Aviva 2013 Annual Report Download - page 36

Aviva plc
Annual report and accounts 2013
34
Market focus continued
David McMillan
CEO, Aviva Europe
Business
in brief:
Europe
We offer:
Pensions, protection,
annuities, bonds and
savings, personal and
commercial general
insurance, health
insurance
12.9m1
Customers
6,600
Employees
Market type
Cash generator
France
Growth
Poland, Turkey
Turnaround
Spain, Italy
For more information
about market priorities,
turn to page 20
Europe
We are focused on ve markets: France, a strong cash
generator; Poland and Turkey, growth markets; and
Spain and Italy which we are turning around.
Our strategy
Our strategy for the European business is to
continue improving operational performance
and to deliver sustainable and reliable cash
remittances to Group. We focus on capital
efcient products that meet the needs of
our customers.
We will deliver our strategy through
maintaining our strong presence in protable
segments in France. We will conclude the
turnaround of our Italian and Spanish businesses
so they are well-positioned to benet from
recovery in their markets, and capitalise on
growth opportunities in Poland and Turkey
through a multi-product multi-channel strategy.
This is underpinned by a continuous focus on
balancing cost efciency and investment.
Full year performance
Over the past year we have made signicant
progress in transforming our European portfolio
and have increased cash remittances to Group
by 13% to £388 million. Value of New Business
(VNB) grew by 12% to £303 million, protability
improved in general insurance and we delivered
modest cost savings.
Life operating prot was £851 million (2012:
£869 million). Excluding Aseval (which was sold
in April 2013), life operating prot is up 5%.
This was primarily driven by strong growth in
France and Poland as margins improved and
expenses reduced. General insurance operating
prot increased by 14%, largely driven by the
continued turnaround in Italy. Our operating
expense base reduced by 3% (7% in local
currency) as we continue to focus on efciency.
We have also successfully reshaped our
portfolio, disposing of a number of non-core
businesses.
Our European businesses should benet both
from any macroeconomic recovery and also from
our strategic focus on value and capital efciency.
Europe
2013
£m
2012
£m
Cash remitted to Group 388 343
Operating capital generation 558 571
Operating prot: IFRS basis
Life 851 869
General insurance & health 112 98
963 967
Expenses
Operating expenses 644 662
Integration and restructuring costs 34 28
678 690
Value of New Business (VNB) 303 271
Combined Operating Ratio (COR) 98.1% 99.4%
IFRS prot before tax 1,144 931
France: cash generator
Our strategy and full year performance
Our French business is one of Aviva’s main cash
generators whilst also delivering protable
growth. Our strategy is focused on delivering
sustainable dividends to Group through
increasing protability in our life business,
targeted growth in attractive general insurance
market segments, and a continuous focus on
efciency and customer service.
In France we have a market share of 4% in
life and 2% in general insurance2. We have
a well-diversied presence across products,
channels and customer segments with over
3.2 million customers and over €80 billion of
assets under management.
One of our key strengths is our diverse
distribution model. We have a large owned
distribution network including more than 900
tied agents and UFF (the largest IFA network with
a 10% market share). We distribute our products
1 This represents unique customers and not the number of people who are covered by our policies, which is considerably more.
2 According to Fédération Française des Sociétés d’ Assurances (FFSA), 2012.