Aviva 2009 Annual Report Download - page 50

48
Aviva plc Financial and operating performance continued
Annual Report and Accounts 2009
Asia Pacific
Aviva Asia Pacific operates in eight countries across the region,
following the sale of the Australia operations on 1 October
2009, through both joint ventures and wholly-owned
operations. We have businesses in markets at various stages
of development, with established businesses in Singapore and
Hong Kong, high potential businesses in India and China and
developing businesses in South Korea, Taiwan, Malaysia and
Sri Lanka.
The table below presents the sales, net written premiums,
adjusted operating profit and profit/(loss) before tax attributable
to shareholders’ profits under IFRS of Aviva Asia Pacific for the
years ended 31 December 2009, 2008 and 2007.
2009 2008 2007
£m £m £m
Asia 1,529 1,719 1,868
Australia 1,183 1,780 2,415
Sales 2,712 3,499 4,283
Net written premiums 455 511 602
Adjusted operating profit
Asia long-term insurance and savings business 52 2 (6)
Australia long-term insurance and savings business 40 44 37
General insurance and health 6 — 4
Fund management and non-insurance (21) (10) 2
77 36 37
Profit/(loss) before tax attributable to
shareholders’ profits 146 (68) 35
Year ended 31 December 2009
Sales in Asia Pacific decreased by £787 million, or 22%,
to £2,712 million (
2008: £3,499 million ). In Australia, sales
decreased by 34%, impacted by the sale of the Australian
business on 1 October 2009. Sales in Asia decreased 11% as
a result of the uncertain economic environment, leading to
investor caution across Singapore, Hong Kong, India and our
other Asian markets, together with the impact of the strategic
decision to scale back the sale of capital intensive products in
several Asian markets.
Net written premiums decreased to £455 million, a
decrease of £56 million, or 11%, on 2008 (
2008: £511 million ).
The decrease was mainly due to the impact of the uncertain
economic environment in the region as highlighted above and
the disposal of the Australian business.
Increase in adjusted operating profit of £41 million to
£77 million (
2008: £36 million ) was mainly due to the benefit
from a one-off release of reserves of £68 million following an
actuarial review of assumptions in Singapore, partly offset by
the impact of the Australian disposal.
Profit before tax of £146 million (
2008: £68 million loss )
reflects the favourable movements in the market across the
Asia Pacific region.
Year ended 31 December 2008
Sales in Aviva Asia Pacific were £3,499 million in 2008, a
decrease of £784 million, or 18%, from £4,283 million in 2007.
The decrease was driven by significantly lower investment
sales through Navigator (our wrap administration platform) of
£1,746 million, which were £914 million lower than sales of
£2,660 million in 2007. The lower investment sales were
partially offset by higher long-term insurance and savings
business sales of £1,720 million compared to £1,595 million
in 2007.
Overall sales in Asia declined in 2008 as a result of volatile
investment markets, particularly in Hong Kong and Singapore.
This was partly offset by growth in long-term insurance and
savings business sales in China, due to the expansion of the
distribution network, and first time contributions from new
ventures in South Korea and Taiwan.
Sales in Australia also decreased largely due to the benefit
in 2007 of a one-off transfer of a group pension scheme and
the favourable change in superannuation legislation, which
impacted both long-term insurance and savings sales and
investment sales.
Aviva Asia Pacific’s net written premiums were £511 million
in 2008, a decrease of £91 million, or 15%, from £602 million
in 2007. The decrease was mainly due to the volatile investment
markets impacting sales in Hong Kong, where the products are
mainly investment-related.
Adjusted operating profit was £36 million in 2008,
a decrease of £1 million, or 3%, from £37 million in 2007.
This reflects increased regional costs including one-off costs
associated with recruitment, offset by an increase in the long-
term insurance and savings business due to lower new business
strain from sales and business mix.
Aviva Asia Pacific’s loss before tax attributable to
shareholders’ profit was £68 million in 2008, compared to a
profit of £35 million in 2007. The loss in 2008 reflects the
impact of adverse economic variances mainly in the long-term
insurance and savings businesses.
Aviva Investors
Aviva Investors, our fund management business, operates across
all four regions providing fund management services to third-
party investors and supporting our long-term insurance and
savings and general insurance operations.
The table below presents the adjusted operating profit,
profit before tax attributable to shareholders’ profits under IFRS
and funds under management of Aviva Investors for the years
ended 31 December 2009, 2008 and 2007.
2009 2008 2007
£m £m £m
Adjusted operating profit 115 114 147
Profit before tax attributable to
shareholders’ profits 91 72 129
Funds under management 249,630 236,178 235,309
Year ended 31 December 2009
Aviva Investors’ adjusted operating profit in 2009 was
£115 million, in line with 2008. Higher performance fees were
earned in 2009, offset by lower average market levels through
the year.
Profit before tax attributable to shareholders’ profits was
£91 million, an increase of £19 million, or 25%, on 2008 (
2008:
£72 million
). Profit in 2009 benefited from lower integration
and restructuring costs on the set-up of Aviva Investors.
Aviva Investor’s funds under management were
£250 billion, an increase of £14 billion, or 6%, on 2008. The
increase is a result of investment performance and product
sales together with capital appreciation in some fixed income
markets, offset by the impact of sterling’s appreciation against
the euro and US dollar.
Year ended 31 December 2008
Aviva Investors’ adjusted operating profit was £114 million in
2008, a decrease of £33 million, or 22%, from £147 million in
2007. The decrease was mainly due to the investment market
volatility in the year, with all geographical areas experiencing
downward pressure on fee income.
Aviva Investor’s profit before tax attributable to
shareholders’ profits was £72 million in 2008, a decrease of
£57 million, or 44%, from £129 million in 2007. The decrease