Aviva France Bruno Rostain

Transcription

1 Aviva France Bruno Rostain Avivaplc

2 Aviva s market position and prospects Antarius (Crédit du Nord) AFER Financial results and conclusions Appendix: Aviva s unit-linked fund performance Slide 18

3 French life market in bn France market premium income Non bancassurance CAGR = 4.4% (estimation) Bancassurance Agents Sales force Brokers Direct The French Life market by distribution channel (premiums received) Sales force 16% Brokers 9% Agents 8% Direct & Others 6% Banks 61% Group pensions 7% The French Life & Health market by class of business (estimated at end Dec. 2003) Protection 17% Individual savings & pensions 76% Source: Fédération Française des Sociétés d Assurances (2002) Slide 19

4 Aviva s market position and prospects - Strong track record in existing sectors Aviva France new business By distribution 2003 premium by type of business In m CAGR = 7.9% compared to 4.4% for the market Group pensions 0.5% Protection 2.5% Agents Sales force Captive Brokers Other Brokers Direct Savings 97% focus on individual savings and pension business 3.5% market share, ranking it 7th in terms of reserves and 10th in terms of new business higher proportion of unit-linked business than the market as a whole high degree of control over its distribution channels Existing channels have outperformed market growth Slide 20

5 Aviva s market position and prospects - High degree of control over distribution, with a focus on profitability Médéric Epargne Aviva Vie Salaried network 450 staff 51% Sales force Aviva Direct Direct sales Direct & Others Banks Brokers 100% Agents Epargne Actuelle: a captive broker dedicated to AFER Independent brokers Other captive brokers Aviva Assurances Tied agents Aviva owns customer interface Joint venture Capital link with % of ownership UFF: a network of financial advisors 800 staff 76% 50% Antarius (Crédit du Nord) Bank distribution from Oct Slide 21

6 French Life insurance market bn CAC Unit-linked fund turnover (monthly market average) CAC DSK tax efficient products commence Q Unit-linked sales are historically highly geared to market levels Life and savings turnover on a monthly average Sources: Euronext and Fédération Française des Sociétés d Assurances Slide 22

7 Aviva s market position and prospects - Aviva is positioned to benefit from market improvement 100% Unit-linked share of individual savings 80% 60% 40% 20% Aviva France Total France Market Aviva France - AFER Aviva France - non AFER 0% Q04 Aviva France non-afer business is mostly unit-linked, more so than the market Aviva France s objective is to pursue and increase its sales development in unitlinked products supported by Aviva Gestion d Actifs award-winning performance Slide 23

8 Aviva s market position and prospects Antarius (Crédit du Nord) AFER Financial results and conclusions Appendix: Aviva s unit-linked fund performance Slide 24

9 Antarius (CdN) joint venture Key benefits for Aviva Partnership with Crédit du Nord begins 1st October 2004 for a minimum of 12 years Exclusive distribution for most product types through CdN s network of over 600 branches with access to a 1.2+ million strong customer base Collaboration in Life follows successful cooperation in General insurance Aviva to provide administration management and fund management of euro funds on its own systems The IT development costs have been taken in the Profit and Loss accounts Slide 25

10 Antarius (Crédit du Nord) business model Crédit du Nord Aviva France 50% 50% Commercial Network CdN asset management Fund management of unit-linked funds Antarius Antarius contracts Managing entity Administration Technical Accounting Legal Aviva Gestion d Actifs Fund management of Euro funds Slide 26

11 Antarius (CdN) outperformed peers 2003 new business: 769m representing around 70% of non AFER new business Mathematical reserves at 31/12/2003: 3.4bn (of which 40% unit-linked) Cumulative new business growth over two years (base 100 in 2001) + 40 % + 30 % Antarius (CdN) (+35%) Sogecap (+31%) Crédit du Nord customer coverage: 17% + 20 % Market (+11%) + 10 % UAF / Natio Vie (+16%) ABP / Prédica (+14%) CNP (+10%) Erisa / CM-CIC (+8%) 0 % Slide 27

12 An attractive proposal for Crédit du Nord What Aviva offers Effective collaborative relationship already proven in General insurance Worldwide bancassurance experience and local product expertise Re-usable supporting systems Benefits for Crédit du Nord Confidence in business partnership No learning curve, full range of competitive products today Efficient platform providing cost efficiencies Class leading fund management performance Competitive product offering and improved growth and profits Slide 28

13 Antarius - Return on investment and financing Projected IRR (p.a.) over 12 years 17% 16% 15% 14% 13% 12% 11% 10% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% CAGR of new business (assumes 25% unit-linked) Funding uses existing resources in France with low initial capital payment Cost = EV + Cardif exit costs + systems development costs Modest statutory profit anticipated from Antarius This acquisition will not impact our capacity to deliver regular dividends to the Group Slide 29

14 Antarius (CdN) - 30% improvement in Aviva s non AFER operational efficiency Existing business Antarius Situation post Change excluding AFER Antarius and Protection business (Aviva Direct) Operational expenses for portfolio administration: 78m +Antarius - savings = 78m + 0% Policies in-force: = % Technical reserves: 12.3bn + 3.4bn = 15.7bn + 28% Aviva s objective is to handle Antarius volumes within existing cost-base Slide 30

15 Aviva s market position and prospects Antarius (Crédit du Nord) AFER Financial results and conclusions Appendix: Aviva s unit-linked fund performance Slide 31

16 AFER: unique in the French market Successful association for over 25 years: Representing funds of 30bn and over customers With a single product concept, sold in two versions: a euro product first and now a multi-support Strong customer loyalty built on low charges and strong financial performance year after year: 76% of new business comes from existing customers Around 35% of new members are introduced through existing customers Low lapse rate: 2.7% The AFER bonus rate has always been a reference on the French market Efficient distribution through: Epargne Actuelle, a captive broker, which has some 80 staff, operates in 35 agencies, with around customers, representing 34% of AFER premium income Aviva Assurances tied agents Low loadings and low administration cost (0.475% and 0.10% respectively; see appendix 1) Slide 32

17 AFER prospects We are optimistic as to the prospects for this important distribution channel following the agreement, signed in October It should unleash AFER s potential. 40% 30% 20% 10% 0% % Growth FY 2001 FY 2002 FY 2003 Q Aviva France - AFER euros French Market - euros The target for 2004 is to increase the proportion of unit-linked sales In m ,0% ,9% AFER New Business (average monthly volumes) 5,4% ,2% 11,4% ,2% ,0% 20% 15% 10% 5% YTD Nov. 03 Disc Dec. 03 Disc Jan 04 Disc Feb 04 Disc March 04 0% AFER U.L. AFER euros % UL/Total Slide 33

18 AFER unit-linked margin benefit AFER Technical Provisions Euro/Unit-linked (in bn) Euros Unit-linked % Unit-linked LNB from 2004 Margin benefit Uplift on Total Net/Net AFER Margin 6% (1) 1.3% 15% 3.2% 20% 4.3% 25% 5.3% (1) Actual FY 2003 % of LNB Assumptions: Total AFER growth of 7% UL: 15% of new business Slide 34

19 Aviva s market position and prospects Antarius (Crédit du Nord) AFER Financial results and conclusions Appendix: Aviva s unit-linked fund performance Slide 35

20 Aviva France a positive contribution to the Group 2.2 Opening Embedded value (in bn) Pre-tax Life achieved operating profit (in m) APE (in m) & New business margin (gross of tax & cost of SSM in %) 300 Pre-tax Life MSSB operating profit (in m) % % Q % APE 1Q APE 2Q to 4Q NBC margin G/G Ytd Slide 36

21 Pensions reform in France Precise conditions were finalised in April 2004 First PERP products launched in Q Anticipated business of around 1bn in 2004, as consumers adapt to longer-term saving commitments, thanks mostly to transfers from existing savings Savings rate in France is already high Aviva France viewpoint: Several PERP products will be launched: PERP AFER: decision to be taken PERP non AFER: June 2004 launch PERP Crédit du Nord: May 2004 launch The PERP is an opportunity for our networks It is an additional product through which we can satisfy our clients need for pension provision and develop regular premium business Marketing approach to be based on informing the customers and stressing our specialist pensions know-how, so as to differentiate our offer from the mass campaigns run by the banks Slide 37

22 Conclusions Significant potential to increase higher margin unit-linked sales supported by current trends: strong performances of Aviva Gestion d Actifs high degree of control over distribution networks market recovery Antarius provides not only a strong return on investment, but also an opportunity to lock-in unit cost reductions on existing business AFER performances are strong, with scale advantage and upside unit-linked potential We see new PERP market as a medium / long-term growth opportunity, creating additional marketing opportunities for existing products Slide 38

23 2004 Aviva s unit-linked fund performance - Aviva Gestion d Actifs: an award-winning asset manager... for particular funds for fund ranges 2003 Lipper Fund Awards Best fund: international convertible bonds - Victoire Convertibles Prix L Agéfi 2nd prize over 3 years: diversified euro fund category - Victoire Profil Equilibre Prix Le Revenu Gold award: international bond fund over 10 years - Victoire Oblig International Bronze award over 10 years - Victoire Sécurité Europe Prix La Tribune / Standard & Poor s Gold award: best Euro zone equities fund over 3 years - Victoire Actions Euro Lipper Fund Awards Best fund: international convertible bonds - Victoire Convertibles Best fund: Defensive profile Europe - Victoire Sérénité Best fund: Euro zone equities - Victoire Actions Euro Prix La Tribune/Standard & Poor's Gold award: best provider of extended fund range over 5, 3 and 1 year Prix Investir Magazine Golden laureate for SICAV range over 5 years Prix Mieux Vivre Votre Argent Gold award: fund management over 5 years all sectors Silver award: fund management over 1 year all sectors Prix Le Revenu Insurance sector awards: Bronze award: overall performance over 3 years Gold award: Euro zone shares over 3 years Silver award: international shares over 3 years Gold award: international bonds over 3 years Silver award: diversified funds over 3 years Prix La Tribune / Standard & Poor s Gold award: best provider of extended fund range over 3 years Gold award: best provider of extended fund range over 1 year

24 AFER distribution costs and charges Appendix 1 Loadings Acquisition 3% of new business 2.66% commissions Paid to distribution channels 0.34% Resource for the insurer to cover sales/advertising costs % Administration costs Administration 0.475% on mathematical reserves 0.06% 0.315% Other net costs Margin before cost of capital and tax Slide 40

25 Aviva s unit-linked fund performance - Aviva Gestion d Actifs: the asset manager of Aviva France The consistently strong performance of AGA is a powerful sales support for our Life operation. Focus on a limited number of UCITs (around 35), mainly based on Euro zone and bonds Extremely low cost base as a percentage of funds under management (expenses of 2.7 bp at end 2003) 49bn funds under management (vs 44bn end 2002) 72 staff - of whom 12 are specialist fund managers Quartile ranking of AGA funds at end December year to 31/12/03 3 years to 31/12/03 5 years to 31/12/03 Appendix 2 Number of funds Top quartile 43% 77% 69% 1st and 2nd quartiles 89% 94% 90% 1st, 2nd and 3rd quartiles 100% 100% 97% 1st, 2nd, 3rd & 4th quartiles 100% Slide 41

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