Aviva 2014 Annual Report Download - page 272

Aviva plc Annual report and accounts 2014
Information on the Company continued
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models will allow us to leverage this position to positively react
to market opportunities. We will continue to address increasing
customer demand for choice, simplicity and self-service by
working with our broker partners on processes and technology
solutions in order to help them compete with other channels.
Market and competition
Canada is the 8th largest non-life insurance market7 in the
world and is established and stable. The four largest provinces
generate around 85% of total premiums with Ontario, the
largest, representing 40% of total Canadian premiums4.
The Canadian general insurance industry is highly
fragmented with many small players and no dominant
consumer brand. Steady consolidation has resulted in the top
five companies representing 40% of the market and the top
two companies, Intact Financial and Aviva, controlling 23% of
the market4.The rest of the industry includes several national
carriers as well as smaller, provincially based or niche
companies.
Whilst direct and affinity channels are gradually increasing in
market share, the traditional broker channel accounts for 66%
of distribution4. In addition to the growth of direct and affinity
channels, insurance carriers are increasingly supporting and
controlling distribution through investment in brokers.
Products
The general insurance products that we provide through our
Canadian companies are:
• Personal, home and motor insurance;
• Small and medium-size enterprise commercial insurance,
including motor, property, liability, boiler and machinery, and
surety; and
• Niche personal insurance products including holiday and park
model trailers, hobby farms, boats as well as antique, classic
and custom cars.
Distribution
We operate in Canada through a distribution network focused
on approximately 1,600 independent group and retail brokers
who distribute our core personal and commercial line products.
In addition, we work closely with both independent and wholly
owned specialty brokers to distribute specialty personal line
products.
Asia
Business overview and strategy
In Asia, we are focused on growth in China and South East Asia.
Increasing the value of our new business remains our first
priority in Asia. We are achieving this through scale benefits and
by focusing our product mix on higher margin products.
In Singapore, our life business is a leading insurer in the
market14, providing employee benefit and individual life
insurance through diversified distribution channels. We also
have general insurance operations in Singapore and are
considered the market leader in online personal motor
insurance15.
In China, through our 50% joint venture with COFCO
Group, we are ranked number 7 among 27 foreign life insurers
in terms of APE as at 30 September 201416. We have a presence
in 12 provinces and over 50 branches. We operate a multi-
distribution platform including agency, bancassurance, direct
marketing, and brokerage channels offering a wide range of
protection and savings products.
14 Latest available competitor results (30 June 2014)
15 The General Insurance Association of Singapore
16 APE data released by National Insurance Industry Communication Club
In Indonesia, we signed an agreement in January 2014 to form
a 50% joint venture with PT Astra International Tbk which
completed in May 2014. As part of this agreement, we entered
into a bancassurance distribution arrangement with Permata
Bank which was launched in December 2014.
In Hong Kong, our wholly owned subsidiary operates
through the bancassurance, IFA, and agency channels, with a
focus on Bancassurance through its preferred relationship with
DBS Bank.
In Taiwan and Vietnam, through our joint ventures with First
Financial Holding and VietinBank, respectively, we aim to grow
our bancassurance businesses and diversify our distribution
networks over the next few years.
In India, with a distribution network of 121 branches, we
operate in partnership with the Dabur Group through a 26%
interest in Aviva Life Insurance Company India Ltd. As at 31
October 2014, we ranked 9th among the private life insurance
companies in India based on Total APE (including Group
Business)17.
During 2014 we completed the disposal of our South
Korean business.
Market and competition
The Asian markets are strategically important to Aviva, owing to
large populations in fast-growing economies, coupled with
relatively low insurance penetration rates and social coverage.
Life insurance penetration (as measured by insurance premium
as a proportion of GDP) in most Asian countries is typically less
than 5% (1.6% in China and Indonesia, 0.6% in Vietnam, and
4.4% in Singapore) 7.
The Asian markets are expected to deliver GDP growth of
6.4%18 in 2015, ranging from 3% in Singapore to 7% in
China19.
Products
Our Asian businesses offer a wide range of protection, savings,
and pension products, including universal life, participating and
non-participating endowments, unit-linked single and regular
premium life insurance, other savings and pensions products,
and a range of accident and health insurance products.
Distribution
Across Asia, we operate a multi-distribution strategy. In
Singapore, we have a core bancassurance relationship with DBS
Bank and also own a majority interest in PIAS, a leading
financial advisory firm. In China, our products are sold mainly
through telemarketing, bancassurance, and agents. In
Indonesia, group business is sold through our direct sales force
and individual business is primarily sold through our
bancassurance channel. In Taiwan and Vietnam, bancassurance
is the main distribution channel. We are also investing in other
channels such as direct marketing and digital to differentiate
ourselves from competitors.
Aviva Investors
Business overview and strategy
Aviva Investors offers a range of fund management services,
operating in the UK, Europe, North America and Asia and had
£246 billion in assets under management as at 31 December
2014 (31 December 2013: £241 billion).
Our largest clients are the long-term insurance, savings, and
general insurance businesses of Aviva, to whom we provide
bespoke asset management services across a broad spectrum of
asset classes.
We provide external clients with bespoke segregated
solutions or offer access to a variety of fund ranges. Our
principal target clients for the larger segregated solutions tend
17 http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_List.aspx?DF=MBFL&mid=3.1.8
18 Asian Development Bank, Asian Development Outlook 2014 update
19 IMF World Economic Outlook, October 2014
268 | Aviva plc Annual report and accounts 2014