Aviva 2014 Annual Report Download - page 12

fundamental questions dening our
business strategy: what we do, how we
do it and where we do it.
Firstly, we are a True Customer
Composite, which means we can provide
customers with life, general and health
insurance and asset management in one
place. We are in a peer group of one –
the only true composite of scale in the UK
and one of only a few in the world. Our
aim is to offer customers one view of
Aviva - one statement, one premium, one
phone number and one log-in.
Secondly, Digital First. Digital is
increasingly how our customers want to
deal with us – and how we will serve
them. Therefore if it is a choice of where
we will invest, it will be in digital rst
across any channel.
Thirdly, Not Everywhere. We are not
interested in planting ags or being in
100 countries. Our focus is on a select
number of markets and segments where
we have scale and protability or a
distinct competitive advantage – where
we can win.
Our people
Turnarounds are not delivered by strategies
or nancial engineering. They are
delivered by people. I want to thank our
people for their dedication and
commitment, which has helped Aviva
make such progress.
Over the past two years, Aviva
employees have seen signicant change.
Despite the sometimes difcult choices
that have had to be made, 2014 saw
employee engagement markedly improve
– in particular in levels of pride, motivation
and advocacy. These now stand above
sector benchmarks. We have attracted
some of the best talent in the market to
our senior team – although they are well
aware they will be judged by their
performance rather than their CVs.
I also want to pay a personal tribute
to John McFarlane, who will step down
as Chairman at the AGM. John has
shown strength and subtlety as Chairman
and I am grateful for his guidance and
challenge. John became Chairman during
a challenging time for the business and
has left with the business in a stronger
position. Following the AGM, John will
be replaced by Sir Adrian Montague.
We have already beneted from working
with Sir Adrian as Senior Independent
Director and look forward to working
with him as Chairman.
Going Forward
The proposed Friends Life transaction
speeds up our turnaround. A successful
integration of Friends Life is a major focus
and it is important to demonstrate our
ability to execute on our plans and achieve
our external objectives. This is a bare
minimum.
While the proposed integration of
Friends Life is a major exercise, there are
large parts of the business that are not
involved and we will continue to focus
on better capital allocation and efciency
across the entire group, driving digital
throughout the organisation and building
our true customer composite model.
Aviva has travelled a long way in the
past two years. But it would be wrong
to assume that our turnaround is nearing
completion. On the contrary, we have
further to travel than the distance we
have come – and in 2015 the Friends Life
transaction allows us to reset our
expectations once again.
Proposed
acquisition of
Friends Life
Our proposed acquisition of the FTSE
100 life insurer, Friends Life, is good for
shareholders and customers alike. They
will benet from being part of a strong,
more diversied and resilient business
with a wide range of products:
• It is consistent with our investment
thesis of cash ow plus growth creating
c.£600 million of incremental cash ow
• We expect annual run rate cost savings
of £225 million by the end of 2017
• It will create the UK’s leading insurance,
savings and asset management
business with c.16 million customers1,
equivalent to accessing one in four
households.
• We are an iconic British business and this
acquisition will increase our scale in
attractive segments of our home market
• We are stronger together, with the best
of both companies giving us a leadership
position in the growing corporate
pensions and protection markets
• It will increase our assets under
management at Aviva Investors by up
to £70 billion (a 28% increase)2
• It will increase our cash ows, reduce
our leverage and support continued
growth in our dividend
• It will allow us to invest in our other
businesses for growth.
Strengthened
management team
We made a number of senior appointments
in 2014 to strengthen our management
team and bring new skills into the Group. Chris Wei
CEO, Global Life Insurance
and Chairman Asia
Andrew Brem
Chief Digital Ofcer
Tom Stoddard
Chief Financial Ofcer
Monique Shivanandan
Chief Information Ofcer
Euan Munro
CEO, Aviva Investors
1 Based on customer numbers as at 31 December 2013 and prior to the deduction of overlapping customers.
2 Based on 2014 funds under management.
08 | Aviva plc Annual report and accounts 2014
Group Chief Executive Ofcer’s statement continued