Aviva and Interim Management Statement Essay

Submitted By bgtstar
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Pages: 29

News Release
Aviva plc
Interim management statement for the nine months to 30 September 2014
30 October 2014

Aviva plc Third Quarter 2014
Interim Management Statement
Mark Wilson, Group Chief Executive Officer, said:
“Aviva’s turnaround is delivering. Our key metrics have improved again. Year to date, our net asset value is 10% higher; value of new business is up 15%1 and the general insurance combined ratio improved to 95.9%.
“The steps we have taken to focus and strengthen the Group mean we are in a different position to two years ago.
“Notwithstanding this progress, there is still more to do before we can be satisfied we are fully delivering on our investment thesis of cash flow plus growth.”

Cash flow

 Progress in cash remittances expected at FY14
 Operating capital generation £1.3 billion (9M13: £1.3 billion)

Value of new business

 Value of new business grew 15%1 to £690 million3 (9M13: £619 million2,3)
 Balanced product mix with VNB split 36% protection, 35% savings and 20% annuities
 Increase driven by strong performance in Europe (40%1) and Asia (47%1)
 UK life returned to growth in the 3rd quarter, with VNB up 18%. 9M14 VNB 9% lower

Expenses

 Momentum on expense efficiency has continued

Combined operating ratio

 Combined operating ratio (COR) of 95.9% (9M13: 96.9%)
 UK COR improved by 1.4 percentage points to 94.1% (9M13: 95.5%)
 Canada COR of 96.8% (9M13: 95.2%) impacted by worse weather and fire losses

Balance sheet

 IFRS net asset value increased 10% year to date to 298p (FY13: 270p)
 Economic capital4 surplus £7.9 billion (FY13: £8.3 billion)

1
2
3
4

On a constant currency basis.
Comparative has been restated to reflect changes in MCEV liquidity premium valuation and an extension of the MCEV covered business. See the basis of preparation in note 1 to the statistical supplement for details.
Excludes Eurovita, Aseval, CxG and Malaysia.
The economic capital surplus represents an estimated position. The economic capital requirement is based on Aviva’s own internal assessment and capital management policies. The term ‘economic capital’ does not imply capital as required by regulators or other third parties.

2
Aviva plc
Interim Management Statement
30 October 2014

Key financial metrics

Operating capital generation
9 months
2014
£bn

Continuing operations

Restated1
9 months
2013
£bn

United Kingdom & Ireland Life
United Kingdom & Ireland General Insurance & Health
Europe
Canada
Asia and Other

0.5
0.3
0.4
0.1


0.4
0.3
0.5
0.1


Total

1.3

1.3

Value of new business

Continuing operations

Restated1
9 months
2013
£m

9 months
2014
£m

Sterling % change2 Constant currency % change2 United Kingdom & Ireland
France
Poland3
Italy, Spain, Turkey & Other3
Asia3
Aviva Investors

303
156
46
83
97
5

330
118
34
66
71


(8)%
33%
34%
26%
36%


(8)%
39%
40%
41%
47%


Value of new business – excluding Eurovita, Aseval, CxG & Malaysia
Eurovita, Aseval, CxG & Malaysia

690
(4)

619


12%


15%


Value of new business

686

619

11%

15%

Continuing operations

9 months
2014
%

9 months
2013
%

Change

United Kingdom & Ireland
Europe
Canada

94.2%
99.8%
96.8%

95.7%
98.3%
95.2%

(1.5)pp
1.5pp
1.6pp

General insurance combined operating ratio

95.9%

96.9%

(1.0)pp

30 September
2014
£bn

30 June
2014
£bn

Sterling
% change

7.9
2.9
298p
302p
486p

8.0
3.3
290p

(1)%
(12)%
3%

478p

2%

General insurance combined operating ratio

Capital position

Estimated economic capital surplus4
Estimated IGD solvency surplus4
IFRS net asset value per share
Pro forma IFRS net asset value per share5
MCEV net asset value per share (restated)1,6
1.
2.
3.
4.

Comparatives have been restated to reflect the changes in MCEV methodology set out in note 1 to the statistical supplement.
Currency movements are calculated using unrounded numbers so minor rounding differences may exist.
Poland includes Lithuania, Italy excludes Eurovita, Spain excludes Aseval and CxG and Asia excludes Malaysia.
The economic capital and…