Aviva 2013 Annual Report Download - page 268

Aviva plc
Annual report and accounts 2013
266
Information on the Company continued
be Standard Life, Prudential, Legal & General, Lloyds Banking
Group, Friends Life, Zurich, Canada Life and Just Retirement.
In Ireland, the economic environment remains challenging
although we believe the life insurance market has returned to
growth in 2013. The life insurance market in Ireland is relatively
concentrated and there has been further consolidation in the
sector during 2013. We consider our main competitors to be
Bank of Ireland Life, Irish Life, Canada Life (now merged with
Irish Life) and Friends First.
Products
In the UK, we provide a comprehensive product range focused
on both the consumer and corporate market. The pensions and
`at retirement’ products we offer include personal pensions,
equity release, annuities, income drawdown and with-profits
products. Our annuity offerings include immediate life,
enhanced, fixed-term annuities and with-profits pension
annuities. We provide a number of traditional life insurance
products, including level-term, decreasing-term (with or without
critical illness), guaranteed whole life insurance, and guaranteed
lifelong protection plans. Our savings and investment products
include ISAs, investment bonds, funds, base rate trackers,
investments with guarantees and with-profits products.
In Ireland, our long-term insurance and savings business
offers a wide range of protection, bonds, savings, pension and
annuity products. Our protection products include life insurance,
mortgage protection, specified illness and guaranteed and
whole life cover products. The pension range covers retirement
and investment products including government personal
retirement savings accounts (PRSA) schemes.
Distribution
We have a multi-distribution strategy, which means we sell our
products through intermediaries, corporate partners, in the
workplace, and directly to customers. We are a leading provider
in the UK intermediary market with 10% share3.
In the UK, we have exclusive distribution deals for the sale of
protection products with Tesco, Santander, Barclays, Royal Bank
of Scotland and the Post Office. We remain committed to
building on our existing relationships and distribution
partnerships as well as to growing our workplace and direct
channels.
UK & Ireland general insurance
Business overview and strategy
The UK and Irish businesses are managed under a single
management structure and work is progressing to leverage the
scale and expertise that we believe exists in the UK to benefit
the Irish business.
We are a leading general insurer in both the UK and Ireland
with market shares of 10.5%4 and 15.3%5 respectively. We
employ around 9,000 people and operate from a number of
locations throughout the UK and Ireland, including Norwich,
Perth, Glasgow, London, Dublin and Galway.
We focus on personal and commercial insurance. In the UK
we hold top three positions in all our major classes of business6.
We believe our key strengths include underwriting and pricing
sophistication, claims and cost management and excellent
customer service. Our aim is to deliver cash and profitable
growth by focussing on the fundamentals of the insurance
business to maximise underwriting returns and we have a
portfolio strategy to deliver greater stability of earnings.
4 Datamonitor analysis of market share based on 2012 GWP.
5 Irish Insurance Federation, 2012.
6 2012 FSA returns based on GWP data – covers personal motor, homeowner, commercial motor and
commercial property.
Market
The UK is the fourth largest non-life insurance market in the
world7. In 2012, the top four companies had a 32%4 share of
the general insurance market.
The UK and Ireland general insurance markets are cyclical in
nature and remain very competitive, particularly in personal
lines, where the market is highly commoditised.
Following significant premium rate increases in recent years
in response to rising claims costs and frequencies, the UK
personal motor market has continued to see rate reductions in
2013 reflecting intense competition and regulatory change.
Challenging economic conditions also apply to other UK classes
of business, although there are some signs of rates hardening in
the commercial market. In Ireland, the market remains
challenging, reflecting the economic downturn, increased
competition and market contraction of 4.3% in 20125.
In the UK our main competitors are Direct Line Group,
RSA, The Admiral Group, AXA, Zurich, LV, Allianz and Ageas.
In Ireland, our competitors include RSA, AXA, Zurich, FBD
and Liberty.
Products
We provide a wide range of general insurance products both in
the UK and Ireland. In the UK we have a business mix of
approximately 60% personal lines and 40% commercial lines.
Our UK personal products include motor, home and travel
insurance. Our UK commercial products include motor, property
and liability insurance for small and medium size enterprises
(SMEs) and the larger UK Corporate and Speciality Risks market.
In Ireland our products include property, motor, travel, farm
and business insurance and our health insurance business
provides products for both the personal and company sector.
Distribution
We have a multi-distribution strategy. Our personal products
are sold directly to customers over the phone and through our
websites www.aviva.co.uk, www.aviva.ie,
www.quotemehappy.com and www.generalaccident.com,
via brokers and through corporate partnerships. Our
Quotemehappy and General Accident insurance products are
also available through price comparison websites. For
commercial insurance, we focus on broker distribution and
believe that independent brokers remain the best source of
advice for business customers.
France
Business overview and strategy
France is the third8 largest insurance market in Europe. Aviva
France has a significant presence in the French Life insurance
market in which it operates through two main companies: Aviva
Vie and Antarius (JV structure with Crédit Du Nord). Aviva
France is ranked tenth in general insurance as measured by
gross written premiums, according to L’Argus de l’Assurance, as
at 31 December 2012. Aviva France’s strategy is to deliver
sustainable dividends to Group by increasing profitability in our
life business and targeted growth in profitable general insurance
segments.
Market
The life insurance market is driven by individual savings and
dominated by bancassurance, which has accounted for around
60% of the life insurance market over the past decade
according to FFSA8. We believe that customer confidence in
financial markets has been affected but that over a longer
period, multi-funds policies and unit-linked funds are the best
insurance vehicles for performance. We believe the long-term
insurance and savings market in France has longer-term growth
7 Swiss Re Sigma Study (World insurance 2012).
8 Fédération Française des Sociétésd'Assurance (FFSA).