Aviva 2013 Annual Report Download - page 38

Aviva plc
Annual report and accounts 2013
36
Market focus continued
We have launched a virtual branch selling life
investment products directly to customers, set
up agreements with price comparison sites to
sell our products, and invested in social media
engagement. We are one of the biggest
direct general insurance providers with a
15% market share¹.
We are the second largest pension provider
based on assets under management. The Polish
government has now introduced legislation
changing the pensions system; however our
pensions business has been closed to new
customers since 2011, therefore the impact
of the changes on VNB will be marginal.
Our life business generates most of our
operating prot and cash in Poland. The life
market remains attractive and we plan to
continue to grow our life business in 2014.
We will do this by increasing the productivity
of our current direct sales force, launching a new
branch based network with a focus on a younger
demographic, selling both insurance and
other nancial products (including third-party
mortgages and loans), and further developing
innovative online solutions.
Operational efciency has continued to
improve, driven by automation and digitalisation
of core processes and implementation of
customer self-service tools. This is an area we
plan to invest more in over the next few years.
In Poland, VNB increased strongly to £51
million (2012: £35 million) driven by higher
sales and improvements in product mix. Total
operating prot increased to £184 million (2012:
£167 million) and there was also an increased
dividend of £85 million (2012: £70 million).
Turkey
Our life business in Turkey, which operates
through a joint venture with Sabanci Group,
continued to show strong growth in 2013. VNB
increased 23% to £37 million (up 28% in local
currency). Life protection premiums increased
year-on-year by 33% and pension contributions
by 80% driven by favourable regulatory
developments.
Changes to pensions legislation effective
January 2013 have helped to improve VNB.
The introduction of a 25% government matching
contribution has encouraged customers to set
up or recommence personal contributions.
The benet of these additional contributions has
been only partially offset by a legislated reduction
in fund and allocation charges.
Our main distribution channel is Akbank, one of
the largest private banks in Turkey, part of the
Sabanci Group. We have successfully piloted a
hybrid distribution arrangement using our sales
force to sell in Akbank branches.
In 2013, we increased our bancassurance
distribution with three new partnerships with
Abank, Odeabank and Burgan Bank.
Our life and pensions business has the largest
direct sales force in the market. We are focused
on expanding our direct sales force and agency
channel, whilst we are also exploring afnity
partnerships within the Sabanci Group.
In 2014 we are looking to pilot the sale of
pension and protection products through the
retail branches of other Sabanci Group
companies including Carrefour SA and EnerjiSA.
We are focused on operating excellence and
we are currently consolidating all our operating
platforms into one, to provide better customer
interactions, improve efciency and reduce
operational complexity.
We also have a small, fully owned general
insurance business in Turkey that is held for sale
at the year end. In 2013 we have reduced
premiums to focus on more protable segments.
Performance continues to be unsatisfactory
despite 13.2 percentage points improvement
in COR.
The market in 2014
The economy in Poland remains resilient with
insurance penetration forecast to continue
to increase from current low levels.
The political and economic environment in
Turkey remains uncertain. However, we believe
this market offers strong long-term potential for
protable growth, with its young population,
good economic growth and increasing demand
for nancial products.
In both markets we are well-placed to make
the most of the growth opportunities.
Our strategic
focus has shifted from
targeting volume, to
preserving capital and
creating value.
David McMillan
CEO, Aviva Europe
Business
in brief:
Poland and
Turkey
In Poland, we
distribute through:
Two joint ventures
and six bank partners,
2,300 tied agents,
600 multi-agencies,
800 brokers
In Turkey, we
distribute through:
Akbank and other
partners (1,100
branches), 700 direct
sales advisors,
140 agencies
5.6m
Customers
1,400
Employees
1 Polish Insurance Chamber.
For more information
about market priorities,
turn to page 20