Aviva 2014 Annual Report Download - page 8

Dear
shareholder
I am enormously pleased that 2014
hasbeen another year of progress for
Aviva in its transformation to become
one of the best performing nancial
institutions in our sector
Aside from good organic business
performance, the year culminated with the
announcement of the proposed acquisition
of Friends Life, which will give us a
considerably stronger underpinning.
A strong management team
Our Chief Executive Ofcer, Mark Wilson,
has completed his second year with us and
the advancement of the group under his
leadership over a relatively short period
has been impressive.
During this time, he has assembled a
management team that is not only able to
deliver good business performance, but
who have considerable potential for the
future. I know you would wish me to
thank Mark and the team for their
contribution.
A clear strategy
Under Mark’s leadership, Aviva now has
a clear purpose, is embracing new cultural
values around our people, our customers
our shareholders and the communities
where we do business, and has articulated
a clear strategy for the future.
Proposed acquisition of Friends Life
While Aviva’s recent organic growth and
return prospects already present a
compelling investment proposition, the
proposed acquisition of Friends Life not
only consolidates our leading position in
the UK, it offers greater dividend capacity
and balance sheet strength than would
otherwise have been possible organically.
I believe it offers an attractive outcome to
both Aviva and Friends Life shareholders.
Operating performance
Headline operational performance
improved in the year, despite having been
impacted by a stronger sterling exchange
rate and the decline in the annuities market
following the Chancellor’s Budget decision.
Operating prot on an IFRS basis grew
by 6% during the year to £2,173 million,
which included lower operating expenses,
down 7%. Value of new business
increased by 11% to over £1 billion and
there was a 1.6 percentage point
improvement in the combined operating
ratio to 95.7%. Net asset value increased
to 340 pence per share and shareholders
beneted from a total shareholder return
of 11.5%.
Dividend
In line with the statement we made in the
formal offer for Friends Life, the Board has
declared a nal dividend of 12.25 pence
per share (2013: 9.40 pence) representing
a 30% increase on the 2013 nal dividend
per share, and a 2014 full year dividend of
18.1 pence (2013: 15.00 pence), up 21%.
Board and governance
It has indeed been an honour to have
served you as your Chairman, and with
Board and management colleagues for
whom I have the greatest respect.
However, as was announced in
September, I shall be standing down from
this position at the Annual General Meeting,
and will be replaced by Sir Adrian Montague,
our Senior Independent Director.
The membership of the Board was
largely unchanged in the year, with the
exception of Tom Stoddard who joined
us as Chief Financial Ofcer in April 2014,
following Pat Regan’s departure, and he
already has made an important
contribution.
Following the completion of the
proposed acquisition Sir Malcolm
Williamson, Chairman of Friends Life, will
join the Board of Aviva plc as Senior
Independent Director, and Andy Briggs, the
Group Chief Executive of Friends Life, will
become Chief Executive Ofcer of Aviva UK
and Ireland Life, the merged UK life
business of the combined Group and also
joins the Board. We look forward to both
Sir Malcolm and Andy joining the Board.
Gay Huey Evans has decided to retire
from the Board from the conclusion of the
2015 AGM and on behalf of the Board I
John McFarlane
Chairman
4 March 2015
04 | Aviva plc Annual report and accounts 2014
Chairman’s statement