Aviva 2014 Annual Report Download - page 44

• Aim to become the most trusted
nancial services brand and the rst
choice insurer for key market segments,
including middle income and afuent
customers, and the family segment.
Turkey
Overview
AvivaSA is one of Turkey’s leading private
pension and life insurance companies,
with nearly two million customers.
Our joint venture with Sabancı Group,
one of Turkey’s leading conglomerates,
sells life and pensions products through
banks and agents. Our main distribution
channel is Akbank, one of Turkey’s largest
privately owned banks, with over 900
branches, and part of the Sabancı Group.
We also employ the largest life and
pension direct sales force in Turkey, with
over 600 people, and the fastest growing
agency channel, with over 130 agencies.
In addition, our corporate channel is
ranked number one in employer
sponsored group pension contracts8.
Financial performance
Life operating prot of £10 million
(2013: £8 million) reects improved returns
from our individual pension business.
VNB of £30 million is down 19%
primarily due to adverse foreign exchange
movements. On a constant currency basis,
VNB is down 3%, mainly driven by a
reduction in our share of the business
following the partial IPO in November
2014.
Operational highlights
In 2014 we:
• Launched an initial public offering for a
minority stake in AvivaSA, which valued
our business at TL1.7 billion
(£469 million) and realised £40 million
in cash
• Extended our exclusive bancassurance
agreement with Akbank for another
seven years, until 2029
• Improved the productivity and
protability of our network of agents by
launching new products.
Market context and challenges
Despite uncertainties, 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.
We are well-placed to make
the most of the growth opportunities.
Operational highlights
In 2014 we:
• Further strengthened our distribution
by rejuvenating our direct sales force,
launching new initiatives to increase
agents’ activity and productivity
• Launched our New Network, Aviva
nancial centres offering nancial
products, including insurance, mortgages
and loans. We have a physical presence
in ten new branches and 100 advisors in
large cities where we are under-
represented
• Further enhanced our digital capability,
including establishing our virtual branch.
Market context and challenges
Relatively low insurance penetration in
Poland continues to represent a signicant
opportunity, especially around young and
afuent segments of the population.
Competitive pricing in general insurance
will continue to put pressure on margins
and efciency. We expect to see our
Polish business grow as the insurance
sector matures.
Priorities
In 2015, we will:
• Invest in our existing distribution,
building digital capabilities, improving
remuneration and introducing new
digital sales tools
• Further grow our bancassurance
business with BZ WBK by offering
innovative products and improving
customer retention
Priorities
In 2015 we will:
• Continue to grow our pensions and
protection sales, focusing on maximising
the value of our distribution agreement
with Akbank
• Continue to build our retail network and
improve its productivity
• Leverage the opportunity in afnity to
access the substantial customer base of
other Sabancı Group companies,
working closely with some of the largest
retailers in Turkey, in sectors such as
electronics and energy supply.
Italy
Overview
We are a mid-sized composite insurer,
offering life, general and health insurance.
We are in the top four in the protection
market9 and have a growing position in
the general insurance market.
We operate through strong
bancassurance partnerships, with three of
the ve top banks in Italy – Banco
Popolare, UBI Banca, and UniCredit. We
also operate through a distribution
network of around 600 agents and
brokers.
We have made signicant progress in
restructuring our business and improving
our performance. We remain focused on
capital efciency and delivering cash to
the Group. We have moved from turning
around the business to seizing strategic
opportunities and maximising the
potential of the composite model.
Financial performance
There has been good progress with
improvements across all key nancial
metrics. During 2014 we delivered
improved cash remittances of £32 million
(2013: £12 million) and a 47% increase in
VNB10 to £63 million, which was due to
increased volumes and improved margins
on bonds and savings products.
Total operating prot marginally
increased to £172 million (2013:
£169 million). Life operating prots were
stable at £142 million. Excluding Eurovita,
life prots were up 13% (19% in constant
currency) driven by improved product mix.
There was also a small increase in
prots in our general insurance business,
which led to a 1.2 percentage point
improvement in the combined operating
ratio to 94.0%.
Simplicity and
convenience
Our Aviva Italia app lets our customers deal
with us when and how they want. They
can get access to our agents’ contact details,
nd out more about our products, make a
claim or report an incident and manage
their policies in a secure client area. That
delivers the simplicity and convenience our
customers want.
www.avivaitalia.it/
aviva-app
8 Pension Monitoring Centre, Turkey.
9 IVAA - Istituto per la Vigilanza Sulle Assicurazioni.
10 Excludes Eurovita.
40 | Aviva plc Annual report and accounts 2014
Market focus continued