Aviva plc Interim Management Statement for the three months to 31 March 2012

A solid start to 2012

LONDON--()--Aviva plc (NYSE:AV) today announced its Q1 2012 Interim Management Statement. In a challenging economic environment, operating profit for the quarter is marginally down compared to the same period last year due to the deconsolidation of Delta Lloyd and the sale of RAC. Adjusting for these, operating profit has marginally increased.

Aviva continues to focus on capital and operating capital generation. Aviva’s estimated IGD solvency surplus at 31 March 2012 was £3.2 billion, ahead of the full year 2011 position (FY11: £2.2 billion) and in line with the position at 29 February 2012 (£3.3 billion). Aviva generated £0.5 billion operating capital in the first quarter and the IFRS Net Asset Value per share increased to 445 pence (FY11: 435 pence).

Long-term savings sales were down 5% at £7.5 billion (1Q11: £7.8 billion) as a result of tough market conditions. General insurance and health net written premiums were level with last year at £2.2 billion (1Q11: £2.2 billion).

Profitability levels are in line with targets: in life insurance the new business internal rate of return was 13.3% (1Q11: 13.7%) and the Group general insurance combined operating ratio was 96% (1Q11: 97%).

John McFarlane, Executive Deputy Chairman, commented:

“Although the economic environment remains uncertain, we have delivered a solid operating performance during the first three months of 2012 and profitability in both our life and general insurance businesses is in line with targets.

“We have begun the process of identifying a new CEO for the Group, internally and externally. We expect this will take the remainder of this year, as we need to appoint the best person in the world available to us. In the interim, I will act as Executive Chairman to ensure we take the necessary actions and decisions to improve the standing and performance of the Group, and to accelerate these actions. I am excited to be playing a pivotal role at what is clearly an important time for Aviva.

“My first task is to make an improvement in the capital and financial strength in the group as well as an improvement in our financial performance. Whilst not underestimating the significance of the challenge I am optimistic of the outcome.

“To this end, last week I announced a new set of priorities for Aviva:

  • Firstly a strategic review of all our businesses to ensure we are focused on the right segments; that we put in place plans to advance the performance and position of our businesses strategically, and exit sensibly those that are not part of our future. These will be reviewed by me and subsequently the Board in June, and we will provide an update to you in July.
  • Secondly to build the capital base and improve the balance sheet strength of the group.
  • Thirdly a profit and value improvement programme involving the dynamic reallocation of capital across our businesses, identifying sources of segmental revenue growth, and improvement in our operating margins and return on capital.
  • Finally a continuous advancement in the foundation of the group and our position with all stakeholders and a frank and open communication with shareholders.

“Aviva has a strong brand, dedicated people and I believe the business has a great future.”

World-wide total sales (excluding Delta Lloyd and RAC)

    Quarter 1

2012

£m

  Quarter 4

2011

£m

  Quarter 1

2011

£m

  Sterling %
change on

4Q11

  Sterling %
change on

1Q11

  Local

currency %
change on

1Q11

Total long-term savings sales   7,465   7,763   7,843   (4 %)   (5 %)   (4 %)
General insurance and health net written premiums 2,236 2,195 2,242 2 % 0 % 0 %
World-wide total sales   9,701   9,958   10,085   (3 %)   (4 %)   (4 %)

IRR

       
    Quarter 1

2012

  Quarter 1

2011

Group IRR (excluding Delta Lloyd)   13.3%   13.7%
   
United Kingdom 15% 16%
Ireland   3%   7%
United Kingdom & Ireland 13% 14%
France 11% 10%
United States 13% 14%
Spain 16% 22%
Italy 12% 12%
Poland 23% 22%
Asia 13% 13%
Other Higher Growth markets   24%   19%

General insurance combined operating ratio (excluding Delta Lloyd and RAC)

  Quarter 1

2012

  Quarter 1

2011

Group 96%   97%
 
United Kingdom & Ireland 97% 100%
France 91% 89%
Canada 95%   98%

Capital position

             
         

31 March
2012

 

31 December
2011

IFRS net asset value per share         445p   435p
MCEV net asset value per share         506p   441p
Estimated IGD solvency surplus         £3.2bn   £2.2bn
 
               
          31 March
2012
  31 March
2011
Operating Capital Generation         £0.5bn   £0.2bn
Investor contacts   Media contacts   Timings   Contents
Pat Regan

+44 (0)20 7662 2228

 

Charles Barrows

+44 (0)20 7662 8115

 

David Elliot
+44 (0)20 7662 8048

  Nigel Prideaux

+44 (0)20 7662 0215

 

Andrew Reid

+44 (0)20 7662 3131

 

Sue Winston

+44 (0)20 7662 8221

  Real time media conference call
0730 hrs BST

 

Analyst conference call
0930 hrs BST

Tel: +44 (0)20 7162 0025

Conference ID: 915458

  Business and financial review 1

 

Business performance 3

 

Statistical supplement 6

Media

The Aviva media centre at www.aviva.com/media includes images, company information and news release archive. Photographs are available on the Aviva media centre at www.aviva.com/media.

Business and financial review

A solid start to 2012...

Aviva’s operating performance during the first three months of 2012 has been solid. Although the market environment is still uncertain, we have remained focused on allocating capital to our chosen markets where we can earn higher returns and increase operating capital generation. Operating profit for the quarter is down marginally compared to last year due to the deconsolidation of Delta Lloyd and the sale of RAC.

...with good operating capital generation

We generated £0.5 billion operating capital in the first quarter, including £0.1 billion benefit from a reinsurance transaction in the UK, and delivered solid profitability levels in both general insurance and life insurance.

A clear focus on profitability in life insurance...

Life insurance profitability is in line with our target. Our disciplined approach to writing life insurance new business underpinned the group internal rate of return of 13.3%. Long term savings sales stood at £7.5 billion, down 5% as a result of the macroeconomic environment in some of our markets and our continued actions to moderate sales of capital intensive products.

In our newly-formed UK & Ireland business life and pension sales were slightly reduced at £2,642 million (1Q11: £2,793 million). In the UK, life and pension sales were £2,443 million with a life new business IRR of 15%. Pension sales in the UK increased 12% and we made further progress in individual annuities and in protection where sales increased 20%. In Ireland, market conditions remain difficult and we continue to restructure the business to improve profitability.

Market conditions remain subdued in our continental eurozone markets, with life and pension sales in Italy and Spain down 23%, and in France life and pension sales declined 14%.

In the US, life and pensions sales increased against a low comparator. As a result we expect sales growth compared with the prior year to moderate in the remainder of 2012.

In our higher growth markets, Asian life and pension sales increased with a particularly strong performance in Singapore, whilst sales in China were down due to intensive pricing competition from bank deposits. In Poland, subdued consumer demand led to a decline in life and pension sales with a shift of focus toward unit linked and protection business.

...and profitable growth in general insurance.

In general insurance the combined operating ratio improved to 96%, driven by our strength in underwriting and the significant improvements we have made over a number of years in costs and customer service.

General insurance and health net written premiums stood at £2.2 billion. In the UK, excluding Ireland, we continued to make good progress, growing the business in those areas where we can earn higher returns. Underlying general insurance sales in the UK were up 3%, excluding both RAC and a one-off corporate partner deal in 1Q11, and we now have approximately 2.3 million personal motor customers with 70,000 new customers since the start of the year. In Canada sales increased by 7% and in total in our other markets sales increased marginally.

Asset management

Aviva Investors increased net funded external sales to over £1 billion in the first quarter and investment performance continues to be good in a challenging economic environment.

Capital management

The estimated group regulatory capital surplus based on the EU Insurance Groups’ Directive (IGD) as at 31 March was £3.2 billion. This is after accruing for the 2011 final dividend of £0.4 billion (net of scrip) and also reflects market movements in the quarter.

Managing the IGD position remains a key focus for us and there are a wide range of actions we can take to mitigate the adverse impact of market movements on the underlying capital generation of the group. These include re-insurance and securitisation as well as on-going earnings generation.

We have continued our equity hedging program – the IGD surplus would be reduced by approximately £0.3 billion in the event of a 20% fall in equity markets from the level at the end of the quarter and by an additional £0.2 billion if markets fell a further 20%.

Our estimated economic capital coverage ratio remains in the range c145% - 150% in line with the FY11 preliminary announcement.1

At the end of the first quarter we had liquid assets of £1.4 billion at the centre of the group. In addition, the group also had access to unutilised committed credit facilities of £2.1 billion provided by a range of leading international banks.

Last month we took advantage of favourable conditions and substantial demand in the credit market to raise $650 million (£400 million) through a hybrid debt issue. We are firmly committed to our plans to reduce hybrid debt, although in the current economic environment we will do this over the medium term.

Asset quality

Our shareholder asset exposure (net of minorities) to debt securities of the governments of Greece, Ireland, Italy, Spain and Portugal (including local authorities and government agencies) at 31 March 2012 was £1.3 billion (FY11: £1.3 billion). We have minimal exposure to the government securities of Greece and Portugal.

Our shareholder asset exposure (net of minorities) to debt securities of banks at 31 March 2012 was £6.3 billion (FY11: £5.9 billion). Within this total £4.1 billion is either covered or senior debt (FY11: £3.7 billion).

Net asset value

The IFRS net asset value per share has increased by 10 pence since FY11 to 445 pence per share driven by the underlying profitability of the business and market movements. There have been adverse movements in the Delta Lloyd yield curve in 1Q12 and the net impact of these included in the Aviva net asset value is a reduction of approximately 7 pence.

The MCEV net asset value per share has risen by 65 pence to 506 pence since FY11, driven mainly by the impact of equity market gains and narrowing credit spreads. There have been adverse movements in the Delta Lloyd yield curve in 1Q12 and the net impact of these included in the Aviva net asset value is a reduction of approximately 7 pence.

Reshaping to simplify and grow

In April we announced a new, flatter organisation as part of our strategy to simplify and bring more focus to the business. As we reduce the number of countries we operate in we have decided to remove the regional layer of our structure and appoint the chief executives of our three largest businesses to the Group Executive Committee.

The changes will result in a simpler and more efficient organisation delivering operational benefits, accelerating delivery of our strategy and providing opportunities for profitable growth. We are moving ahead with these plans and look forward to updating the market further about them, and the associated cost savings, at an investor and analyst event to be held before the interim results.

1 The economic capital surplus represents an estimated unaudited position. The capital requirement is based on Aviva’s own internal assessments and capital management policies. The term `economic capital’ does not imply capital as required by regulators or other third parties. Pension scheme risk is allowed for, through a period of five years of stressed contributions.

Business performance

Developed Markets

In our UK life business long-term sales increased 1% to £2,875 million (1Q11: £2,840 million) in line with our focus on writing profitable new business. Life and pension sales, excluding bulk purchase annuities, increased 6%. Life new business IRR was 15% (1Q11: 16%).

We delivered strong growth in key product lines. In pensions, sales were up 12% to £1,264 million (1Q11: £1,124 million). We performed well in individual annuities where we are the market leader, with sales of £641 million (1Q11: £645 million) and in protection with sales 20% higher at £300 million (1Q11: £250 million).

Bulk purchase annuity sales were lower at £21 million (1Q11: £140 million) as we chose not to write business that did not meet our profitability criteria.

Our UK general insurance business continues to deliver good levels of profitability with a combined operating ratio of 97% (1Q11: 100% excluding RAC). This reflects our ongoing focus on underwriting and claims management in 1Q12. While net written premiums were lower at £974 million (1Q11: £1,013 million excluding RAC), underlying sales were up 3% when the contribution from a one-off corporate partner deal in 1Q11 is excluded.

Personal lines profitability has been good in the quarter with rate growth of 6% in personal motor and 3% in homeowner. Commercial motor rates remain firm in response to rising claims costs and we are starting to see the benefit of the actions taken to improve profitability. We continue to take a disciplined approach to writing business in the competitive commercial non-motor markets, where rating remains in low single digits.

Good progress is being made integrating our UK and Irish businesses. Ireland remains a difficult market and profitability is not yet at acceptable levels: life and pension sales decreased 29% to £199 million (1Q11: £280 million) reflecting the challenging market environment and general insurance net written premiums were lower reflecting continued soft market conditions. Our joint venture with AIB in Ireland was closed to new business from 31 March 2012. Total sales in 2011 through this JV were £432 million.

In France, life and pensions sales declined 14%, broadly in line with the market. The majority of the French sales decline was driven by the AFER product. However, following the 2011 annual AFER rate announcement in January, the AFER business has experienced a partial recovery. Sales through our partnership with Crédit du Nord were resilient, decreasing 2%, a 1% increase on a local currency basis. Protection sales have increased by 5% to £54 million following the introduction of a new long term care product last year. General insurance and health continues to perform well, with net written premiums increasing by 3% mainly due to rate increases.

In Spain difficult economic conditions continue and total life and pensions sales have decreased by 23%. The lending market has been weak and mortgage approvals fell by 41%* but our sales of protection were resilient, helped by targeted sales campaigns in the first quarter, and reduced only 18% (15% on a local currency basis).

In Italy our actions to reduce sales of capital intensive with-profit products led to a decline of 23% in life and pensions sales this quarter. Our focus on adjusting the sales mix has enabled us to retain our leading position in the protection sector although we were impacted by the decline in the mortgage market.

In the US life and annuity sales grew 32% to £1,034 million (1Q11 £786 million), with annuity sales increasing 38% and life sales 17%. The life new business IRR was 13% (1Q11: 14%). Sales in 1Q11 were particularly low and as a result we expect sales growth compared with the prior year to moderate considerably in the remainder of 2012.

In Canada general insurance sales increased 7% to £454 million (1Q11: £426 million). This was led by strong growth in our motor insurance business. Our combined operating ratio improved to 95% due to the benefits of benign weather and our continued focus on writing profitable business, managing costs and using technology to enhance underwriting capabilities.

* According to the Instituto Nacional de Estadistica based on a 41% decrease in the total value of mortgage approvals from the three months to Feb 2011 and the three months to Feb 2012

Higher Growth Markets

In Singapore our bancassurance agreement with DBS Bank continued its strong sales performance. Overall life and pension sales in Singapore were up 56% to £126 million (1Q11: £81 million).

In China the overall market was impacted as bank deposit rates continue to be attractive and insurers shifted their focus from single premium to regular premium sales. Life and pension sales were down 20% to £89 million (1Q11: £111 million) as we saw keen competition in the broker channel where competitors offered large incentives to buy market share.

In India, although life and pension sales were flat at £36 million (1Q11: £36 million), sales increased 9% on a local currency basis as a result of changes in the product mix and improvements to distribution that started in 2011.

In Poland economic concerns subdued consumer demand, contributing to a decline in life and pensions sales of 28%. We have focused the direct sales force on higher profitability unit-linked and protection products which has improved the mix of these products this quarter (1Q12: 73%, 1Q11: 57%). In general insurance there was a 7% increase in net written premiums (14% increase on a local currency basis), supported by improved retention and rate increases.

Aviva Investors

Aviva Investors continued to grow in the first quarter. Net funded external sales were £1.2 billion, up 100% on 1Q11. Further institutional mandates were won in the UK, Middle East and North America.

Assets Under Management were £273 billion (FY11: £263 billion), driven by positive net sales and capital appreciation, which offset adverse foreign exchange movements.

Investment performance continued to be good in a challenging economic environment. 76% of institutional funds performed above benchmark where a benchmark is specified (1Q11: 78%), with 71% of portfolios performing above median against a relevant peer group (1Q11: 74%).

Notes to editors

Aviva provides 43 million customers with insurance, savings and investment products.

We are the one of the UK’s largest insurers and one of Europe’s leading providers of life and general insurance.

We combine strong life insurance, general insurance and asset management businesses under one powerful brand.

We are committed to serving our customers well in order to build a stronger, sustainable business, which makes a positive contribution to society, and for which our people are proud to work.

The Aviva media centre at www.aviva.com/media includes images, company and product information and a news release archive. Follow us on twitter @avivaplc.

All figures have been translated at average exchange rates applying for the period. The average rates employed in this announcement are 1 euro = £0.83 (3 months to 31 March 2011: 1 euro = £0.85) and US$1 = £0.64 (3 months to 31 March 2011: US$1 = £0.63).

Income statements and cash flows of foreign entities are translated at average exchange rates while their balance sheets are translated at the closing exchange rates on 31 March 2012.

Growth rates in the press release have been provided in sterling terms unless stated otherwise. The supplements following present this information on both a sterling and local currency basis.

Cautionary statements:

This should be read in conjunction with the documents filed by Aviva plc (the “Company” or “Aviva”) with the United States Securities and Exchange Commission (“SEC”).

This should be read in conjunction with the documents filed by Aviva plc (the “Company” or “Aviva”) with the United States Securities and Exchange Commission (“SEC”). This announcement contains, and we may make verbal statements containing, “forward-looking statements” with respect to certain of Aviva’s plans and current goals and expectations relating to future financial condition, performance, results, strategic initiatives and objectives. Statements containing the words “believes”, “intends”, “expects”, “plans”, “will,” “seeks”, “aims”, “may”, “could”, “outlook”, “estimates” and “anticipates”, and words of similar meaning, are forward-looking. By their nature, all forward-looking statements involve risk and uncertainty. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements. Aviva believes factors that could cause actual results to differ materially from those indicated in forward-looking statements in the presentation include, but are not limited to: the impact of ongoing difficult conditions in the global financial markets and the economy generally; the impact of various local political, regulatory and economic conditions; market developments and government actions regarding the sovereign debt crisis in Europe; the effect of credit spread volatility on the net unrealised value of the investment portfolio; the effect of losses due to defaults by counterparties, including potential sovereign debt defaults or restructurings, on the value of our investments; changes in interest rates that may cause policyholders to surrender their contracts, reduce the value of our portfolio and impact our asset and liability matching; the impact of changes in equity or property prices on our investment portfolio; fluctuations in currency exchange rates; the effect of market fluctuations on the value of options and guarantees embedded in some of our life insurance products and the value of the assets backing their reserves; the amount of allowances and impairments taken on our investments; the effect of adverse capital and credit market conditions on our ability to meet liquidity needs and our access to capital; a cyclical downturn of the insurance industry; changes in or inaccuracy of assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, lapse rates and policy renewal rates), longevity and endowments; the impact of catastrophic events on our business activities and results of operations; the inability of reinsurers to meet obligations or unavailability of reinsurance coverage; increased competition in the UK and in other countries where we have significant operations; the effect of the European Union’s “Solvency II” rules on our regulatory capital requirements; the impact of actual experience differing from estimates used in valuing and amortising deferred acquisition costs (“DAC”) and acquired value of in-force business (“AVIF”); the impact of recognising an impairment of our goodwill or intangibles with indefinite lives; changes in valuation methodologies, estimates and assumptions used in the valuation of investment securities; the effect of legal proceedings and regulatory investigations; the impact of operational risks, including inadequate or failed internal and external processes, systems and human error or from external events; risks associated with arrangements with third parties, including joint ventures; funding risks associated with our participation in defined benefit staff pension schemes; the failure to attract or retain the necessary key personnel; the effect of systems errors or regulatory changes on the calculation of unit prices or deduction of charges for our unit-linked products that may require retrospective compensation to our customers; the effect of a decline in any of our ratings by rating agencies on our standing among customers, broker-dealers, agents, wholesalers and other distributors of our products and services; changes to our brand and reputation; changes in government regulations or tax laws in jurisdictions where we conduct business; the inability to protect our intellectual property; the effect of undisclosed liabilities, integration issues and other risks associated with our acquisitions; and the timing impact and other uncertainties relating to acquisitions and disposals and relating to other future acquisitions, combinations or disposals within relevant industries. For a more detailed description of these risks, uncertainties and other factors, please see Item 3d, “Risk Factors”, and Item 5, “Operating and Financial Review and Prospects” in Aviva’s Annual Report Form 20-F as filed with the SEC on 21 March 2012. Aviva undertakes no obligation to update the forward looking statements in this announcement or any other forward-looking statements we may make. Forward-looking statements in this presentation are current only as of the date on which such statements are made.

Aviva plc is a company registered in England No. 2468686.

Registered office
St Helen's
1 Undershaft
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Statistical supplement

Contents

Analyses

1. Geographical analysis of life, pensions and investment sales

2. Product analysis of life and pensions sales

3. Trend analysis of PVNBP – cumulative

4. Trend analysis of PVNBP – discrete

5. Geographical analysis of regular and single premiums – life and pensions sales

6. Geographical analysis of regular and single premiums – investment sales

7. Trend analysis of general insurance and health net written premiums – discrete and cumulative

8. Sovereign exposures

9. Exposure to worldwide bank debt securities

1 – Geographical analysis of life, pensions and investment sales

    Present value of new business premiums1
3 months 2012
£m
  3 months 2011
£m
  % Growth
      Sterling   Local2

currency

Life and pensions business  
United Kingdom 2,443 2,513 (3 %) (3 %)
Ireland   199   280   (29 %)   (27 %)  
United Kingdom and Ireland 2,642 2,793 (5 %) (5 %)
France 1,092 1,271 (14 %) (12 %)
United States 1,034 786 32 % 29 %
Spain 402 524 (23 %) (21 %)
Italy 673 874 (23 %) (21 %)
Other developed markets   37   60   (38 %)   (34 %)  
Developed markets   5,880   6,308   (7 %)   (6 %)  
Poland 107 149 (28 %) (22 %)
China 89 111 (20 %) (25 %)
Hong Kong 27 39 (31 %) (33 %)
India 36 36 9 %
Singapore 126 81 56 % 52 %
South Korea 127 124 2 % 2 %
Other higher growth markets   124   126   (2 %)   5 %  
Higher growth markets   636   666   (5 %)   (3 %)  
Total life and pensions – continuing operations 6,516 6,974 (7 %) (6 %)
Total life and pensions – discontinued operations3     796   (100 %)   (100 %)  
Total life and pensions   6,516   7,770   (16 %)   (15 %)  
Investment sales4
United Kingdom and Ireland 432 327 32 % 32 %
Aviva Investors 479 476 1 % 3 %
Higher growth markets   38   66   (42 %)   (44 %)  
Total investment sales – continuing operations 949 869 9 % 10 %
Total investment sales – discontinued operations3     125   (100 %)   (100 %)  
Total investment sales   949   994   (5 %)   (3 %)  
Total long-term savings sales – continuing operations 7,465 7,843 (5 %) (4 %)
Total long-term savings sales – discontinued operations3     921   (100 %)   (100 %)  
Total long-term savings sales   7,465   8,764   (15 %)   (14 %)  

1. Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine the value of new business.

2. Growth rates are calculated based on constant rates of exchange.

3. Prior period discontinued operations represent the results of Delta Lloyd.

4. Investment sales are calculated as new single premiums plus the annualised value of new regular premiums

2 – Product analysis of life and pensions sales

    Present value of new business premiums1
3 months

2012
£m

  3 months
2011
£m
  % Growth
      Sterling   Local2

currency

Life and pensions business  
Pensions 1,264 1,124 12 % 12 %
Annuities 662 785 (16 %) (16 %)
Bonds 128 271 (53 %) (53 %)
Protection 300 250 20 % 20 %
Equity release   89   83   7 %   7 %
United Kingdom 2,443 2,513 (3 %) (3 %)
Ireland   199   280   (29 %)   (27 %)
United Kingdom and Ireland   2,642   2,793   (5 %)   (5 %)
Life 284 243 17 % 15 %
Annuities   750   543   38 %   36 %
United States   1,034   786   32 %   29 %
Pensions 84 137 (39 %) (23 %)
Savings 1,963 2,397 (18 %) (16 %)
Annuities 10 13 (23 %) (23 %)
Protection   147   182   (19 %)   (18 %)
Other developed markets   2,204   2,729   (19 %)   (17 %)
Developed markets   5,880   6,308   (7 %)   (6 %)
Higher growth markets   636   666   (5 %)   (3 %)
Total life and pensions sales – continuing operations 6,516 6,974 (7 %) (6 %)
Total life and pensions sales – discontinued operations3     796   (100 %)   (100 %)
Total life and pensions sales   6,516   7,770   (16 %)   (15 %)

1. Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine the value of new business.

2. Growth rates are calculated based on constant rates of exchange.

3. Prior period discontinued operations represent the results of Delta Lloyd.

3 – Trend analysis of PVNBP – cumulative

    1Q11 YTD
£m
  2Q11 YTD
£m
  3Q11 YTD
£m
  4Q11 YTD
£m
  1Q12 YTD
£m
  % Growth on 1Q11
Life and pensions business – Present value of new business premiums1            
Pensions 1,124 2,742 4,006 5,340 1,264 12 %
Annuities 785 1,610 2,434 3,832 662 (16 %)
Bonds 271 466 638 801 128 (53 %)
Protection 250 490 749 1,025 300 20 %
Equity release   83   160   234   317   89   7 %
United Kingdom 2,513 5,468 8,061 11,315 2,443 (3 %)
Ireland   280   553   757   917   199   (29 %)
United Kingdom and Ireland 2,793 6,021 8,818 12,232 2,642 (5 %)
France 1,271 2,345 3,224 4,047 1,092 (14 %)
United States 786 1,658 2,796 3,932 1,034 32 %
Spain 524 1,015 1,425 1,926 402 (23 %)
Italy 874 1,778 2,517 2,993 673 (23 %)
Other developed markets   60   121   185   201   37   (38 %)
Developed markets   6,308   12,938   18,965   25,331   5,880   (7 %)
Poland 149 305 403 487 107 (28 %)
Asia 426 902 1,343 1,782 442 4 %
Other higher growth markets   91   172   237   320   87   (4 %)
Higher growth markets   666   1,379   1,983   2,589   636   (5 %)
Total life and pensions   6,974   14,317   20,948   27,920   6,516   (7 %)
Investment sales2   869   1,830   2,682   3,473   949   9 %
Total long-term savings sales – continuing operations 7,843 16,147 23,630 31,393 7,465 (5 %)
Total long-term savings sales – discontinued operations3   921   1,255   1,255   1,255     (100 %)
Total long-term saving sales   8,764   17,402   24,885   32,648   7,465   (15 %)

1. Present value of new business premiums (PVNBP) is the
present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine the value of new business.

2. Investment sales are calculated as new single premiums plus the annualised value of new regular premiums.

3. Prior period discontinued operations represent the results of Delta Lloyd up to 6 May 2011 only.

4 – Trend analysis of PVNBP – discrete

    1Q11
£m
  2Q11

£m

  3Q11

£m

  4Q11
£m
  1Q12
£m
  % Growth on 4Q11
Life and pensions business – Present value of new business premiums1            
Pensions 1,124 1,618 1,264 1,334 1,264 (5 %)
Annuities 785 825 824 1,398 662 (53 %)
Bonds 271 195 172 163 128 (21 %)
Protection 250 240 259 276 300 9 %
Equity release   83   77   74   83   89   7 %
United Kingdom 2,513 2,955 2,593 3,254 2,443 (25 %)
Ireland   280   273   204   160   199   24 %
United Kingdom and Ireland 2,793 3,228 2,797 3,414 2,642 (23 %)
France 1,271 1,074 879 823 1,092 33 %
United States 786 872 1,138 1,136 1,034 (9 %)
Spain 524 491 410 501 402 (20 %)
Italy 874 904 739 476 673 41 %
Other developed markets   60   61   64   16   37   131 %
Developed markets   6,308   6,630   6,027   6,366   5,880   (8 %)
Poland 149 156 98 84 107 27 %
Asia 426 476 441 439 442 1 %
Other higher growth markets   91   81   65   83   87   5 %
Higher growth markets   666   713   604   606   636   5 %
Total life and pensions   6,974   7,343   6,631   6,972   6,516   (7 %)
Investment sales2   869   961   852   791   949   20 %
Total long-term savings sales – continuing operations 7,843 8,304 7,483 7,763 7,465 (4 %)
Total long-term savings sales – discontinued operations3   921   334          
Total long-term saving sales   8,764   8,638   7,483   7,763   7,465   (4 %)

1. Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine the value of new business.

2. Investment sales are calculated as new single premiums plus the annualised value of new regular premiums.

3. Prior period discontinued operations represent the results of Delta Lloyd up to 6 May 2011 only.

5 – Geographical analysis of regular and single premiums – life and pensions sales

  Regular premiums     Single premiums
    3 months 2012
£m
  Local currency growth   WACF   Present
value
£m
  3 months
2011
£m
  WACF   Present
value
£m
    3 months 2012
£m
  3 months
2011
£m
  Local
currency growth
Pensions 144   7 %   4.8   695   135   4.5   606 569   518   10 %
Annuities 662 785 (16 %)
Bonds 128 271 (53 %)
Protection 43 10 % 7.0 300 39 6.4 250
Equity release                 1     89   82   9 %
United Kingdom 187 7 % 5.3 995 174 4.9 857 1,448 1,656 (13 %)
Ireland   13   (28 %)   3.7   48   18   3.6   65     151   215   (28 %)
United Kingdom and Ireland 200 4 % 5.2 1,043 192 4.8 922 1,599 1,871 (14 %)
France 23 7.3 167 24 6.5 157 925 1,114 (15 %)
United States 27 23 % 10.5 283 22 11.0 242 751 544 36 %
Spain 21 (22 %) 5.4 114 28 5.5 154 288 370 (20 %)
Italy 26 24 % 5.4 140 22 5.4 118 533 756 (28 %)
Other developed markets   3   (50 %)   11.0   33   6   7.8   47     4   13   (67 %)
Developed markets   300   3 %   5.9   1,780   294   5.6   1,640     4,100   4,668   (11 %)
Poland 9 (18 %) 9.0 81 12 8.7 104 26 45 (37 %)
Asia 77 15 % 4.8 372 67 4.7 318 70 108 (37 %)
Other higher growth markets   16   (20 %)   4.3   68   22   3.1   69     19   22   (10 %)
Higher growth markets   102   4 %   5.1   521   101   4.9   491     115   175   (34 %)
Total life and pension sales – continuing operations 402 3 % 5.7 2,301 395 5.4 2,131 4,215 4,843 (12 %)
Total life and pension sales – discontinued operations1     (100 %)       55   8.9   488       308   (100 %)
Total life and pension sales   402   (9 %)   5.7   2,301   450   5.8   2,619     4,215   5,151   (17 %)

1. Prior period discontinued operations represent the results of Delta Lloyd.

6 – Geographical analysis of regular and single premiums – investment sales

Investment sales   Regular     Single     PVNBP
  3 months
2012
£m
  3 months 2011
£m
  Local
currency
growth
    3 months
2012
£m
  3 months 2011
£m
  Local
currency
growth
    Local
currency
growth
United Kingdom and Ireland 2   1   100 % 430   326   32 % 32 %
Aviva Investors 2 2 477 474 3 % 3 %
Higher growth markets             38   66   (44 %)     (44 %)
Total investment sales – continuing operations 4 3 33 % 945 866 10 % 10 %
Total investment sales – discontinued operations1               125   (100 %)     (100 %)
Total investment sales   4   3   33 %     945   991   (4 %)     (3 %)

1. Prior period discontinued operations represent the results of Delta Lloyd.

7 – Trend analysis of general insurance and health net written premiums — discrete and cumulative

  Net written premiums
          Growth on 1Q11   Growth
on 4Q11
    1Q11
Discrete
£m
  2Q11
Discrete
£m
  3Q11
Discrete
£m
  4Q11
Discrete
£m
  1Q12
Discrete
£m
 
Sterling
%
  Sterling
%
United Kingdom and Ireland* 1,334 1,390 1,323 1,268 1,216 (9 %)   (4 %)
France 359 225 201 231 368 3 % 59 %
Canada 426 599 537 521 454 7 % (13 %)
Other developed markets1   136   112   131   105   124   (9 %)   18 %
Developed markets   2,255   2,326   2,192   2,125   2,162   (4 %)   2 %
Higher growth markets   66   61   67   70   74   12 %   6 %
Total net written premiums – continuing operations 2,321 2,387 2,259 2,195 2,236 (4 %) 2 %
Total net written premiums – discontinued operations2   369   188         (100 %)    
Total net written premiums   2,690   2,575   2,259   2,195   2,236   (17 %)   2 %
 
*UK and Ireland analysed as:
UK GI 1,013 1,045 1,020 1,032 974 (4 %) (6 %)
RAC 79 85 97 (100 %)
UK Health 109 136 97 131 120 10 % (8 %)
Ireland GI and Health   133   124   109   105   122   (8 %)   16 %
United Kingdom and Ireland   1,334   1,390   1,323   1,268   1,216   (9 %)   (4 %)

1. Other developed markets includes Group Reinsurance.

2. Prior period discontinued operations represent the results of Delta Lloyd up to 6 May 2011 only.

     
Net written premiums
  Growth on 1Q11
    1Q11
YTD
£m
  2Q11
YTD
£m
  3Q11
YTD
£m
  4Q11
YTD
£m
  1Q12
YTD
£m
 
Sterling
%
  Local
currency
%
United Kingdom and Ireland* 1,334 2,724 4,047 5,315 1,216 (9 %) (9 %)
France 359 584 785 1,016 368 3 % 5 %
Canada 426 1,025 1,562 2,083 454 7 % 6 %
Other developed markets1   136   248   379   484   124   (9 %)   (7 %)
Developed markets   2,255   4,581   6,773   8,898   2,162   (4 %)   (4 %)
Higher growth markets   66   127   194   264   74   12 %   17 %
Total net written premiums – continuing operations 2,321 4,708 6,967 9,162 2,236 (4 %) (3 %)
Total net written premiums – discontinued operations2   369   557   557   557     (100 %)   (100 %)
Total net written premiums   2,690   5,265   7,524   9,719   2,236   (17 %)   (16 %)
 
*UK and Ireland analysed as:
UK GI 1,013 2,058 3,078 4,110 974 (4 %) (4 %)
RAC 79 164 261 261 (100 %) (100 %)
UK Health 109 245 342 473 120 10 % 10 %
Ireland GI and Health   133   257   366   471   122   (8 %)   (8 %)
United Kingdom and Ireland   1,334   2,724   4,047   5,315   1,216   (9 %)   (9 %)

1. Other developed markets includes Group Reinsurance.

2. Prior period discontinued operations represent the results of Delta Lloyd up to 6 May 2011 only.

8 – Sovereign exposures
Direct sovereign exposures to Greece, Ireland, Portugal, Italy and Spain (net of non-controlling interests, excluding policyholder assets)
31 March 2012   Participating
fund assets

£bn

  Shareholder assets

£bn

  Total

£bn

Greece      
Ireland 0.4 0.2 0.6
Portugal 0.2 0.2
Italy 6.0 0.8 6.8
Spain   0.8   0.3   1.1
Total Greece, Ireland, Portugal, Italy and Spain   7.4   1.3   8.7
FY11 Greece, Ireland, Portugal, Italy and Spain   6.9   1.3   8.2
9 – Exposure to worldwide bank debt securities
Shareholder asset direct exposures to banks (net of non-controlling interests, excluding policyholder assets)
    Shareholder assets     Participating assets
Debt securities   Total
senior
debt
£bn
  Total
subordinated
debt
£bn
  Total
debt
£bn
    Total
senior
debt
£bn
  Total
subordinated
debt
£bn
  Total
debt
£bn
Austria           0.3     0.3
France 0.1 0.1 3.5 1.0 4.5
Germany 0.1 0.1 0.2 0.4 0.5 0.9
Ireland 0.1 0.1
Italy 0.1 0.1 0.3 0.1 0.4
Netherlands 0.4 0.2 0.6 1.6 0.2 1.8
Portugal 0.1 0.1
Spain 0.7 0.2 0.9 1.0 0.2 1.2
United Kingdom 0.5 0.5 1.0 0.8 1.3 2.1
United States 1.2 0.8 2.0 1.0 0.1 1.1
Other   0.9   0.4   1.3     2.0   0.6   2.6
Total   4.1   2.2   6.3     11.0   4.0   15.0
FY11   3.7   2.2   5.9     10.6   3.6   14.2

Contacts

Aviva plc
Media contacts
Nigel Prideaux, +44 (0)20 7662 0215
or
Andrew Reid, +44 (0)20 7662 3131
or
Sue Winston, +44 (0)20 7662 8221

Sharing

Contacts

Aviva plc
Media contacts
Nigel Prideaux, +44 (0)20 7662 0215
or
Andrew Reid, +44 (0)20 7662 3131
or
Sue Winston, +44 (0)20 7662 8221