Aviva 2014 Annual Report Download - page 49

Financial performance
Cash remittances were up 14% to
£16million. Fund management prots also
improved, up 16% to £79 million, which
included a £12 million contribution from
the UK retail fund management business
which transferred to Aviva Investors from
UK Life in May 2014. Assets under
management increased by 2% to £246
billion, with favourable market movements
partly offset by net redemptions and the
disposal of River Road Asset Management.
In February 2015, Aviva Investors reached
a settlement with the FCA for certain systems
and controls failings that happened between
August 2005 to June 2013 and agreed to pay
a ne of £17.6million. Provision for this cost
has been made and is fully reected within
theFY14 result. We ensured no customers
were disadvantaged.
2013 operating prot included an
adverse impact of £96 million, reecting
the compensation in respect of the
breaches of the dealing policy and
associated costs.
Operational highlights
In 2014, aside from laying the foundations
for becoming a global leader in outcome-
orientated solutions, we:
• Signicantly strengthened our risk and
control team, with Steve Farrall
appointed as our new Chief Risk Ofcer
and Robin Mitchell as Global Head of
Compliance
• Strengthened our executive team with
the appointment of Mark Versey as
Director of Client Solutions and Susan
Ebenston as Chief Operating Ofcer.
David Lis was promoted to the position
of Chief Investment Ofcer, Equities and
Multi-Assets, and Mark Connolly was
appointed as Chief Investment Ofcer,
Fixed Income
• Streamlined our business, for example
we sold our Asia-Pacic real-estate funds
business and River Road.
Market context and challenges
Aggressive action by central banks in
lowering interest rates has led to
suppressed market volatility and good
performance across a wide range of asset
classes. However with interest and bond
rates already so low it is hard to be very
optimistic about prospective returns. The
low to non-existent returns available on
the lowest risk assets has led to some
increased risk appetite among institutional
investors, however regulatory pressures are
preventing this from going too far. We see
this as presenting a very real opportunity
for an asset manager like us to use our
experience in risk management and
investment insight across a broad range of
asset classes to deliver the outcomes the
institutional investor is looking for and
which can no longer be achieved by the
traditional approaches.
Priorities for 2015
We will:
• Continue to put our clients at the heart
of everything we do
• Strengthen our relationship with Aviva
Group businesses to make maximum use
of Aviva’s powerful brand and sales
network
• Widen our distribution network, with
products available through Aviva and
third party platforms
• Enter new markets, such as the United
States
• Operate as a globally integrated business
in order to continue developing
investment propositions that are relevant
to our clients.
• Create a streamlined and simple business
model that is able to harness scalability
within the organisation.
Towards sustainable
capital markets
We’ve been around for 319 years and we’re
a business that looks to the long term
and looks at how to overcome long-term
risks. We think there are strategic risks to
economic growth in the future:
• An assumption of unlimited natural
resources. This creates a fundamentally
awed pricing system in capital markets.
• Capital markets that are systematically
short term. This magnies the problems
associated with a awed system.
To take a lead on these issues, in
June 2014, we launched our Roadmap
for Sustainable Capital Markets which sets
out clear and practical recommendations
on how our capital markets could promote
and support sustainable growth.
Performance indicators
£16m
(2013: £14m)
Cash remitted to Group
£63m prot
(2013: £26m loss)
Total operating prot
comprising:
£79m (2013: £68m)
Fund management
£2m (2013: £2m)
Pooled pensions
£18m loss (2013: £96m loss)
Other operations
£298m
(2013: £290m)
Operating expenses
£246bn
(2013: £241bn)
Assets under management
www.aviva.com/roadmap/
Strategic report
Aviva plc Annual report and accounts 2014 |45