Interim Results 2017

Transcription

1 Interim Results 2017

2 2 Disclaimer Cautionary statements: This should be read in conjunction with the documents distributed by Aviva plc (the Company or Aviva ) through The Regulatory News Service (RNS). This presentation contains, and we may make other verbal or written 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, projects, plans, will, seeks, aims, may, could, outlook, likely, target, goal, guidance, trends, future, estimates, potential and anticipates, and words of similar meaning, are forward-looking. By their nature, all forwardlooking 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 simplifying our operating structure and activities; the impact of various local and international political, regulatory and economic conditions; market developments and government actions (including those arising from the referendum on UK membership of the European Union); 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 short or long term inflation; 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; changes in, or restrictions on, our ability to initiate capital management initiatives; 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; a cyclical downturn of the insurance industry; the impact of natural and man-made catastrophic events on our business activities and results of operations; our reliance on information and technology and thirdparty service providers for our operations and systems; 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; regulatory approval of extension of use of the Group s internal model for calculation of regulatory capital under the European Union s Solvency II rules; 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 (including cyber attack); risks associated with arrangements with third parties, including joint ventures; our reliance on thirdparty distribution channels to deliver our products; 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 fluctuations in share price as a result of general market conditions or otherwise; the effect of simplifying our operating structure and activities; 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, including decreased demand for annuities in the UK due to proposed changes in UK law; the inability to protect our intellectual property; the effect of undisclosed liabilities, integration issues and other risks associated with our acquisitions; and the timing/regulatory approval impact, integration risk, and other uncertainties, such as non-realisation of expected benefits or diversion of management attention and other resources, relating to announced acquisitions and pending disposals and relating to future acquisitions, combinations or disposals within relevant industries; the policies, decisions and actions of government or regulatory authorities in the UK, the EU, the US or elsewhere, including the implementation of key legislation and regulation. For a more detailed description of these risks, uncertainties and other factors, please see Other information Shareholder Information Risks relating to our business in Aviva s most recent Annual Report. Aviva undertakes no obligation to update the forward looking statements in this presentation 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.

3 Mark Wilson Group Chief Executive

4 Performance highlights Operating profit Capital Cash Interim dividend 1,465m +11% Operating EPS 25.8p, +15% Solvency II ratio 193% 1 Capital Generation 1.1bn 1,170m cash remittances +56% 8.40p per share +13% 4 All footnotes on page 27

5 Operating profit Operating profit: +11% Growth drivers: 45% 1,008m 1,071m 1,170m 1,325m 1,465m 20% 8% 3% (19)% HY13 HY14 2 Aviva Investors Europe UK & Ireland Asia Canada 5 All footnotes on page 27

6 Capital & cash Solvency II cover ratio 1 SII Capital Generation 1.1bn 180% 150% 180% 174% 189% 193% Cash remittances 1,170m FY15 FY16 6 All footnotes on page 27

7 Interim dividend Interim dividend up 13% Interim dividend 8.40p 5.60p 5.85p 6.75p 7.42p 8.40p 2017 share buyback HY13 HY14 300m 7 All footnotes on page 27

8 Growth Life insurance General insurance New business volumes 3 Net written premiums 75% 29% 27% 20% 13% 11% 25% 7% 6% 5% (28)% (4)% UK annuities & equity release UK pension Asia 4 Europe Protection 4 UK protection Europe savings & pensions (excl. France) 4 France savings 4 Canada 4 UK personal lines UK commercial property & specialty Europe 4 UK commercial motor 8 All footnotes on page 27

9 Aviva Investors Growing Winning mandates Diversifying products Operating profit 71m (+45%) Operating margin 26% (+6pp) External appeal increasing Progress on multiple fronts Assets under management External AUM 246bn 290bn 345bn 351bn 45bn 44bn 57bn 72bn FY14 FY15 FY16 FY14 FY15 FY16 9

10 Digital Trading Strategic Disruption 6m registrations 5 (+28%) GI premiums 525m 6 (+13%), c25% of total UKGI sales MyAviva: higher propensity to buy 2 nd product 45% new business sales to existing customers Foundations in place Unlocking back-books Strategic partnerships Product innovation Leading IP Using robotics and AI Data & risk analytics Ask it Never Rewarding loyalty 10 All footnotes on page 27

11 Strategic progress Oaks Acorns Apple trees HSBC partnership UK insurance: single operating model RBC integrated in Canada France: progress under new management Vietnam: 100% owned Aviva Investors: AIMS at 12bn AUM HK Tencent JV: awaiting regulatory approval Spain: capital withdrawn FPI: sale announced India: re-evaluating options 11

12 Capital management Underlying inflows Additional inflows Capital generation Remittances Core usage Dividend Organic growth Cash and capital Special remittances Disposals Discretionary deployment Bolt-on M&A Debt repayment Share buyback 12

13 Checklist Grow operating profit 11% growth Strong capital 193% 1, 300m buyback in 2017 Grow dividend 13% growth, on track for 50% pay-out ratio Reallocate capital Announced disposals, improved focus Digital Further progress, focused on leading IP 13 All footnotes on page 27

14 Tom Stoddard Chief Financial Officer

15 Operating profit Operating profit ( m) Change UK & Ireland life % UK & Ireland general insurance & health % Aviva Investors % Operating profit 1,465m Up 11% Canada (19)% Europe % Asia % Corporate costs, non insurance & other (132) (166) (26)% Group debt & other interest costs 7 (155) (159) (3)% Operating profit 1,325 1,465 11% Operating EPS 25.8p Up 15% 15 All footnotes on page 27

16 Net asset value Opening NAV per share at 1 January Operating profit Dividends Investment variances & short-term fluctuations 414p (8)p 26p (16)p Integration & restructuring costs Down 50% Pension movement 0p AVIF amortisation (5)p Integration & restructuring Disposals Share buyback Other Closing NAV per share at 30 June p (1)p 5p (2)p (1)p Basic EPS 14.9p Up significantly 16 All footnotes on page 27

17 UK Life consistent growth Life operating profit Operating expenses 699m 750m 418m 412m Value of new business 3 Highlights m 200m 82m 37m 71m 77m 79m 88m 13m 20m Long term savings Annuities & equity release Protection Health & other All footnotes on page 27 Double digit growth in three core product lines 36% growth in new business volumes (PVNBP 3 ) Remittances of 922m, including 315m special

18 UK Life double-digit growth across all core segments Long Term Savings m Operating profit Margin Driver m % bps % bps Target range New (45) (40) 11% n/a n/a (45)-(50) Existing % 25bps 25bps 25-30bps 88bn (Opening assets) Total % 105bn (Opening assets) Annuities & Equity Release Protection New % 11% 8% % 818m (PVNBP 3 ) Existing % 60bps 70bps 55-70bps 53bn (Opening assets) Total % New % 41% 52% 40-50% 112m (APE) Existing (3)% 8% 8% % 1.7bn (In-force premiums) Total % 1,435m (PVNBP 3 ) 57bn (Opening assets) 128m (APE) 1.7bn (In-force premiums) Legacy (3)% 46bps 46bps 35-40bps 83bn (Opening assets) 81bn (Opening assets) Other (61)% Total % 18 All footnotes on page 27

19 Aviva Investors maintaining growth momentum Operating profit AIMS: 12bn AUM 12.0bn 49m 71m 3.0bn 9.0bn AIMS target income AIMS target return FY15 FY16 Positive cost-income jaws AUM up to 351bn bn 1.7bn (2.4)bn 6.3bn Operating income Operating expenses 345bn 351bn 150 FY16 External net flows Internal core net flows Internal legacy net flows Market & other 30-Jun-17 19

20 UK & Ireland GI organic growth, improved margins Operating profit Combined operating ratio 9 210m 7 83m 127m 251m 85m 166m LTIR & other Underwriting Reported earned COR 93.8% 92.5% Of which prior year development +1.5% +0.9% Weather +2.4% +2.9% Normalised AY COR 97.7% 96.3% Net written premiums Highlights 2,180m 2,326m Broad-based growth and continued mix optimisation UK Direct/Digital Non Direct/Digital Ireland NWP up 12% in constant currency HSBC win to support future growth 20 All footnotes on page 27

21 Canada underlying improvement overshadowed by PYD Operating profit Combined operating ratio 9 88m 46m 71m 55m LTIR & other Underwriting Reported earned COR 95.9% 98.9% Of which prior year development +3.8% (1.6)% 42m 16m Weather (0.9)% (0.4)% Normalised AY COR 98.8% 96.9% Net written premiums Highlights 1,049m 1,477m 265m RBC RBC performing in line with expectations 1,212m Reported COR: adverse PYD and heightened catastrophe losses Normalised AY COR: 1.9pp improvement 21 All footnotes on page 27

22 Europe improved growth Operating profit Combined operating ratio 9 & growth 430m m Turkey Spain Poland Italy France Net written premiums 757m 879m Reported COR 98.9% 92.7% Of which prior year development +0.7% +2.7% Weather (2.7)% (2.1)% Normalised AY COR 96.9% 93.3% Value of new business 3 Highlights 188m m Turkey Spain Poland Italy France Operating profit: +9% in constant currency Expense discipline: stable in constant currency Announced partial disposal of Spanish business for 475 million 22 All footnotes on page 27

23 Asia operational progress, portfolio repositioned Operating profit Operating expenses 112m 115m 70m 70m FPI 88m 101m 42m 45m Value of new business 13 Highlights 43m 71m China: VNB more than doubled Vietnam: acquired 100% ownership, aligned incentives FPIL: sale announced 23 All footnotes on page 27

24 Capital generation Underlying capital generation 0.9bn Operating capital generation 1.1bn 189% 1.1bn (0.2)bn 0.2bn (0.2)bn (0.3)bn 0.2bn (0.7)bn 193% 11.3bn 11.4bn 31-Dec-16 1 BU underlying generation Debt & centre costs Other capital actions Market, FX and other Share buyback Disposals Dividend 30-Jun All footnotes on page 27

25 Reiterating financial targets Operating EPS Cash Dividend Mid-single digit growth in medium term 7bn cash remittances % pay-out ratio

26 Performance and delivery Operating profit Capital Cash Interim dividend 1,465m +11% Operating EPS +15% Solvency II ratio 193% 1 Capital Generation 1.1bn 1,170m cash remittances +56% 8.40p per share +13% 26 All footnotes on page 27

27 Footnotes 1. Represents the shareholder view. This excludes the contribution to Group Solvency Capital Requirement (SCR) and Group Own Funds of fully ring fenced with-profits funds 3.2 billion (FY16: 2.9 billion) and staff pension schemes in surplus 1.2 billion (FY16: 1.1 billion). Includes an estimated adverse impact of a notional reset of the transitional measure on technical provisions ( TMTP ) to reflect interest rates at 30 June billion decrease to surplus (FY16: 0.4 billion). Also included are the pro forma impacts of the disposal of the Spanish joint ventures and retail life insurance business ( 0.1 billion increase to surplus), the disposal of Friends Provident International Limited ( 0.1 billion increase to surplus), and the buy-back of the remaining 0.2 billion share capital out of the 0.3 billion total commitment announced 25 May The 31 December 2016 Solvency II position includes the pro forma impacts of the disposal of Aviva s 50% shareholding in Antarius ( 0.2 billion increase to surplus) and an anticipated future change to UK tax rules restricting tax relief ( 0.4 billion decrease to surplus). 2. Operating profit has been restated to exclude amortisation and impairment of acquired value of in-force business, which is now shown as a non-operating item. 3. PVNBP and VNB are presented on an adjusted Solvency II basis. 4. On a constant currency basis. 5. Total number of UK digital registrations. 6. Gross written premiums. 7. general insurance and health operating profit has been rebased for the reduction in the AGH loan. 8. NAV is presented net of tax & MI. 9. The combined operating ratio is now reported on an earned basis. Comparators have been realigned to reflect this change. 10. PVNBP and VNB for and are presented on an adjusted Solvency II basis. and HY14 are presented on a MCEV basis. 11. Excluding Eurovita & CxG. 12. A 50 bps increase in corporate bond spread and 10% increase in lapse rates result in a proportionate decrease in Group Own Funds and Group SCR with no overall impact on the rounded Group cover ratio. 27

28 Appendix

29 Life

30 Operating profit snapshot (Global Life) % Change NB Income % Underwriting margin Investment Return 324 1,366 5% 6% Life operating profit Total income 2,290 8% ,021 1,226 1,319 Acquisition expenses (439) (4)% Admin expenses (678) (6)% HY14 DAC, AVIF & Other 146 (15)% OPBT 1,319 8% 30 All footnotes on page 64

31 Profit drivers (Global life) 218m Underwriting margin 247m 310m 324m New business (PVNBP 10 ) 3.8% 3.5% 2.7% NB margin 3.0% 2.7% 2.6% Acq. Margin 2.5% 2.2% 12,630m 14,052m 16,568m 20,025m HY14 Investment return (AUM / margin) 84bps 78bps 78bps 77bps HY14 Admin expenses & unit cost 39bps 37bps 35bps 38bps 231.9bn 273.9bn 330.9bn 356.3bn 408m 507m 637m 678m 31 HY14 All footnotes on page 64 HY14

32 Investment margin (Global life) Investment mix Unit linked (reserves/amc) ,366 1,284 1, Expected return Spread Participating Unit linked 104bps 87.1bn 105bps 114.8bn 97bps 147.8bn 95bps 165.9bn HY14 2 HY14 Participating (reserves/bonus) Spread (reserves/margin) 61bps 53bps 57bps 60bps 44bps 41bps 44bps 40bps 97.7bn 103.5bn 117.4bn 120.5bn 47.1bn 55.7bn 65.7bn 69.9bn HY14 HY14 32 All footnotes on page 64

33 Life operating profit snapshot (UK & Ireland) % Change NB Income % Underwriting margin Investment Return % - Life operating profit Total income 1,210 5% Acquisition expenses (213) (1)% Admin expenses (325) 2% HY14 2 DAC, AVIF & Other 84 (18)% OPBT 756 6% 33 All footnotes on page 64

34 Life profit drivers (UK & Ireland ) Underwriting margin New business (PVNBP 10 ) 62m 103m 158m 164m 2.9% 2.4% 6,248m 3.5% 2.6% 7,341m 2.5% 2.4% 8,571m NB margin Acq. Margin 2.3% 1.8% 11,686m HY14 Investment return (AUM / margin) HY14 Admin expenses & unit cost 63bps 62bps 61bps 29bps 30bps 58bps 26bps 28bps 124.6bn 175.2bn 220.5bn 233.3bn 162m 253m 332m 325m 34 HY14 All footnotes on page 64 HY14

35 Life investment margin (UK & Ireland) Investment mix Expected return Spread 71 Participating Unit linked 225 HY14 2 Participating (reserves/bonus) Unit linked (reserves/amc) 91bps 90bps 80bps 74bps 107.2bn 118.4bn 78.7bn 49.2bn HY14 Spread (reserves/margin) 29bps 34.5bn 26bps 44.9bn 30bps 51.9bn 36bps 49.5bn 35bps 40.9bn 41bps 51.6bn 44bps 61.4bn 39bps 65.4bn HY14 HY14 35 All footnotes on page 64

36 Life operating profit snapshot (Europe) % Change NB income 129 (1)% Underwriting margin Investment Return % 11% 455 Operating profit Total income 858 9% Acquisition expenses (135) 6% Admin expenses (300) (16)% HY14 2 DAC, AVIF & Other 10 43% OPBT % 36 All footnotes on page 64

37 Life profit drivers (Europe) Underwriting margin New business (PVNBP 10 ) 130m 109m 115m 124m 4.3% 4.0% 4.2% NB margin 3.3% 2.9% Acq. Margin 2.6% 2.3% 2.6% 4,966m 4,501m 5,627m 5,749m HY14 Investment return (AUM / margin) 109bps 111bps 112bps 107bps HY14 11 Admin expenses & unit cost 55bps 53bps 50bps 44bps 48bps 102.6bn 90.5bn 97.8bn 108.4bn 225m 226m 258m 300m 37 HY14 All footnotes on page 64 HY14

38 Life investment margin (Europe) Investment mix Expected return Spread Participating Unit linked Unit linked (reserves/amc) 150bps 144bps 146bps 119bps 36.7bn 38.1bn 31.2bn 32.4bn HY14 Participating (reserves/bonus) 82bps 83bps 79bps 80bps HY14 60bps Spread (reserves/margin) 61.6bn 56.1bn 62.2bn 67.1bn 4.3bn 25bps 3.2bn 19bps 3.2bn 19bps 3.2bn HY14 HY14 38

39 Operating profit snapshot (Asia life) % Change NB income % Underwriting margin 36 (3)% Investment Return 85 37% Operating profit Total income % 79 Acquisition expenses (91) (34)% 34 Admin expenses (53) (13)% HY14 DAC, AVIF & Other 42 (30)% OPBT 120 2% 39

40 General insurance & health

41 General insurance and health (Group) Operating profit Net written premium ,289 4,218 4,545 5,224 HY14 HY14 GI Combined operating ratio 9 Investments 95.8% 93.7% 95.7% 94.5% 31.3% 30.9% 32.2% 31.3% C&E ratio 2.9% 2.6% Average assets LTIR % 2.4% 2.3% 64.5% 62.8% 63.5% 63.2% Loss ratio 17,231 15,649 14,075 14, HY14 All footnotes on page 64 HY14

42 General insurance and health (UK & Ireland) Operating profit Net written premium ,321 2,342 2,515 2,619 HY14 GI Combined operating ratio % 93.8% 93.8% 92.5% 32.8% 31.6% 33.2% 33.2% 61.5% 62.2% 60.6% 59.3% C&E ratio Loss ratio 2.8% HY14 10,612 Investments Average assets LTIR % 2.6% 2.6% 2.6% 9,320 7,335 6, HY14 All footnotes on page 64 HY14

43 General insurance and health (Canada) Operating profit Net written premium 131 1, ,026 1,013 1,049 HY14 HY14 GI Combined operating ratio % 91.9% 95.9% 98.9% 30.6% 31.0% 31.3% 29.4% 66.4% 60.9% 64.6% 69.5% C&E ratio Loss ratio 3.1% 2.8% Investments Average assets LTIR % 2.3% 2.4% 4,904 3,592 3,586 3,878 HY14 HY14 43 All footnotes on page 64

44 General insurance and health (Europe) 57 Operating profit Net written premium , HY14 HY14 GI Combined operating ratio 9 Investments 97.9% 95.8% 98.9% 28.3% 28.4% 30.4% 92.7% 29.3% C&E ratio 2.8% 2.4% Average assets LTIR % 2.1% 1.9% Loss ratio 69.6% 67.4% 68.5% 63.4% 2,745 2,498 2,620 2,962 HY14 HY14 44 All footnotes on page 64

45 Earnings per share

46 Operating earnings per share Group operating profit Less operating tax Minority Interest DCI and fixed rate tier 1 notes Preference shares Total operating earnings after tax, MI & DCI and preference shares Weighted average number of shares Operating earnings per share 1,325 1,465 (323) (311) (67) (73) (21) (23) (9) (9) 905 1,049 4,046 4,

47 Basic earnings per share Operating profit attributable to shareholders Investment return variances and economic assumption changes on long-term business Short-term fluctuation in return on investments backing non long-term business Economic assumption changes on GI & Health business Impairment of goodwill, joint ventures and associates and other amounts expensed Amortisation and impairment of intangibles Amortisation and impairment of acquired value of in-force business Profit on disposal and remeasurement of subsidiaries, JVs and associates Integration and restructuring costs and other Profit attributable to ordinary shareholders Weighted average number of shares 905 1,049 (2) (129) (267) (166) (98) (10) 0 (19) (68) (71) (270) (201) (18) 192 (82) (40) ,046 4,061 Basic earnings per share

48 Returns

49 Operating return on total capital employed 23.2% 19.7% 21.2% 18.8% 17.4% 22.9% 14.6% 9.9% 10.7% 8.7% 12.4% 12.3% 7.1% 13.2% 12.1% 11.9% 14.3% 12.9% UK & I Life UK & I GI Canada Europe Asia FM Following a correction to accounting and modelling for annual management charge rebates in UK Life, prior year comparatives have been restated All footnotes on page 64

50 Operating return on total capital employed & return on equity Group return on capital employed Group return on equity 11.6% 15.5% 8.8% 9.3% 11.0% 12.4% 50

51 Analysis of operating return on equity 51 Operating return m Before tax After tax Weighted average shareholders funds including non-controling interests Return on Equity % UK & Ireland Life , % UK & Ireland GI and Health , % Canada , % Europe , % Asia , % Fund management % Corporate and Other Business (130) (88) 5,725 n/a Return on total capital employed 1,658 1,310 28, % Subordinated debt (191) (154) (7,223) 4.3% Senior debt (2) (2) (1,384) 0.3% Return on total equity 1,465 1,154 19, % Less: Non-controlling interests (73) (1,372) 10.6% Direct capital instrument and tier 1 notes (23) (1,123) 6.1% Preference capital (9) (200) 8.5% Return on equity shareholders funds 1,049 16, %

52 Capital & cash flows

53 Solvency II own funds by tier Regulatory view* bn % of SCR % of own funds Tier % 77% T1 unrestricted % 66% T1 restricted % 10% Tier % 22% Tier % 1% % 100% Shareholder view Regulatory view of own funds adjusted by 5.2bn due to with-profits funds, pension schemes and other pro-forma adjustments Shareholder view coverage ratio of 193% 1 *Estimated 53

54 Solvency II sensitivities Impact on Solvency cover ratio (SCR) 30/06/2017 SCR : 193% 1 25bps increase in interest rate 4% 100bps increase in interest rate 16% 25bps decrease in interest rate (6)% 50bps decrease in interest rate (12)% 10% increase in market value of equity 2% 10% decrease in market value of equity (2)% 25% decrease in market value of equity (3)% 50bps increase in Corporate Bond spread 12 0% 100bps increase Corporate Bond spread (1)% 50bps decrease in Corporate Bond spread (2)% 10% increase in maintenance and investment expenses (7)% 10% increase in lapse rates 12 0% Credit downgrade on the annuity portfolio (4)% 5% increase in mortality / morbidity rates life assurance (2)% 5% decrease in mortality rates annuity business (12)% 54 5% increase in gross loss ratios (3)% All footnotes on page 64

55 External Subordinated debt debt a profile balanced maturity profile 1,300m Restricted Tier 1 Tier 2 Tier 3 882m 879m 800m 790m % 443m 500m 500m 450m 7.875% 571m 615m 700m 6.125% 600m 7.875% 8.25% 210m 439m 8.250% 6.875% 400m 400m 162m 267m 500m 6.625% 6.875% 6.875% % 6.875% 5.902% 8.250% All debt instruments have been presented at optional first call dates at nominal values converted to GBP using 30 June 2017 rates. 55

56 Balance sheet

57 Total managed assets Assets by liabilities covered Participating assets by type m Participating funds Policyholder funds Shareholder funds 334, , ,322 77, , , ,493 80, , ,987 73,641 60,937 70,207 56,780 Shareholder assets by type Euro-style UK With-profits style 77,794 80,758 Annuity & non-profit 65,171 67,280 GI, Health & other 12,623 13,478 57

58 Shareholder assets Shareholder assets by type m 77,794 80,758 20,963 23,061 Corporate debt by rating Total: 27,065m 7% 12% 41% 29% 1% 10% 28,149 2,934 27,065 2,592 Government debt Corporate bonds Other debt Mortgage loans Other AAA A Less than BBB AA BBB Non-rated Government debt by rating Total: 23,061m 18,074 18,975 20% 68% 6%6% 7,674 9,065 AAA AA A BBB Less than BBB Non-rated 58

59 Shareholder assets Corporate bonds by industry 6% 7% 2% 19% 7% Loans by type Total: 25,519m 6% 9% 10% 8% 13% 19% 19% 75% 59 Financials - Banks Financials - Insurance & other Utilities Consumer services Industrial Communications Real estate Oil & gas Other Loans & advances to banks Healthcare, Infrastructure & PFI other loans Mortgage loans Other

60 Shareholder assets Mortgage loans Mortgage loans Total: 18,975m 18% Commercial real estate portfolio Commercial: 6,923m LTV 95% 83% 85% 61% 58% 58% 45% 37% Loans in arrears 1,583 1, Healthcare, infrastructure & PFI Commercial Loan interest cover 1.4x 1.4x 1.5x FY12 FY13 FY14 2.1x 2.2x 2.4x FY15 FY16 Securitised mortgage loans & equity release 60

61 Other

62 Disposals pro-forma Antarius Completed 1Q17 Spain (part) Expected completion 2H17 FPIL Expected completion 2018 m FY16 FY16 FY16 Operating profit (before tax & MI) Operating EPS* 0.6p 0.2p 0.8p 0.3p 3.5p 1.7p Proceeds 500m 475m 340m IFRS NAV impact (net of proceeds) Included c 120m gain c (130)m loss SII surplus impact (net of proceeds) All impacts reflected in surplus position of 11.4 billion * based on weighted average number of shares of 4,051m at FY16 and 4,061m at 62

63 Estimated amortisation of acquired value of in-force 600m 500m 400m FPI FL UK Other Aviva businesses 300m 200m 100m 63 0m This is our latest estimated projection as provided at FY16 and is subject to a variety of factors including the effects of markets. We announced the sale of FPI in July It is expected to complete in early 2018.

64 Footnotes 1. Represents the shareholder view. This excludes the contribution to Group Solvency Capital Requirement (SCR) and Group Own Funds of fully ring fenced with-profits funds 3.2 billion (FY16: 2.9 billion) and staff pension schemes in surplus 1.2 billion (FY16: 1.1 billion). Includes an estimated adverse impact of a notional reset of the transitional measure on technical provisions ( TMTP ) to reflect interest rates at 30 June billion decrease to surplus (FY16: 0.4 billion). Also included are the pro forma impacts of the disposal of the Spanish joint ventures and retail life insurance business ( 0.1 billion increase to surplus), the disposal of Friends Provident International Limited ( 0.1 billion increase to surplus), and the buy-back of the remaining 0.2 billion share capital out of the 0.3 billion total commitment announced 25 May The 31 December 2016 Solvency II position includes the pro forma impacts of the disposal of Aviva s 50% shareholding in Antarius ( 0.2 billion increase to surplus) and an anticipated future change to UK tax rules restricting tax relief ( 0.4 billion decrease to surplus). 2. Operating profit has been restated to exclude amortisation and impairment of acquired value of in-force business, which is now shown as a non-operating item. 3. PVNBP and VNB are presented on an adjusted Solvency II basis. 4. On a constant currency basis. 5. Total number of UK digital registrations. 6. Gross written premiums. 7. general insurance and health operating profit has been rebased for the reduction in the AGH loan. 8. NAV is presented net of tax & MI. 9. The combined operating ratio is now reported on an earned basis. Comparators have been realigned to reflect this change. 10. PVNBP and VNB for and are presented on an adjusted Solvency II basis. and HY14 are presented on a MCEV basis. 11. Excluding Eurovita & CxG. 12. A 50 bps increase in corporate bond spread and 10% increase in lapse rates result in a proportionate decrease in Group Own Funds and Group SCR with no overall impact on the rounded Group cover ratio. 64