2001 results and business update. 27 February 2002

Transcription

1 2001 results and business update 27 February 2002

2 Richard Harvey Group Chief Executive

3 Agenda Business review Richard Harvey Financial results Mike Biggs Questions

4 Delivering strong results in a challenging environment Strong results Integration completed Dividend to be rebased Company to be rebranded

5 Delivering strong results in a challenging environment Long-term new business sales outperformed in major markets Major deals completed - Spain, Italy, Singapore Benefiting from re-shaped general insurance business - COR* of 102% delivered Integration completed and total cost savings exceeded * from continuing operations before exceptional items

6 Financial results Group operating profit* up 41% to 2,004 million Worldwide long-term savings new business at 15 billion New business contribution up 30% to 591 million General insurance operating profit up 133% to 945 million Dividend maintained at 38.0p Dividend for 2002 to be rebased to 23.0p * From continuing operations including life achieved operating profit before amortisation of goodwill and exceptional items

7 Change in dividend policy Current policy incompatible with maintaining growth Faster growth achieved than expected Need to use larger part of profits to fund growth Expect dividend growth to be around 5% pa - cover between times

8 Strong growth in long-term new business sales Total sales billion Life & pension sales Investment sales Compound growth of 24% per annum

9 Profitable growth in the business Life achieved operating profit* 1,569 million 1,674 million UK and International UK and International Continental Europe 38% +25% to 779 million Continental Europe 47% Only UK based European player * From continuing operations including life achieved operating profit before amortisation of goodwill and exceptional items

10 Strong Continental European growth Total Life & Pensions sales France +5% Ireland +21% Italy Netherlands +34% +291% Spain +155% ,000 1,500 2,000 million European long-term savings is our main priority for development

11 Move to private retirement savings underpins European growth State pension for average worker as % of final salary (i) Spain Italy France Germany UK % Worker to pensioner ratios (ii) e Sources : (I) Goldman Sachs : (ii) CES ifo: (ages / over 60s) Undeliverable state pensions

12 CGNU - the fourth largest bancassurance network in Spain Strong multi-regional presence Single operational platform Total of some 8 million potential customers Caixa Galicia Caja España Over 3,000 branches Bancaja Unicaja Source: INE Covers 70% of Spanish GDP

13 CGNU: Spanish bancassurance JV life cos Bank Customers ASEVAL Products & Administration BANCAJA 2.4m Controlling 50% stakes UNICORP VIDA BIA GALICIA UNICAJA CAIXA GALICIA 2.0m 2.3m CAJA ESPAÑA VIDA CAJA ESPAÑA 1.3m 8.0m

14 Norwich Union - the UK s market leader Growth of market share to over 11% Record new business sales beating expectations Life & pensions up 10% to 7.3bn RBSG - sustainable partnership building momentum Wealth management being integrated into life business Well-positioned for the impact of depolarisation Brand, scale and broad product offering

15 Development of bancassurance 1, Sales million m m m m 2001 RBSG Italy Spain Singapore Bancassurance accounts for 14% of total sales

16 Building a world class fund management business Morley Top UK insurance fund management company in S&P awards 3 billion of external mandates won Moving to a global operating model Victoire Asset Management - best asset management team for insurance company in France Netherlands - launch of new funds into Germany and Belgium Australian Navigator - exporting platform to Singapore

17 Benefiting from refocused general insurance business Worldwide COR 102% (2000: 109%) Actions taken to improve performance Focus on personal and small commercial business 110 % FY 1999 H H H H % 95 Excluding UK and French storms in 2000 Including UK and French storms in 2000 Group COR progression for discrete half years

18 Integration savings exceeded General insurance 144m Life 96m Other 77m million Annualised integration savings of 317 million Actual Target Completed on time, to budget, cost savings exceeded

19 Review of group brand CGNU name brought the two companies together More than 50 different trading names worldwide Opportunity to create a new international financial services brand Harness benefits of size and international capabilities Important to retain strong brands

20 Our strongest brands today Netherlands Poland Ireland

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23 The benefits of change Rationalise more than 50 trading names worldwide Group news will support trading brands Ease new market entry Enable more effective use of marketing spend Stronger sense of belonging for our people

24 Why Aviva? Met our key criteria: International Fitting Impact Protectable Tested well in consumer research worldwide

25 Next steps Approval from shareholders at AGM on 23 April Change to Aviva plc by end October 2002 Progressive roll-out of Aviva brand to selected trading businesses

26 Mike Biggs Group Finance Director

27 Group financials Operating profit 1 up 41% at 2,004m New business contribution up 30% to 591m On MSSB basis operating profit at 1,533m (2000: 1,028m) General insurance profit 2 of 945m (2000: 412m) Operating EPS 1 at 56.1p (2000: 39.7p) Final dividend of 38.0p (2000: 38.0p) Post-tax return on capital of 9.4% NAV per ordinary share 3 530p (31 December 2000: 606p) 1 including life achieved operating profit and stated before amortisation of goodwill and exceptional items 2 continuing businesses, before exceptional items 3 after adding back equalisation provision

28 New business profitability million Group UK France Spain Italy New business contribution Annual premium 2,319 1, equivalent New business 25.5% 25.8% 33.9% 46.5% 22.2% margin New business margin % 28.6% 25.7% 38.6% 34.5% 2000 (at 2001 economic assumptions)

29 Life achieved operating profit 2001 m 2000 m UK France Ireland Italy Netherlands Poland Spain Other Europe 18 (15) International Total 1,674 1,569 Life achieved operating profit up 5% to 1,674m Strong growth in UK offset by operating assumption changes Netherlands result boosted by operating assumption changes Benefits from bancassurance partnerships in Italy and Spain

30 General insurance result Operating profit 1 up 533m to 945m Underwriting result 1 improvement of 597m UK + 306m ( 195m lower weather claims) France + 175m ( 90m lower weather claims) Other + 116m Improved COR 1 ratio at 102% (2000: 109%) Group expense ratio % (2000:12.6%) UK expense ratio % (2000: 10.7%) 1 from continuing operations before exceptional items

31 Other financials Fund management result 29m (2000: 61m) Profit on sale of subsidiary undertakings of 287m Investment variances - loss of 2,584m (2000: 213m gain) Non-life variance of 952m (2000: gain 256m) Life variance of 1,632m (2000: loss of 43m)

32 Merger savings - recognising the benefits Year ended 31 December Annualised Life General business UK fund management Corporate Total m m m m m - target realised Included in the results

33 Premium income billion % 52% 53% 47% 42% 58% 40% 60% 30% 70% * General Insurance Life (incl Health) Move from Composite to Life Sector * continuing operations

34 Strong growth in long-term new business sales Total sales billion Life & pension sales Investment sales Compound growth of 24% per annum

35 Delivering profitable growth - life new business (2001) Business Unit Internal Rate of Return (net of tax) UK 17% France 16% Netherlands 10% Spain 24% Italy 16% Ireland 27% Poland 22% Other 11% All Business 16% Shareholder capital of 800m invested to finance organic growth

36 Shareholders capital 2 billion Capital Employed Adjustments 1 Adjusted Capital Solvency Requirement 2001 Balance Life Assurance 11.3 (6.5) 4.8 (2.2) 2.6 General Insurance 4.9 (0.3) 4.6 (1.9) 2.7 Other Business Corporate 3.1 (0.8) Total Capital Employed 19.6 (7.6) 12.0 (4.1) Balance 1999 Balance Less Debt: - Internal (3.3) (3.3) (3.3) - External (2.6) (2.6) (2.6) Capital employed net of debt 13.7 (7.6) 6.1 (4.1) Represented by: - Hybrid debt Shareholders Funds 12.5 (7.6) 4.9 (4.1) (7.6) 6.1 (4.1) (1) For life assurance, the adjustment represents the difference between capital employed and the embedded value net worth. For non-life operations, the adjustments represent goodwill. (2) Excludes shareholders interest in the UK and Ireland Life with-profit businesses

37 Impacts on capital (since ) Dividends Corporate Restructuring Acquisitions/ Joint Ventures Hybrid Earnings Debt & Other (1.7) bn US losses - (1.4) bn London Market - (0.3) bn 5.2bn (1.7) bn 0.4 bn (1.4) bn 1.2 bn 2.0bn Consideration - (2.0)bn Tangible net assets bn

38 Dividend cover million 1,400 1,200 1, Achieved operating profit MSSB operating profit Dividend payment Agg MSSB operating profits (per share) 39.2p 28.3p 43.2p 110.7p Dividend (per share) 38.0p 38.0p 38.0p 114.0p Dividend cover x1.03 x0.75 x1.14 x0.97 * Represents the 1999 full year dividend per share for CGU plc ( the weighted average full year dividend for CGUplc and NU plc was 34.3p) *

39 Asset deployment Total adjusted capital employed By business segment By asset type 12.0 billion 2% 19% 40% 7% 7% 45% 39% 41% Life assurance General insurance & health Other business Corporate Fixed interest Equity Property Other net assets (including deposits)

40 Executing strategy to create value Developing strong market positions Extending our distribution power Exiting value-destroying businesses Strong operational performance Building competitive advantage

41 Questions & Answers

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