particularly in Ireland and the Netherlands. This was
partly offset by the development of new distribution channels,
product launches in the year across a number of our businesses
and the strengthening of the euro.
Europe’s profit before tax attributable to shareholders’
profits was £48 million in 2008, a decrease of £1,274 million,
or 96%, from £1,322 million in 2007. The decrease was mainly
due to adverse investment returns and the cost of the unit-
linked compensation in the Netherlands of £126 million.
North America
Aviva North America includes the long-term insurance and
savings business in the US, which provides life insurance and
annuity products, and the general insurance business in Canada.
The table below presents sales, net written premiums,
adjusted operating profit and profit/(loss) before tax attributable
to shareholders’ profits under IFRS of Aviva North America for
the years ended 31 December 2009, 2008 and 2007.
2009 2008 2007
£m £m £m
Protection 871 623 617
Annuities 3,674 4,244 2,600
Other long-term business — 848 429
General insurance 1,800 1,601 1,412
Sales 6,345 7,316 5,058
Net written premiums 6,176 6,268 4,426
Adjusted operating profit
Long-term insurance business 85 16 79
General insurance 144 145 154
Non-insurance (16) (12) (4)
213 149 229
Profit/(loss) before tax attributable to
shareholders’ profits 244 (338) (38)
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
Year ended 31 December 2009
Sales in Aviva North America were £6,345 million, a decrease
of £971 million, or 13%, (
2008: 7,316 million ). The decrease
is driven by a decrease in annuity sales resulting from
management action to focus on capital efficiency and the
decision not to participate in funding agreement business in
2009. Protection product sales increased by 40% on actions
to create innovative products and expand product distribution.
General insurance sales in Canada increased by £199 million,
or 12%, to £1,800 million (
2008: £1,601 million ), with growth
driven by increased sales in homeowner while personal auto
premiums were maintained at a similar level to 2008.
Aviva North America’s net written premiums decreased by
£92 million, or 1%, to £6,176 million (
2008: £6,268 million ).
The decrease is a result of lower long-term insurance and
savings sales in the US offset by improved sales in Canada as
stated above.
Adjusted operating profit was £213 million, an increase of
£64 million, or 43%, on 2008 (
2008: £149 million ). Long-term
insurance and savings adjusted operating profit increased to
£85 million (
2008: £16 million ) driven by improved investment
margin earned on existing equity indexed annuity business.
General insurance adjusted operating profit is in line with 2008
at £144 million
(2008: £145 million) with the benefits of
increased sales volumes, higher long-term investment return,
cost savings and foreign exchange movements being offset
by the adverse movement in the claims experience.
Aviva North America’s profit before tax attributable to
shareholders’ profits was £244 million, an increase of £582
million (
2008: £338 million loss ). The increase is mainly as a
result of favourable investment performance during the year.
Year ended 31 December 2008
Sales in Aviva North America in 2008 increased by
£2,258 million or 45% to £7,316 million (
2007: £5,058 million ).
This increase reflected higher US long-term insurance and
savings business sales, driven by improved annuity sales,
reflecting our expanded distribution, new product launches and
successful marketing programmes. General insurance sales in
Canada increased by 13% to £1,601 million, with growth
across all lines and sales through the acquisition of National
Home Warranty in July 2008.
Aviva North America’s net written premiums were
£6,268 million in 2008, an increase of £1,842 million, or 42%,
from £4,426 million in 2007. The increase was mainly due to
increased annuity sales in the US and improved sales across
all lines of business in Canada.
Adjusted operating profit in Aviva North America was
£149 million in 2008, a decrease of £80 million, or 35%, from
£229 million in 2007. This is driven by lower annuity margins
and lower yield on variable rate investments. Annuity margins
were adversely impacted by increased option costs and lower
account value, driven by underperformance of the equity
markets and higher lapse rates. In our Canadian general
insurance business the result was impacted by favourable prior
year development, which was offset by difficult market
conditions in the insurance cycle, weather related costs, higher
expenses and lower investment income as a result of the sale
of equities undertaken in the latter half of 2007.
Aviva North America’s loss before tax attributable to
shareholders’ profits was £338 million in 2008, an increase
in loss of £300 million, from £38 million loss in 2007. The
increased loss was mainly due to significantly lower investment
income and the recognition of impairment losses, both driven
by the downturn in the economic environment.
Performance review