Aviva 2014 Annual Report Download - page 42

Europe
Europe
Overview
We are focused on ve markets in Europe:
France, a mature cash-generating business,
with excellent distribution and good
prospects for further growth; Poland1 and
Turkey, two of the strongest growth
markets in Europe, with relatively under-
penetrated insurance sectors2 where we
are building long-term value; and Spain
and Italy, our two turnaround businesses
where we have been improving capital
efciency and cash generation.
Our European businesses enjoy strong
market positions in life insurance and we
are a composite in three markets, with
general insurance businesses in France,
Italy and Poland. We have around 10.5
million customers in Europe.
Our strategy
Our Europe-wide strategy is to deliver
sustainable and reliable cash remittances
to the Group. Over the last year we
continued to reshape our portfolio, exiting
sub-scale, unprotable businesses and
focusing on capital light products. We
have made some progress in improving
operating efciencies, but we can still do
more in this area.
Our European businesses have also
delivered signicant growth as a result of
shifting our focus to more protable
products, such as unit-linked and zero per
cent guarantee saving products in our
developed markets, while continuing to
protably grow our business in Poland
andTurkey.
Going forward, our priority is to
capitalise on the potential of the
composite model, build scale in protection
and general insurance, and further
strengthen our distribution, especially by
developing our digital capability.
Market context and challenges
We expect stronger employment and
disposable income to drive demand for life
and savings products across the region. We
are well positioned for a macro recovery in
Europe but we are not dependent on it and
have achieved growth despite the
challenges in the Eurozone.
Digital will continue to be a key
differentiator for insurers, as customers are
increasingly looking for more efcient and
customised service through new
technologies and channels.
Financial performance
Our European businesses have delivered
strongly on cash ow and growth. In
particular, we have increased cash
remittances by 17% to £454 million, grown
VNB by 19% to £392 million and reduced
operating expenses by 7% to £596 million.
Life operating prot of £852 million
was broadly at year-on-year, but
improved by 5% on a constant currency
basis primarily driven by France and
Poland. Excluding Eurovita, Aseval and
CxG, which have been sold, life operating
prot grew 5% (11% in constant currency)
with improvements across all markets.
General insurance operating prot of
£113 million was also in line with 2013, but
4% up on a constant currency basis, driven
mainly by improvements in Italy partly
offset by adverse weather experience in
France. Combined operating ratio in
Europe improved to 97.7%.
What excites me
is the prospect
of becoming a
True Customer
Composite insurer
and developing
state-of-the-art
digital services for
our customers.
—
David McMillan
Chairman, Global Health
Insurance and CEO, Europe
1 Aviva’s Polish business also has management responsibility for Aviva’s operation in Lithuania.
2 Dened as total premiums as a proportion of GDP.
3 Restated to reect the changes in MCEV methodology. Refer to the glossary for further details.
38 | Aviva plc Annual report and accounts 2014
Market focus continued