Aviva 2013 Annual Report Download - page 43

Aviva plc
Annual report and accounts 2013
41
Market focus continued
Strategic report Governance IFRS Financial statements Other information
In order to deliver more to our customers we are
helping our people to reach their full potential by
setting clear performance goals and providing
personal growth and learning opportunities.
We are focused on attracting, developing
and retaining key talent. We remain strongly
committed to helping our people move into
and across the region, building growth and
knowledge from across Aviva.
Full year performance
Asia
2013
£m
2012
£m
Cash remitted to Group 20 25
Operating capital generation 97 80
Operating prot: IFRS basis
Life 96 69
General insurance & health 1(5)
97 64
Expenses
Operating expenses 86 93
Integration and restructuring costs 74
93 97
Value of New Business (VNB) – excluding
Malaysia & Sri Lanka 91 55
Value of New Business (VNB) – total Asia 92 63
Combined Operating Ratio (COR) 108.1% 105.6%
IFRS prot before tax 98 62
Overall operating performance in Asia has been
strong, with satisfactory growth in the value of
new business and operating prot.
Growing VNB is the critical performance
objective in Asia and we achieved 65% growth
in 2013 to £91 million (2012: £55 million). Life
operating prot also grew by 39% to £96 million
(2012: £69 million).
Singapore and China were the main
contributors to both VNB and operating prot
growth. Singapore grew VNB by 52% to
£64 million through a combination of sales
growth across all distribution channels and a
shift in product mix to protection sales.
China grew VNB by 74% to £16 million as a
result of a focus on more protable protection
products and repricing action in the less protable
bancassurance and broker channels. A notable
success in China was the launch of our ‘all-in-one’
protection product in September.
The relatively high general insurance combined
operating ratio of 108.1% is due to an increase in
reserves in Singapore’s motor book following a
change in the reserving methodology.
We have continued to strengthen our
management team in Asia. In 2013 we appointed
Khor Hock Seng as Chief Executive of Aviva Asia.
Khor has over 30 years’ experience of the Asian
insurance market and has the requisite market
and cultural knowledge that is critical to success
in the region. During the year we also appointed
a highly experienced human resources director,
Margaret Chiu; Ken Rappold will be joining us
shortly as our Asia Regional CFO; and we have
appointed Trang Nguyen Ngoc as CEO of our
Vietnamese business.
The market in 2014
South East Asia and China are expected to deliver
relatively good GDP growth in 20143. Importantly,
life insurance penetration remains low in these
markets, ranging from 0.6% in Vietnam to 4.4%
in Singapore4, and we expect this to increase over
the coming years.
The combination of favourable demographic
trends, low insurance penetration and the
region’s rapidly expanding middle class makes
Asia attractive to life insurance companies.
China is currently the fourth largest life
insurance market in the world, and is expected to
overtake Japan as Asia’s largest market in the next
decade4. Singapore has recently been growing at
an average annual growth rate of 15% for new
business5.
Indonesia is one of the world’s fastest growing
life insurance markets with a population of 245
million, making it the fourth largest population in
the world6. It also has low insurance penetration
and a growing consumer class.
The regulatory landscape continues to evolve
with a focus on risk and solvency management
as well as greater interest in sales practices. All
international insurers, like Aviva, benet from
being able to draw on their experience of other
regulatory environments around the world to
respond effectively.
Taken together, these trends underline the
attractiveness of holding selective positions in
Asia, where signicant growth over the long term
is possible.
Street to school
programme
Aviva Asia takes its
responsibilities to society
very seriously and supports
some of the region’s most
vulnerable citizens –
street-connected children.
This year the Asian business
helped over 130,000
children and our employees
and customers dedicated
over 15,000 hours of work
to voluntary projects for
Aviva’s Street to School
programme. Over the
year we entered into
new community projects
in Indonesia to help street
children in Jakarta, held
an awareness campaign
on the plight of left-behind
children in China and
hosted a round table with
the United Nations in
Singapore on the rights of
street children in South East
Asia, to name just a few of
our initiatives.
4 Swiss Re Sigma No 3/2013, Swiss Re Asian Insurance Outlook March 2013.
5 Life Insurance Association, Singapore, 2009-2012.
6 World Development Indicators, The World Bank.
For more information on nancial
performance see ‘Other Information –
Financial and Operating
Performance’ in our annual report
and accounts