Aviva 2013 Annual Report Download - page 29

Aviva plc
Annual report and accounts 2013
27
Strategic report Governance IFRS Financial statements Other information
Measuring our performance in 2013 continued
Financial key performance indicators Our performance
Expenses
Expenses
2011 2012 2013
261
3,366
461
3,234
363
3,006
Integration and restructuring costs – continuing (£m)
Operating expenses – continuing (£m)
Relevance and measurement Performance
Managing our expense base is essential
to delivering our investment thesis to
improve competitiveness. Expenses
include integration and restructuring
costs and operating expenses. Operating
expenses include claims handling costs,
non-commission acquisition costs and
other expenses.
Operating expenses (on a continuing
basis) reduced by 7% showing the
impact of cost savings initiatives across
all markets. The overall 2011 baseline
for the Group-wide expense reduction
target is £3,366 million, meaning that
£360 million of savings out of the £400
million target have been delivered by
the end of 2013. On a continuing basis,
integration and restructuring costs were
21% lower than 2012 and mainly
include expenses associated with the
Group’s transformation programme.
Value of new business (VNB)
Value of new business – excluding Malaysia
and Sri Lanka (£m)
2011 2012 2013
811
738
835
Relevance and measurement Performance
Value of new business is a key measure
of our growth and the source of future
cash ow in our life businesses. VNB is
calculated on a Market Consistent
Embedded Value (MCEV) basis.
Value of new business increased 13%,
primarily driven by France, Asia1, Poland
and the UK. Growth in these markets
was partly offset by reductions in Italy,
which was impacted by lower product
margins, and Spain, where volumes and
margins were affected by difcult local
market conditions and the disposal
of Aseval.
General insurance combined operating ratio (COR)
General insurance combined operating ratio
(%) excluding Delta Lloyd and RAC
2013
97%
2012
97%
2011
98%
Relevance and measurement Performance
COR measures the protability of
general insurance business. A
percentage below 100% indicates that
the general insurance business has
delivered an underwriting prot. COR
is calculated as net incurred claims
expressed as a percentage of net earned
premiums, plus written commissions
and expenses expressed as a percentage
of net written premiums.
Protability in our general insurance
business decreased slightly to 97.3%
(2012: 97.0%) principally due to the
impact of the Alberta and Toronto oods
in Canada, which more than offset the
positive effect of favourable weather in
the UK & Ireland and improved
underwriting discipline in Europe.
1 Excluding Malaysia and Sri Lanka.