aviva uk: investor update december 2009

8/7/2019 Aviva UK: Investor Update December 2009

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Investor presentation December 2009 3

Contents

33UK life inherited estate reattribution5

18Avivas businesses2

26Financial strength4

86North America, Asia Pacific and Aviva Investors7

37UK and Europe6

8

3

1

105Contacts

24Executive management

4Overview

Page


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Overview


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10%

40%

15

30

H1 2000 H1 2009

An increasingly global company

(1) Total long-term savings new business sales and G.I. and health net written premiums

34%

32%

24%

5%

47%

21%

9%

17%

6% 20%General

Insurance

80%Long

Term

Savings

H1 2009 sales

24.4bn (1)

Asia Pacific

North America

UK Life

Europe

UK GI

billion

billion

5%


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Purpose

Prosperity &

peace of mind

Strategic

priorities

Manage composite

portfolio

Build global Asset

Management

Allocate capital

rigorously

Multi-channel customer

reach

Boost productivity

Targets

Vision

One Aviva,twice the value

98% meet or beat COR

500m cost savings by 2010

Double IFRS EPS by 2012 at

the latest

1.5 2 x dividend cover on

IFRS post tax operating

earnings

UK

Market leadership

Drive up profitability

Generate capital

Insurance excellence

Operational excellence

N. America

Profitable growth

Optimise business mix,

growth & margin

Diversify distribution and

products Generate net capital

returns

Europe

Scale, growth, capital

Seize unique growth

opportunities

One Europe operating

model Generate capital

Asia Pacific

Scale, growth

Prioritised portfolio

Regional operating

model

Investment required

Asset ManagementAsset ManagementAviva Investors

Globally integrated business Transform the investment model Increase third party business

Our strategy


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General insurance

COR2Life and Pensions Margins

2.1%

1.7%

2.8%

1.0%

2.1%

2.1%

2.6%

0.5%

UK

Europe

North America

Group Total

2.5% 2.3%Asia Pacific

Focus on Margins vs Sales

Life and Pensions margins maintained

15% local currency reduction in sales due to a combination ofmarket conditions and management action

Pricing and commission action reduces impact of growing

customer demand for lower margin guaranteed products

18.2bn17.5bn

General

insurance

22%

26%

Europe

Life

UK Life

General

insurance

21%

36%

33%

HY1 2008 HY1 2009

UK

4.7bn

7.1bn

Europe

NA/Asia

UK

6.0bn

7.0bn

Europe

3.1bnNA/Asia

3.9bn

10 bn

15 bn

5 bn

DL

2.1bn

DL

1.8bn

Sales

6 months

2009 %12 months

2008 %


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Focus on Profit vs Premiums

General Insurance COR improved

10% local currency reduction in premiums, excluding 2008 Dutch

Healthcare premiums of 0.7 billion

Cost and commission action taken to build sustainable

profitability

Evidence of rating improvement in challenging markets

NWP5.1bn

4.9bn

General

insurance

22%

26%

Europe

Life

UK Life

General

insurance

21%

36%

33%

5 bn

3 bn

HY1 2008 HY1 2009

UK

1.1bn

Europe

NA/Asia

UK

2.8bn

1.0bn

Europe

0.8bnNA/Asia

0.9bn

2.3bn

DL

0.6bn

DL

0.5bn

General insurance

COR2General Insurance CORs

97%

97%

99%

98%

6 months

2009 %12 months

2008 %

99%

96%

97%

UK

Europe

North America

Total General Insurance

99%


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Strong Cost Management

Ahead of run rate 500

million cost saving targets

Eliminating cost over runs

and reducing operational

complexity in UK Life

Closing 13 operational

centres and simplifying

product range in UK GI

Cost reduction exercises

across Europe

35% reduction in group

centre costs

Customer service

maintained

9.0% - 239m

Reduction inunderlying cost base

1,500m

1,700m

1,900m

2,100m

2,300m

2,500m

2,700m2,622m

72m(38m)

148m 2,493m

(80m)

(118m)

(75m)

(38m)

HY08Expense

Base

Forex+acq& disposal +Restructuring

HY08

Inflation Restructuring

HY09

HY09Expense

Base

UK Life UK GI Europe Other (inc. Group)


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UK Life

Driving up profitability

14.0%10.6%New business IRR

3.5%2.9%Life & Pensions margin(1,2)

40m140mCost overrun

+/-

751m382mIFRS operating profit

883m589mEV operating profit

679m372mExisting Business operating return

11,669m9,185mLife & Pensions sales (PVNBP)(1)

20082005

+27%

+60bp

+83%

+50%

+97%

2005 shown on an EEV basis, 2008 on a MCEV basis. (1)Data shown on an EEV basis. (2)Margin pre cost of capital and taxation, 2008 margin unaudited, published MCEV margin 1.7%.

71%

Significant progress on delivering the One Aviva, twice the value agenda

+340bp


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UK Life

Generating capital

+/-

704m365mFree surplus generation

2.5%5.3%Strain % of L&P sales (PVNBP)(2)

293m488mNew business capital strain(1)

20082005

-2.8pps

+93%

Delivering value to group

-40%

(1) New business strain includes initial capital strain and changes in required capital. (2) Life & Pensions sales calculated on an EEV basis for comparative basis.

500m dividend paid over the last three years


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UK General Insurance

Transforming the business

Execution of strategy is improving the

quality of earnings

Actively exiting poor performing business

Rating increases above inflation on all

major classes

Improving current year profits

Driving down distribution costs FY 200740%; FY 2008 37%; HY 2009 34%

200 million cost savings delivered -

ahead of target for further 150 million

HY ROCE of 13.4%

HY1 08 HY1 09 +/-

Net written premium 2,589m 2,049m -21%

COR 98% 99% +1pps

Current year profit (1) 142m 159m +12%

Current year claims ratio(1) 65.9% 69.6% +3.7pps

Expense ratio 12.8% 11.7% -1.1pps

Commission ratio 25.3% 21.9% -3.4pps

Insurer of the year 1st 1st1st 6

years

running

IFRS operating profit(2) 314m 282m -10%

(2) Includes Aviva Re

(1) Operating profit or claims ratio excluding prior year savings


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Life & pensionsLife & pensions

CompositeCompositeAvivas

presence

Aviva is uniquely positioned in Europe

Share of GDP L&P PVNBP GI NWP

H1 09 m H1 09 m

France 14.5% Top 10 2,733 631

Ireland 1.4% Top 5 478 Top 5 294

Italy 11.7% Top 10 2,461 190

Lithuania 0.2% Top 5 49 -

Poland 2.7% Top 5 572 20

Russia 8.5% Top 5 14 -

Spain 8.1% Top 5 1,394 -

Turkey 3.7% Top 5 134 53

Czech Rep 1.1% 17 -

Hungary 0.8% Top 10 26 -

Slovakia 0.5% 1 -

Romania 1.0% Top 5 41 -

Belgium 2.6% Top 10 465 -

Germany 18.6% 177 -

Netherlands 4.4% Top 5 1,351 Top 5 758

79.8% 9,913 1,946

Source: IMF

AvivaRegion

Strengths in 15 markets

Covering 80% of GDP and premium


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A clear strategy to exploit the European opportunity

Quantum Leap game changing for the industry

Aviva Europe

Delta Lloyd

IPO strategic management

Life & pensionsLife & pensions

CompositeCompositeAvivas

presence


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From To

Aviva Europes Quantum Leap

Multiple, complex products

Twelve federated businesses

Multiple systems

and processes

Complex legal entity structure

Sub optimal capital allocation

and risk management

Fungible capital, state of the art

capital and risk processes

Simplified structure under

single holding company

Shared systems

and processes

Customer centric product catalogue

and shorter time to market

One Pan European Business

One Head Office

Pan European distribution

organisation


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Key milestones in ongoing transformation

Increasing financial flexibility

Sale of Australian business completed

Realises value from a business where Aviva had limited organic growth opportunities

452 million selling price at 16 x IFRS earnings

Reattribution of the inherited estate

Over 800,000 customers will benefit from a 470 million payout

Provides approximately 650 million of new business capital in the first 5 years

Successful IPO of Delta Lloyd

Total gross cash proceeds of approximately 1.0 billion for a 41% stake Significant strategic milestone

New corporate governance framework consistent with Dutch market practice

Enhances value and liquidity of retained stake in Delta Lloyd


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Q3 2009 IMS update

Managing for profit

Worldwide long-term savings sales and life and pension sales1 both reduced by

11% due to lower consumer demand and strategic actions to optimise profitability

Group margin in line with full year 2008 at 2.1%

General insurance COR of 98%, in line with meet or beat target

Balance sheet strength at 30 September 2009

Enhanced IGD solvency surplus of 3.7bn2

25% increase in MCEV NAV per share at 520 pence from half year 2009

1.1bn default provision against UK annuity book remains unutilised, with no

material default experience

Net unrealised gain of 0.4bn on debt securities in US business following

improvement in US credit markets (31 Dec 2008: unrealised loss of 2.4bn)

(1) PVNBP

(2) Excludes 0.4bn uplift from sale of Australian business, additional 0.5bn from the Delta Lloyd IPO and deduction of 0.5bn for policyholder incentive payments

as part of the reattribution


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Avivas businesses


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General Insurance

Long Term savings

Composite

Manage the composite portfolio

Diversity, cash flow, resilient product range


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Aviva Investors

A powerful global asset management business

Globally integrated asset management business

The third pillar of our composite model, rebranded Aviva Investors

222 billion funds*, in 15 countries across North America, the UK,Europe and Asia Pacific

Accelerate the transformation of our investment model

Scalable central investment unit & small autonomous teams

Enhance capability to sell & service clients across borders

Invest in people, technology and solutions development

Increase 3rd party business

Accelerate profit contribution to Group* Aviva Investors assets under management as of 30 June 2009


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Bancassurance

Direct Sales

Independent Agents

Multi-distribution

Increase customer reach

Access to customers through preferred channels


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Increase customer reach

Over 90 bancassurance agreements


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Growth In Life and Pensions assets by region

Source: Aviva Research supported by Oliver Wyman

Life & Pensions Assets 2007($bn)

Life&PensionsAssetsCAG

R(2007-2017) Area of bubble = Projected increasein Life & Pensions assets to 2017

Avivas presence

Strong

GrowingAsia-Pacific (ex. Japan)

North America Europe


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Executive management


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A highly capable and experienced executive team

Andrew MossChief Executive

Mark Hodges

UK Life

Tom GodlaskyNorth America

John AinleyHuman Resources

Igal MayerUK GI

Anupam SahayStrategy

Amanda MackenzieMarketing

Andrea Moneta

Europe

Alain DromerAviva Investors

Simon MachellAsia Pacific

Philip ScottChief Financial Officer


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Financial strength


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Operatingprofits and

other

income

Marketmovements(including

FX)

IGD surplusDecember

2008

Issueof hybrid

debt

at DL

Issue ofHybrid debt

Sale of DLHealth

Dividends Value of non-

regulated

entities

Othermovements

IGD

SurplusJune 2009

Increasein CRR

Action on the Balance Sheet

IGD Solvency Surplus Significantly Strengthened

3.0

2.0

1.0

0

2.0bn

0.4bn

0.2bn0.5bn

0.1bn

0.2bn (0.3bn)

0.5bn (0.3bn)

3.2bn

4.0

bn

(0.1bn)

IGD solvency surplus increased to 3.7bn* at 30 September 2009

Equity hedges protect surplus: 40% fall in equities reduces surplus by 0.5bn, 40% rise increases

surplus by 1.3bn

1.1 billion default provision against UK annuity book remains unused at 30 September 2009

* Excludes 0.4bn uplift from sale of Australian business, additional 0.5bn from the Delta Lloyd IPO and deduction of 0.5bn for policyholder incentive payments

as part of the reattribution


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Corporate Debt - Shareholder

A high quality, diverse portfolio

Just over 94% of corporate debt is investment grade or NAIC rated

Minimal movement in rating grades


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Fundmanagement

Corporate

/ Regional

costs

Pensioninterest

Debt costs(ex pension

interest)

HY1 09operating

profit

Life:new

business

HY1 08operating

profit

GILife:in-force

Operating earnings up 12%

to 1,685 million

Life new business increase

reflects lower volumes, offset by

increased group margin

Life in-force

Lapse experience good

in the light of economicconditions

Credit spread narrowing

and unwind of unrealised

losses in France and US

MCEV Operating Profit

New business and in force book both generate strongearnings

1,000

500

1,500

1,509m

1,685m

(17)m

15m

17m (34)m

(54)m(63)m

m

312m2,000


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Operating earnings of 1,049

million, down 14% on prior year

Impact of debt costs and pension

P&L costs

Investment return for operating

profit based on 10 year

swap rate

IFRS Operating Profit

A lower asset and earnings base

0

Fundmanagement

Corporate /

Regional

costs

Pension

P&L

Cost

Debt costs HY1 09operating

profit

LifeHY1 08operating

profit

GI

1,223m

1,049m

(16)m(18)m 17m (40)m

(54)m

(63)m

m

1,000

500

1,500

750

1,250

250


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IFRS Profit After Tax

Material decrease in investment losses and provisions

IFRS

H1 2009

m

H1 2008

m

FY 2008

m

Operating profit 1,049 1,223 2,297

Investment variances Long term business 155 (636) (1,631)

Investment variances GI and other (73) (308) (913)

Impairment / amortisation of goodwill

and intangibles(63) (93) (183)

Profit on disposals 20 9 7

Integration and restructuring costs (148) (132) (326)

Exceptional items - (84) (551)

Profit / (Loss) before tax 940 (21) (1,300)

Tax (193) (63) 415

Profit / (Loss) after tax 747 (84) (885)

Profit after tax of 747 million

No repeat of investment losses

experienced in 2008

Integration and restructuring costsincludes brand spend in 2009

No repeat of exceptional items

in 2008

No further increase in provisions


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UK life inherited estate

reattribution


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Inherited estate reattribution customer

perspective

A fair deal for customers

Strong customer story over 800,000 customers benefit

Just over 87% of eligible policyholders voted during election process,

with 96% choosing to accept the offer

Incentive payment of 470 million

90% of eligible customers will receive between 214 and 1,230

Customers will start receiving their payments from early November with

most receiving them by the end of the year

Around 70% of the value of the inherited estate paid to customers

through special bonus and reattribution


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Inherited estate reattribution shareholder

perspective

A good deal for shareholders

Incentive payment flexed with size of estate Total estate value for reattribution of 1.25bn

Based on average valuation of the estate at the end of June, July and August

Policyholder incentive payment acquires:

Assets backing the estate (1.5bn at 31.12.08)*

Assets and Liabilities backing the cost of guarantees (3bn at 31.12.08)*

* Based on 100% policyholder take-up


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Inherited estate reattribution shareholder

perspective

Significant capital and return benefits

Significant capital and earnings benefits:

Provides 650m of new business capital strain funded from reattributedestate in first 5 years

3 year cash payback

One off 180m MCEV profit

One off 80m IFRS profit

Ongoing earnings of c30m on an MCEV basis and c45m IFRS per

annum


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UK and Europe


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UK Life


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UK Life

Strategy

Disciplined financial management and capital optimisation

Generate greater value through enhanced interactions withexisting customers

Drive significant profitable growth in our Risk business

Reshape our distribution relationships for value and low cost

acquisition

Drive significant profitable growth in Corporate sector

Seize the opportunity to become the most recommended insurer

Distribution

Strong multi-distribution capability through:

Bancassurance joint venture with the RBS Group

Strong Partnerships, e.g. CIS, Post Office

Leading provider to IFAs, e.g. Bankhall, Sesame,

Tenet and SimplyBiz

Growing corporate channel - 17% of total new

business in 2008 (2007: 8%)

Well placed to benefit from the Retail Distribution Review

H1 2009 Performance

Life and pensions sales 21% lower at 4,735m as a result of

actions to manage product mix, pricing and costs, and the effect

of the economic downturn Commission reductions and business mix changes have

contributed to a strengthened new business margin of 2.1%

(H1 2008: 1.2%)

IFRS life operating profit 14% lower at 368m driven by the fall

in asset market values reducing with-profit results

Life MCEV operating return of 345m, a 17% decreasereflecting lower expected returns from existing business

On track to reduce costs by 100m by the end of 2009

Current position

A leading UK Life company, with 10.8% life and pensions

market share at H1 2009 (H108: 10.4%)

Broad product reach, top four position in our key markets

Improving our service proposition to become a key

differentiator

Continuing to simplify our business model through

outsourcing and e-commerce developments

Received final approvals for the reattribution of the inherited

estate

United under a global brand - name changed to Aviva on

1st June 2009


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We have delivered our promises

Rationalise costs

Simplify the legacy

Value out of service

Manage retention

Focussed on priorities, delivering the right things

Develop the business

Strong balance sheet

Capital efficiency


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Trading through the recession..

Thriving in challenging markets

Lower sales in a significantly

contracting market

Market share increase at higher margin

Focus on profitability of new business

while maintaining capital discipline

resulting in increased margin

Top 4 position in key markets

1

2

3

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09

PVNBP bn

Pension Bonds & other Annuities Protection

Quarterly Sales

Quarterly sales (Life & Pensions PVNBP) on an MCEV basis. Life & Pensions market share based on ABI data.


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while enhancing returns

Reduced individual pension, group

pension and bond commissions

Growth of fee-based Employee Benefit

Consultant business

Customer service efficiencies

E-Commerce enhancements

Improved product mix

Significantly leveraging pricing, commission and expenses

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

HY1 2008 FY 2008 HY1 2009 Q3 2009

New BusinessMargin Improvement


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IPP & GPP, 33%

IPP & GPP, 40%

Corporate pensions, 6%

Corporate pensions, 4%

Protection exc. creditor,

10%

Individual Annuities, 15%

Individual Annuities, 17%

BPA, 7%

BPA, 2%

Bonds, 27%Bonds, 24%

Other, 4% Other, 3%

Protection exc. creditor,

8%

and moving our mix towards higher margin risk

products

Driving profitability, driving value

Increase in individual annuities through innovative

rating factor pricing

Reduction in BPA proportion due to rigoroushurdle rate discipline:

Compelling proposition to 50 EBCs

Protection excluding creditor increased despite

collapse in mortgage market:

Excellent growth of Simplified Life product

Individual and group personal pension rise

supported by:

market leading e-Commerce

170 schemes secured in HY1 2009, 188mPVNBP

Bonds impacted by management actions reducing

commission, market conditions and CGT changesPVNBP share of portfolio

Q3 2008 Q3 2009


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Widening the income and expense jaws

Increasing sales while growing

margin

Targeted cost reductions, driving

out inefficiencies and reducingoperating expenses

Lower, more flexible and variable

cost base

Expense over-run eliminated in 2009

Life & Pensions Sales and Operating Expenses

Growth

Life & Pension sales calculated on an EEV basis for comparative basis.

Operating

Expenses

L&P Sales

-25%

-15%

-5%

5%

15%

25%

35%

2005 2006 2007 2008 2009


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Our focus on annuities is delivering benefits

Extra rating factors (size/postcode/marital status & smoker status) delivering underwriting profit

Increase speed to market and flexibility of rating changes

Established strong BPA proposition

Reduced capital in market place drives increased returns

New business margin shown on an EEV basis.

2.8%6.1%Capital strain %

6796Capital strain m

812Payback (years)

16.7%9.5%IRR

9.1%5.2%Margin

+/-20082005New Business

+3.9pps

+7.2pps

4 yrs

-30%

-3.3pps

IRR benefits from improved pricing, lower expenses and capital efficiency


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Our focus on protection is delivering benefits

Highly competitive market with downward pressure on core mortgage and term products

Improved re-insurance structures & reduced re-insurance costs

Differentiated pricing by Channel / Distributor

Implementation of enhanced rating factors

IRR benefits from lower capital requirements from PS06/14



46Payback (years)

23.5%16.5%IRR

7.8%9.2%Margin


+7.0pps

2 yrs

-62%

-7.4pps

-1.4pps




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Key actions to improve margins in pensions

Increased operational efficiency reducing new business costs

Commission levels reduced in 2008 and 2009 to date. Key actions include:

GPP 3% reduction in initial commission, 0.05% increase in FOC charge Q4 08

IPP single premium commission reduced by 0.5% to 6.0% Q1 09

Implementation of customer agreed remuneration



912Payback (years)

12.4%8.2%IRR

1.6%1.2%Margin


+0.4pps

+4.2pps

3 yrs

-1%

-1.7pps




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Key action in place to improve margins in bonds

Persistency assumptions strengthened

IFA commission rates reduced by 1% Q4 08

Allocation rate reductions by up to 2% Q1 09

Guaranteed Fund Commission reduction Q2 09

IPG profit impacted by market volatility and withdrawn from 17th April 2009



149Payback (years)

7.7%9.7%IRR

0.1%0.8%Margin


66%

2.1pps

-0.7pps

-2.0pps

5 yrs


D li i ti l ll


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Delivering operational excellence

9,20012,500UK headcount

4 star1 starDistributor service rating

+/-

68%49%Employee morale score

75%60%Value on scale platforms

68%38%Customer recommendation score

420Core admin systems

1,4851,032Policies per headcount

2009 Q12005

+44%

+15pps

+19pps

-80%

+3

+30pps

We have transformed our operating model

-26%

UK Lif l i di ti ti iti


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UK Life: an evolving distinctive position

2008 product positioning

Consistent strategy & ruthless execution has delivered a distinctive position

Pension 100%

Pension 0%

Risk 0%

Risk 100%

Savings 0%

Savings 100%

Aviva

C t t f t t f t h i th id t


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Context for strategy: factors shaping the mid term

Industry past

Growth funded by

capital

Single premium driving

volume

IFA channel pre-dominant

A Day boom in personal

pensions

Steady growth inretirement needs

Distributorconsolidation

DB / DC

NPSS

Recession

Demographics

RDR & TCF

Forces for change Threats & opportunities

Capital conservation

Margin squeeze

Smaller IFA shop

window

IFA channel orphans

Growing role of

workplace in retirement

Acceleration in at-retirement provision

The next 3 - 5 years presents a mixture of opportunity and challenge

Positioning based on deep insight


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Positioning based on deep insight

Our heartland is not only distinctive but also more profitable

Overweight for UK

Strong growth predicted

8.6m unserved

Higher average value

Poor Comfor

table

Wea

lthy

Achiever

s

GettingB

y

Low

Earners Supe

rRich

Family

Pre-retired

Retired

Non-Family

LifeStag

e

Wealth

Opportunity from our existing customer base


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Opportunity from our existing customer base

Capitalise on untapped value from our existing customers

40% have no active adviser

Scaling back direct acquisition

Re-directing advisory resource

Generating leads from existing

customers

Industrialise to match

opportunity

UK Life customers by source, mExisting UK Life Customers (Millions)

0.7m Partner

customers

3.5m

customers

have IFA

1.3m Directcustomers

1.4m customers

with no adviser

Opportunity from our unique risk capability


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Opportunity from our unique risk capability

We will drive significant growth in our high margin Risk lines of business

Underlying market growth

Individual annuity

Life cover - underprovided UK

Unrivalled capability

Mortality and morbidity

Asset / liability expertise

Cutting edge risk science

Combined understanding from Life,

GI and Healthcare

Market share H1 2009

0% 5% 10% 15% 20%

PMI

Protection

WP Annuities

Annuities

Source: ABI.

Strong positions in key product sectors

Protection Annuities

Opportunity from our momentum in corporate


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Opportunity from our momentum in corporate

sector

Drive profitable growth in the Corporate sector

Proposition innovation, for example the Pension Tracker e-commerce capability

Average scheme tender and secured case sizes up by at least 25%

170 new GPP schemes secured in HY1 2009

BPA foothold achieved, and solid relationships with 20-30 Employee Benefit

Consultants

Support of a global brand

Full wind-down solutions

Unrivalled combined capability of pensions, BPA and healthcare

Opportunity from our distribution reach post RDR


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Opportunity from our distribution reach post RDR

Independents

c. 10,000

General Advisors10,000

Banks, direct

19,000

IFA

c. 21,000

Tied / multi tied

9,000

Banks, direct15,000

High net worth

500k +

Mass affluent

100k 500k

Middle market

30k 100k

Mass market

0 30k

Advisers Today Advisers 2013

Provision gap

We will shape our distribution portfolio for value and low cost of acquisition

UK Life Strategy

Commercial focus

Leverage One-to-many

channels

Corporate

Bulk acquisition (e.g. BPA)

RBS JV

Banks / building socsPost Office

Other partners

Grow in-house channel

Our strategic focus


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Our strategic focus

5. Seize opportunity to become most recommended insurer

4. Shape distribution portfolio for value & low cost acquisition

3. Drive significant profitable growth in Corporate sector

2. Drive significant profitable growth in our Risk business

1. Capitalise on untapped value from existing customers

Focussingon our

distinctivecustomerheartland

Global re-brand

Distribution reach

and flexibility

All round

proposition strength

Unrivalled data and

capability

Scale of customer

base opportunity

We have clear strategic focus for 2010 - 2012



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UK General insurance


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UK General insurance

Strategy

There are 7 strategic priorities:

Win the Customer

Win the Broker

Building Core Insurance Capability

Claims Inflation Busting

Delivering the Promise of Scale

Lean Manufacturing

Win our People

Distribution

H1 2009 Performance (UK GI only)

General insurance operating profit of 247m

General insurance COR of 99% (H1 2008: 98%) General insurance net written premiums (NWP) of

2,049m (H1 2008: 2,589m), down 21%

Distribution ratio improved to 34% (FY2008: 37%)

including expense ratio of 11.7% (H1 2008: 12.8%),

reflecting benefits from transformational programmes and

actions undertaken to manage cost base

Current position

Operates in the mature UK market

Aviva UKGI enjoys a 13% market share - the largest UKgeneral insurer

Top one or two position in all our major classes

Focus on insurance excellence

Improving quality of earnings

Diversified portfolio of products

and distribution channels

Commercial - Broker

Commercial - Other

Personal - Broker

Personal - Partnership

Personal - Direct

RAC income stream

UK General Insurance delivering transformational


60/106


MarketLeadership

Drive up

profitability

Generate capital

Insurance

excellence

Operational

excellence

UK General Insurance delivering transformational

change

A clear strategy focused around a number of key themes

Reshaping our book to maximise our access to customers whilst delivering asustainable distribution ratio

Transforming the operating model to deliver insurance excellence in the core

areas of pricing, underwriting and claims handling

All activity is underpinned by strict control of distribution and claims costs

through delivering the promise of scale

Developing an agenda for our people that supports and builds the Aviva brand

from the inside out

Tangible recent evidence of positive movement in rates Personal rating achieved in line with the market generally

Achieved average premium increase of 6% in personal motor in HY 2009 Achieved average premium increase of 5% in homeowner in HY 2009

Commercial rates continue to carry positive rate increases

Overall rate increase in HY 2009 of 5%

Current economic climate may be catalyst for market to harden

Insurance Excellence in UK GI: 'Focus on Profit'


61/106


Personal Lines Marketplace

- High unemployment levels and pressure on consumer finances drives price sensitivity and switching behaviour

- Motor insurance purchase and research via aggregators now well established; beginning to grow in household

We have a clear strategy- Repositioning Direct away from aggregators to provide direct customers with our best price

- RAC panel launched to serve customers who wish to select their insurer through a trusted provider

- Supporting independent brokers

- Broker network established

- Delivering Fast Trade trading platform directly into 3,000 of their offices

- Partnerships where the partner has a unique moment of truth

- Executing pricing sophistication

Commercial Lines Marketplace

- Business failures, shrinkage and restricted access to credit has subdued demand

- Broker consolidation has slowed; rates rising slowly

We have a clear strategy- Independent brokers are our distribution, leveraging UK underwriting footprint

- Focus on transactional excellence

- War for distribution

Summary our business



62/106


The UK market leader

Source: Datamonitor

RSA

6.6%

Zurich

5.5%Nat Farmers

2.2%

BUPA

3.8%

Allianz

3.8%

Lloyds BG

4.4%AIG

3.0%

AXA

7.1%

Aviva

12.9%

RBSI

11.4%

Rest of market

39.3%

Consolidated market top 7 insurers haveover 50% market share

Aviva is the largest P&C insurer in UK

Top 1 or 2 position in all our major classes

Unique business model

- Balanced mix of personal andcommercial

- Multi-distribution

- Powerful brands

Consistently delivering performance- 99% or better COR since 2003

1

- 4.4bn operating profit over last 6 years

(1) Excludes impact of 2007 summer floods

UK GI Market Share 2008



63/106


Unparalleled customer reach

DIRECT BROKERS PARTNERS

#1 in the SME market

Insurer of the year2003 to 2008

over 100 others

Powerful brands

3,000

brokers

RAC - Best roadsideassistance provider 2006 to

2008



64/106


Delivering the Promise of Scale

Halve IT costs On track for 350m committed cost

savings

Lean Manufacturing

Mass customisation Service & process centre reengineering

Win the Customer

UKDI fightback

RAC membership Partnerships moments of truth

Win the Broker

War for distribution

Building Core Insurance Capability

Sophisticated pricing Rating leadership Price & product optimisation

Claims Inflation Busting

Sustainable benefits year on year

Win our People

No1 for employees Build core insurance skills Pride & passion for insurance

UK GIs 7 strategic priorities



65/106


Reshaping the book

PERSONALLINES Multichannelapproach

Directmeansdirect

RACPanelforaggregators

Regrowwithbrokers

Pricecompetitivesophisticatedpricing

COMMERCIALLINES Growsmall/medium

independentbrokers

Reducecommissionsignificantly

Maintainpricingdiscipline

RetainInsureroftheYear for7th year

Sustainable growth andsustainable distribution cost

Profitable & growingmedium sized brokers

Unique package

Increase marketshare

With Mass Customisation we can point everyone to the same engine and each "partner"

will get the correct product and price.

Direct is Direct

Leverage Membership Panels/ Aggregators

Partners: Moments of Truth

Personal Lines: A Crystal-Clear Strategy

3rd Party Data

All web applicationsare built on theNUD in a Boxstandard

All partner integrationis provided usingNUD in a Pipe

WebApplication

IntegratedPartner

Application3rd Party Data

AvivaWeb

CallCentreScreens

PolicyAdministration Real-time

Pricing

PartnerIntegration

PartnerWebs

RAC Panel

Store QTE

DataFeedsPrice

RiskBrokerWebs

Small Brokers & National Accounts

BrokerIntegration

Quote

MI

MTA

NB

Brokers e-platform

Platinum CoverGold CoverValue CoverBuildings &ContentsSumsInsuredSpecified InnerLimits

Frozen Food

Blanket

Higher

InnerLi

mit

Unlimited

Blanket

Blanket

HigherInne

rLimi

t

LowInne

rLimi

t

400 Limit

200 Limit

Loss ofrent and a

12,000 Limit

6,000 Limit

Unlimited

1,000 1,000

Single ProductPlatform

Single Process

One Price List

Common

Pricing/Products

Financial strength &reassurance

Truly global peer group

Leveraged marketing

Direct Fightback

Direct is direct Sophisticated pricing

Panel

13 panel insurers 30-40% share

Moments of Truth Profitable & growingsmaller brokers

Unique package

Increase marketshare

Fast Trade e-broking portal

Straight throprocessing

Fast referrals

ProductsPubs restaurants RAC

RESCUE

Manufacturing& wholesaling

Shop & salon

Property

owners

Self employed

Officesurgery



66/106


Reshaping the book

By 2011 our UKGI book will have changed

Direct grows

Brokers grow

Partnerships fall

RAC steady in Rescue but RAC panel growing significantly

Motor grows

Home falls Creditor falls

Commercial lines grow

Rightbalance of volume and profit


67/106


D li i th i f l


68/106


Delivering the promise of scale

c900 Applications


69/106


Delivering the promise of scale

Inflation

C&E38m

One-offs

09 & 10Inflation

One-offs

Phase 2

Cost

150m

Phase1 Cost

Reduction

2007 20102008 FY

Phase 2 Target: 150m

Operations IT

2008 HY

Phase1 Cost

ReductionPhase2 Cost

150m

Reduction

Phase 1 Target : 200m Sales & Marketing IT Support Services Change

Full year 2008 ratio of 12.1% achieved

Remaining phase 2 savings ahead of target

Progress ahead of what was promised in October 2008


S


70/106


Reshaping the book

Focus on profit

Sustainable distribution ratio

Building core insurance capability

Sophisticated pricing

Focus on transactional excellence

Cleanse the book of poor performing business

Inflation busting

Expect rating in line with market at or above inflation

Delivering the promise of scale 265m cost savings delivered in 2008

Expense ratio reduced to 12.1% in 2008

Ahead of target for remaining committed cost savings

Summary

Europe


71/106

Europe in context


72/106


General Insurance

Long Term savings

Composite

Significant part of the Aviva group

Strong historic foundations

Unique opportunity to establish a leadership position

Clear execution strategies are already beginning to make a difference

Poised to make a Quantum Leap

Long-term savingssales

GI and Health sales IFRS Operatingprofit

HY1 2009 for long-term savings sales (present value of new business premiums and investment sales), GI and health sales (net

written premiums) and IFRS operating profit (before group debt and interest costs)

DL

11%

DL14%

DL14%

UK26%

UK

47%

Europe Europe Europe

50% 35% 44%

Other

regions

24%

Other

regions 18%

UK

44%

Other

regions 12%

Europe: Aviva is uniquely positioned


73/106


Developed markets

Source: AXCO

High potentialmarkets

0

2

4

6

8

10

- 10,000 20,000 30,000 40,000 50,000

GDP per Capita (PPP) ()

LifeIn

surancePenetration(GW

P/GDP)%

IrelandFrance

Italy

SpainPoland

Czech Rep

Hungary

Romania

Turke y Russia

Belgium

Netherlands

Germany

Lithuania

Slovakia

Market bubble sizeproportionate to premiums

In different stages of development



Europe: Aviva is uniquely positioned


74/106


Capabilities across all product

lines and distribution channels

In different stages of development



With an enviable competitivefootprint

Source: CEA, 2009

Life Distribution Models

Aviva Europe

Single operating model


75/106


Single operating model

Markets focused on distribution with a

strong centralised support

Synergies in IT, operations, customer

service with pan European sharing of

services

Centralisation of production, keeping

strong radar for each market/segment

State of the art governance

Customer management

& Marketing

Governance

IT,Operation

s&SharedService

sDistribution

Product

In markets

Pooled

Aviva Europe

Bancassurance


76/106


One single business model & governance across

Europe (moved away from Federal structure)

Rapid model to market Aviva in a box concept

Exploiting huge mix opportunities to strengthen

margins grow protection by 30%

Significant growth opportunities, through existing

partners at marginal cost

Innovative shared service platform established in Spain

Strong and successful track record in bancassurance

across Europe

Leading the market, leveraging existing

relationships into GI and other product areas

to triple GI contribution

46 quality partners across Europe

(17 JVs & 29 distribution agreements)

Mutually compelling business model with robustexit clauses

Strong margins, double the Aviva Group average

Proven expertise

Pan-European model drivescost reduction

Strengthened marginsthrough optimised mix

Strong organic growthat marginal cost

Extending product reachto grow profits

Bancassurance

Yesterday Simplify & Innovate Tomorrow

No. 1 bancassurer in Europe Common channel approach

with specific partner offerings

Leveraging uniquebancassurance model

(already existing in Spain)

Optimal product mix

Undisputed leading partner of choice

Cost per policy significantly reduced through

roll-out of shared platform

But, in common with our competitors:

Federal model

Focused on Life Insurance

Aviva Europe

Retail


77/106


Centralised sales services functionsCommon tools and methods (one front end,

product bundling, dynamic pricing, remuneration

system, etc.)

Targeting a 30% increase in sales force productivity

and 10% improvement in customer retention

Single retail operating model with

Customer retention centre of excellence

(implemented):

Top 5 life retail market shares in Ireland, France,

Poland, Lithuania, Turkey, Romania and Russia

Large and profitable life back-book generating

two-thirds of European Life IFRS OP

Strong sales capacity:

Strong presence,highly profitable

franchise

Improved customerprofitability & retention

Stronger performancemanagement and better

capital allocation

Lower network costs

Retail


A significant platform to build from: 9 million customers

18,000 financial advisors

(of which 10,000 in own networks)

12 European markets

7bn life sales (PVNBP)

2.5bn GI sales

Strong and profitable GI business

One European distribution

organisation unit run as a profit

centre

Selling all product lines

Using the same methods

and tools

Managed in a consistent

manner

Integrated channel management (implemented):

Central retail function for Europe

Single ownership of retail channel in all marketsRetail P&L

Performance review process & benchmarking

(implemented):

Aviva Europe

Shared services a lever of Operational Excellence


78/106


1 core platform common IT architecture and systems

3 datacentres in 2 markets (minimum for resilience)

1pan-European network (data & voice) and 1 intranet

Common chart of accounts

Common HR system and process

Single portfolio of change (implemented)

Centralised procurement and supplier management

(implemented) Disparate change to portfolio management

Rationalised document management, reducing costs and

ensuring consistency

Leveraging best practice to drive down cost of GI claims

Inconsistent approach to purchasing spend

12 new business and 15 claims processes

Multiple localised IT processes and systems:

Lower unit costs andIncreased efficiency

Improved customer &distributor satisfaction

and advocacy

Doing it once and keepingit simple. Future growth at

lower incremental cost

Superior, sustainableperformance

Shared services a lever of Operational Excellence


12 IT, HR, Customer Services and Finance

organisations

Running efficiently managed as markets

Best of breed processes within-market

67 core systems in 12 markets

20 datacentres in 12 markets

12 telephony platforms and 29 intranets

Paper-based workflow, many handoffs and

workarounds

Simplify organisation,

processes & systems

Innovative core platformtechnology

Leveraging best practice

Shared services centres single pan-European IT, HR,

Customer Services and Finance functions:

Concentrating on scale, synergies and efficiency

Best of breed rolled out to all markets

Streamlined and effective IT:

12 general ledgers on different technology

platforms and 12 local GAAPs

Multiple HR administration systems

Aviva Europe

Governance, Capital & Risk Management


79/106


Varied approach to reinsurance purchasingReinforce risk as second line of defence

Simplified product design

Increased ease and speed to market

Delivered pan-European product catalogue focussed

on customer needs

Centralised reinsurance purchasing

Capital allocated on basis of a single business

Capital allocated to individual markets

Risk management focused on individual

markets

Over 1000 active products

, p g


Organised on legally distinct subsidiary basis Reinforces separate nature of individual

business

Supported by multiple systems

Separate product development in markets

Governance focused on individual markets

Simplify legal entity structure

and product offering

Strengthen governance

and risk framework

Centralise investment

management

Single holding companyLegal and management structures aligned to One Europe

Efficient access to new markets

Tax and capital efficiency

Established centres of excellence with strengthened

governance on product design

Effective cash flow management across Europe

Over 110bn funds under management Separate relationships with investment

managers

Over 70% of funds managed by

Aviva Investors

Gearing up to meet Solvency II

Improved risk management across Europe

Tax and capitalefficient

Product improvements driveretention and satisfaction

Pan-European risk andcapital management

Improved productperformance and margins

Increased Aviva Investor share of funds managed

Improved product performance

France


80/106


Strategy

Reshape our portfolio with more profitable unit-linked

products

Life: build innovative and comprehensive product offeringbased on best advice at point of sale

Ongoing focus on efficiency to leverage the cost base

GI: To increase profitability and expansion of the agent

network through cross selling opportunities

Distribution

HY 2009 Performance

Total PVNBP sales of 2.4bn (HY08: 2.1bn)

Value of new business (Gross) of 72m

Value of n ew business margin of 3.0% (HY08: 3.4%)

reflecting sales mix

Life MCEV operating return up to 377m (HY08: 241m)

Life IFRS operating profit of 122m (HY08: 145m)

GI and Health operating profit of 36m (HY08: 30m)

despite French storms

Improvement in GI only COR of 95.8% (HY08: 96.2%)despite storms which were partly offset by reserve margin

releases

Current position

Life: top 10 position in the market (5% market share)

Life: multi-channel distribution selling comprehensive

range of savings, pensions, protection & investmentproducts

Life: strong partnership with the AFER Association

Life: Bancassurance partnership with Crdit du Nord

GI: 2.3% market share, personal, small commercial &

health through tied agents and direct channels

H Y 2009 PVN BP

AFER

49%

CreditduNord

27%

OtherAviva

20%

Protection

4%

Ireland


81/106


Strategy

Completing the rebrand from Hibernian to Aviva, and

leveraging on improvement in brand awareness

Optimise our sales volumes consistent with our focus on

prudent capital management and seeking the greatest

returns on capital

Health: grow the health business to triple membership

GI: continue to develop our internet presence to ensure our

distribution remains a competitive advantage

Increase operational efficiencies and reduce costs as a

platform for profitable growth

Distribution

HY 2009 Performance

Sales (PVNBP basis) down 39% to 0.4bn consistent with

the market (down 40% on APE basis) due to reduced

demand for unit-linked products, as customers deterred by

volatile equity markets. Life MCEV operating profit down 55% to 18m (HY08:

40m) reflecting lower VNB and lower expected returns on

existing business

Life IFRS operating profit stable at 29m (HY08: 28m)

GI COR of 94% (HY08: 98%) due to lower claims

frequency and lower number of large claims. Health contributed 23m NWP

Current position

Largest composite insurer in Ireland

Combined Hibernian/Ark business ranks 4th in life &

pensions market with 14% share, 1st in GI with 16% share

and 3rd in Health with 10% share following the acquisition ofVIVAS in 2008 (up from 8% at FY 08)

Competitive market in GI with some competitors pricing for

volume

Life: broad product range with new funds launched in 2009

Hibernian Aviva Health is the fastest growing healthcare

insurer in Ireland and increased the number of newmembers by more than 40% to 222,000 at HY 09 (HY 08:

156,856), outperforming competitors.

-46%

-30%

Distribution analysis of PVNBP

BrokerBroker

Bank

Bank

-

250

500

750

2008 2009

PVNBPm

Italy


82/106


Strategy

Optimise our sales volumes consistent with our focus on

prudent capital management and seeking the greatest returns

on capital Increase protection business in Life and GI

Continue to develop agent and independent financial advisor

network

Leverage strong bancassurance relationships and heighten

brand awareness to increase penetration with existing

partners to continue growth

Distribution

Strong contribution of Aviva Assicurazioni Vita Spa since

acquisition through Unione de Banche

Banca Marche deal expired at the end of May 2009 and

will not be renewed

HY 2009 Performance

Outperformed both Life and GI market, whilst improving margin and

COR demonstrating value of bancassurance model

PVNBP sales up 68% to 2.2bn reflecting customer demand for

products with guaranteed return in current economic climate,

Value of new business margin of 3.7% (HY08: 2.7%) reflecting a

focus on the more profitable credit protection business

Life MCEV operating return of 120m (HY08: 101m) reflecting

improved VNB


Continued growth in GI NWP reflecting new bancassurance

agreement with Banco Popolare

Current position

Top 10 position in the market

Strong bancassurance presence underpinned by Aviva

Assicurazioni Vita (formally UBI Vita) acquired in June2008, which contributed sales of 359 million at HY 09

Growing agent and independent financial advisor network

Brand awareness up 7% to 16% at HY09 (HY08: 9%)

HY 2009 PVNBP m

0 400 800 1200 1600

Other

UniCredit

Unione de Banche

Banca M arche

Banco Popolare

Spain


83/106


Current position Top 5 position in the market with 7% market share

Market leading bancassurance distribution through a

unique and innovative shared service platform -enabling organic growth through existing partners at

marginal cost

Major protection provider, resulting in strong new

business margin

Half Year 2009 PVNBP m

0 100 200 300 400 500 600 700 800

Non bancassurance

Caja Murcia

Caja de Granada

Caja Espana

Unicaja

Caixa Galicia

Bancaja

HY 2009 Performance

HY09 performance negatively impacted by the current

unfavourable economic climate

HY08 included one-off impacts of the Caja Murcia risk

portfolio transfer and regular premium pension transfer PVNBP sales of 1.2bn (HY08: 1.3bn). Excluding Caja

Murcia one-off impacts, HY08 was 1.1bn

Value of new business (gross tax/post CoC) of 78m

(HY08: 116m), with a margin of 6.3% (HY08: 9.0%).

Excluding Caja Murcia risk one offs, the margin at HY08

was 7.2%.

Life MCEV operating return of 154m (HY08: 173m).Excluding Caja Murcia one-offs, HY08 was 139m

IFRS operating profit of 71m (HY08: 74m)

Distribution

Primarily through bancassurance network giving

nationwide distribution

Strategy

Maintain top 5 position

Further develop bancassurance relationships and

continue to develop agent and broker business Focus on customer retention with aim to improve lapse

experience

Develop and launch new products with a focus on high

margin and the preservation of capital

Leveraging new shared service centre to create

sustainable efficiencies

Poland


84/106


Strategy

Maintain a market leading positions in life and pension

markets

Refocusing sales force on protection and unit linked

products following pension legislation change

Leverage the joint venture with Bank Zachodni WBK*

Re-brand to Aviva commenced in first half with new

interim name CU Aviva.

Grow GI business through direct motor launch and new

JV with BZ WBK.

*Launched in 2008 through a network of 400 branches with 1.4m potential new

customers

Distribution

Strong direct sales force of over 3,300 agents

Opportunities to develop sales through bancassurance

partner Bank Zachodni WBK

Group business distributed through specialist sales team

HY 2009 Performance

Life and pensions sales have declined to 0.6bn (HY08:

1.0bn) reflecting high bancassurance sales in 2008.

Value of new business (gross) of 27m

Value of new business margin (gross) of 4.9% (HY08:

3.3%) due to change in business mix

Life MCEV operating earnings down to 92m (HY08:

114m) reflecting lower expected return and value of

new business.


Current position

Leading long-term savings business since 1992

Largest pension provider in Poland representing a 25%

market share

Strong presence in Poland underpinned by more than

3.5 million customers

Re-brand to Aviva scheduled for the end of 2009,

currently trading as Aviva Commercial Union

Anticipated regulatory change will significantly reduce

caps of fees of large pension provides. This impact has

been taken into account prudently within the MCEV

Distribution analysis of PVNBP

RetailRetail

Bank

Bank

-

200

400

600

800

1,000

2008 2009

PVNBPm

Delta Lloyd


85/106


Strategy

Delta Lloyds local listing will enable it to take advantage of

opportunities locally as the market consolidates

Reputation built on Delta Lloyds strong financial position

and management of financial risks, avoiding reliance on

state/shareholder support Achievement of efficiency gains in 2009 and 2010 will

enable DL to be profitable in its competitive market

Strategic solution for Germany is being considered

Distribution

HY 2009 Performance

PVNBP life and pensions sales lower at 1.8bn (HY08:

2.1bn which included substantial group pensions

contracts).

Value of new business (gross) worsened to 34m loss(HY08: 29 million loss)

Life MCEV operating return of 329m (HY08: 35m)

IFRS life operating profit higher at 148m (HY08: 134m)

GI operating profit of 59m with COR of 97%

Current position

Top 5 position in the Netherlands and Belgium for Life new

business; also operations in Germany

Top 5 position in the Netherlands for GI

Multi-channel, multi-label distribution sellingcomprehensive range of long-term savings and general

insurance

ABN AMRO joint venture to continue with expansion to

cover Fortis network

Disposal of health insurance operations on 1 Jan 2009,

while providing future cross-selling opportunities

0 250 500 750 1000

Belgium

Germany

ABN AMRO (bancassurance)

OHRA (direct)

Delta Lloyd Life (intermediary)

General Insurance

HY 2009 Life PVNBP & GI GWP m

North America, Asia Pacific and


86/106

Aviva Investors

Aviva North America


87/106

North America - focus on greater capital efficiency


88/106


Profitable growth

Optimise

business mix,growth & margin

Diversify

distribution and

products

Generate net

capital returns

Sustainable footprint in the US having doubled scale in 2008, a year

ahead of target

Meeting US customer needs with increased annuity guarantees and

unique wellness features in Life products

#1 in indexed life insurance and fixed indexed annuities in the US

#2 in general insurance in Canada

Enhance profitability

Focus on higher margin products

Heightened focus on capital efficiency by moderating pace of growth inindexed annuities in the US

Aim to maintain market leading position

North AmericaH1 2009 Performance


89/106


Doubled scale in 2008, 1 year aheadof target

Q2 2009 sales reflect managementactions taken to moderate annuitysales including re-pricing, commissioncuts and production limits

Life insurance sales remain resilientwhile rest of the life market has seensignificant drop

No funding agreements in H109 so to

use capital to support annuity sales

US Life Volume PVNBP Canadian GI Volume - NWP

Good top line growth fromincreasing commercial lines

market share Undertaken significant changes

to improve operational efficiency,reduce costs and improveservice

Delivered a combined operatingratio of 97%, ahead of the group

target

millions

Steady operating profit despite

unprecedented economic

turmoil

GI profits reflect improvement

in underwriting results

Life profits impacted by market

conditions

IFRS Operating Profit

-

250

500

750

1,000

H1 2007 H1 2008 H1 2009

*

-

50

100

H1 2008 H1 2009

US Life Canada GI

CAGR 4% *

millions

millions

-

500

1,000

1,500

2,000

Q1

2008

Q2

2008

Q3

2008

Q4

2008

Q1

2009

Q2

2009

Annuities Life Funding agreements * on a local currency basis

North America2009 Priorities


90/106


Focus on profitability, productivity and capital efficiency

Optimise business mix and margins Diversify distribution and products

Enhance margins and increase new business return on capital

Focus on capital efficiency

Leverage product and distribution strengths to capture life

insurance market share and manage annuity relationships

Excel in underwriting and enhance profitability

Diversify by product and geography

Generate net capital returns

North

AmericaRegion

AvivaUSA

Aviva

Canada

USA


91/106


Current position

Doubled sales within two years of acquisition of formerAmerUs business and one year ahead of target

Aviva USA became the first provider ever to

simultaneously hold the #1 spot for sales of indexed lifeand indexed annuities

Retained #1 position in both markets for 3 consecutivequarters

Over 1500 employees supporting customers in 50 states

19% growth in customer account value

H1 2009 Performance

Financial performance affected by economic turmoil

Sales reflect consumer demand for products with

guarantees backed by a financially strong provider

MCEV operating profit increased to 120m (H1 2008:

74m)

IFRS operating profit of 24m

Strong AM Best ratings attractive to customers and

distributors

Distribution

Highly effective distribution network

Leverage proprietary product distribution relationships to

optimize agent productivity and sales

Focus on expanding Life sales through substantial

Brokerage General Agent organisations Launched Wealthstar Alliance, an advanced markets

channel focused on life sales primarily through CertifiedPublic Accountants (CPAs) to diversify distribution

Strategy

Maintain a strong position in indexed life and annuitymarkets

Improve annuity margins

Diversify product revenue and enhance margins by

growing life insurance business Capitalise on growing savings and retirement

demographics

Leverage Avivas scale, strength, brand and globalcapabilities to exploit opportunities

Prepare for 151A and diversification into registereddistribution channels

Canada


92/106


Current position

Canadas 2nd largest GI provider, with 9% market share

Balanced portfolio of personal, commercial and specialty

lines

Top 5 position in all major provincial markets

Strong specialty niche products & distribution

Market leading claims service innovation - first insurer in

the world to receive accreditation from the Commission on

Accreditation for Rehabilitation Facilities

Award winning internal training programs

Innovative products and customer solutions

3 million customers

Over 3,000 employees with a nationwide presence

H1 2009 Performance

Strong financial performance in H1 2009

NWP increased by 15% to 889m (4% increase on a local

currency basis)

COR improved to 97% (H1 2008: 98%) due to actions toreduce commissions and expense levels

Operating profit up to 87m (H1 2008: 76m) reflecting

increased sales volumes and improvement in underwriting.

Distribution

Strong independent broker relationships

Broad distribution through 3,000 broker partners from

coast to coast

Largest broker-distributed group insurance provider in

Canada

Secured specialty niche partnerships with leading specialty

brokers

Strategy

Optimise a diversified portfolio by product line and

geography channel across the insurance cycle

Deliver underwriting excellence to outperform the industry

Leverage scale economies through common

infrastructure, automation and centralised core functions

Enhance profitability

Build differentiated brand through innovative, customer

centric insurance solutions and service

Aviva Asia Pacific


93/106

Asia Pacific Remains an attractive growth region


94/106

Investor presentation December 2009 94Investor presentation November 2009 94

Growth, Value

Prioritised Portfolio

Must Win markets Developing BUs

Regional OperatingModel

Grow the

Business

Manage the

Business

Profitably

Support the

Business

ImproveGovernance and

Control

Asia-Pacific not immune to economic crisis Life and pension sales down 22% as customers remained cautious about investing

in unit-linked savings products Lower investment sales reflected investor caution in volatile markets

Asia Pacific remains an attractive growth region Insurance market growth expectations remain positive in key markets (0~5% in

China for H2 09; 10-15% in India for 09-10).

Asias economies to grow at 3.9% in 2009 and 6.4% in 20101

Fundamentals strong with growing middle class and ageing population

Increasing customer demand for protection & health products

Sales have increased in the third quarter vs 2Q in most countries across the region

Strategic focus in 2009/2010 Continued focus on capital preservation, expense management and customer

retention leading to improved product profitability. Getting ready for market recovery in 2010. China: Continued growth, leveraging presence in 10 provinces and 40 city branches

India: Improve agent productivity and adapt product mix to respond to change in

customer needs

Korea: Build on growth momentum and improve product profitability

Singapore & Hong Kong: Profitable growth led by bank channel recovery.

Taiwan and Malaysia: Leverage bank partners distribution power

1 Source: Asian Development Bank (22 September 2009)

Aviva Asia PacificFootprint at a glance


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Developing BUs

Must Win markets

MalaysiaJV: 49:51

with CIMB

CIMB Aviva Life & Takaful,

90% Life, 10% GI

Taiwan

JV: 49:51

with First Group

First-Aviva, 100% Life

South Korea

JV: 47:53 with Woori

Woori Aviva 100% Life

Sri Lanka

51% Aviva owned subsidiary

Eagle

70% Life: 30% GI

Singapore

100% Aviva owned

Life, Navigator, Health

Hong Kong

100% Aviva owned

Life, Navigator (w.e.f 16 June

2009)

Building success in Asia Pacific


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Ambition to build a high growth and value creating region driven primarily by

Must Win markets of China and India

Prioritised portfolio Must Win markets: Achieve leading position in

China & India. Developing BUs: Bancassurance-led; balance

growth and profit

Regional operating model Grow the business organically (e.g. roll-out of

Navigator and GI direct model) and inorganically

(new market entries).

Manage the business profitably through costefficient Shared Services, profitable regional

propositions and increased customer persistency.

Support the business by increasing talent bench

strength, promoting the Aviva brand and creating a

customer centric organisation.

Improve governance and control by implementingglobal best practice in risk management and

financial/actuarial functions.

Strategic focus Competitive advantage

Bancassurance expertise

More than 50 bancassurance partners in region

Share best practice across region

Leverage growth potential in developing

markets

Strong regional and local management team

Strong presence in must-win markets

Regional Operating Model

Costs savings and efficiency

Share skills and services across region

Leading wrap platform roll out in AsiaPacific

Must Win Markets


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Investor presentation December 2009 97Investor presentation November 2009 97* source: China Insurance Regulatory Commission; ** source: Insurance Regulatory and Development Authority

China

Aviva-COFCO Life Insurance (50% Aviva share) launched on 1 January 2003.

No.4 in terms of total premium income among foreign players (15 th among all insurers) as at end of September 2009*.

Multi distribution strategy: direct sales force, agencies, brokers, telemarketing and banks.

13 non-exclusive bancassurance partners (national and local).

Presence in 10 provinces/municipal cities with 40 city branches.

Ambition to become a top 10 player (local & foreign).

3Q09 underlying sales are lower arising from current market volatility coupled with lower future premium expected due

to policyholders exercising premium holiday options.

Key strategies in 2010

Target High End market as core customer cluster; Improving control on channels; Optimize cost and efficiency through

centralised shared services platforms; Implement localization and development of talent; Establish professional

investment management capability.

India

JV partnership (26% Aviva share) with Dabur Group launched in June 2002.

Ranked 11th among the private players in the market on FYP basis as at end of August 2009**.

Multi distribution: 33 bancassurance partners, c.29,000 tied agents and alternative channels (incl. Telemarketing). 3Q09 sales substantially lower than PY primarily due to loss of major bancassurance partners in 2008 (via takeover) and

the impact of negative investor sentiment on unit linked sales.

Key strategies in 2010

Agency expansion in selective high potential locations to maximise opportunities; Enhance agent/ sales manager

productivity, aiming to maximize sales resource and effectively utilise existing infrastructure; Improve persistency; Improve

the Business Model with particular emphasis on cost optimisation.

Developing BUs


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Singapore DBS partnership deal extended to 2015. Introducing Insurance Specialists model in DBS branches.

Sales significantly impacted mainly due to market issues with bank channel sales arising from bank sales of Lehman bonds.

Ranked 5th in Singapore on APE basis as at Q2 20091

Hong Kong DBS partnership deal extended to 2015. Introducing Insurance Specialists model in DBS branches.

Lower Q3 sales due to capital conservation strategy and bank channel sales impact of Lehman Bonds issue.

Substantial increase of volumes through our successful partnership with Woori Bank.

Korea to continue its aggressive multi-distribution expansion.

South Korea

Malaysia We have considerably improved our propositions and customer services by leveraging our regional shared servicesplatform.

Life sales decreased largely due to the decision not to launch low margin tranche products through CIMB to preserve

capital.

Ranked 7th in Malaysia with 6.5% market share in terms of total new premiums as at Q2 2009 2.

Taiwan Significant decrease in volumes due to our decision to change strategy to focus on profitable products.

Our strategy is to improve our penetration of First Banks large customer base (over 5 million).

We signed a distribution agreement with LOLC, a local leader in the leasing sector, increasing our motor business by c.

50%

We are implementing significant measures to reduce lapses and COR.

Sales are adverse mainly due to weak consumer sentiment driven by market volatility in the first part of the year.

Sri Lanka

1. source: Life Insurance Association, Singapore; 2. source: Life Insurance Association, Malaysia;

Aviva Investors


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Aviva Investors executing the strategy


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Aviva Investors

Globally

integrated

business

Transform the

investment

model

Increase third

party business

Significant progress towards developing a global asset

management business

Launched in September 2008, 222bn funds under management at

30 June 2009 and ranked top 20 institutional investor globally

Net new business flows of 3bn in first half of 2009, with 2bn fromthird party clients

Cross border sales gaining traction notably Global High Yield fund(Europe, UK and Taiwan) and Absolute Tactical Asset Allocation

(Europe and UK, entering US).

Building global ways of working - global credit research built andbeing used by over 130 investment professionals

Aviva Investors today


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North America

12.8%

AUM by geography AUM by asset class

Data as of 30 June 2009

222 billion in assets under management

Australia 1.7%

France

27.6%

Ireland 3.4%

Poland 1.1%

Spain 0.4%

UK 53.0%

Fixed income

55.2%

Equities

19.9%

Real estate

9.8%

Cash 10.7%

Other 4.4%

Internal 84.6%

Institutional

10.8%

Intermediary 4.6%

AUM by client

Aviva Investors today


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3.4%5.0%

5.0%

0

500

1,000

1,500

2,000

2,500

FY 2008 H1 2008 H1 2009

Aviva Group* Aviva Investors

Profits

inmillions

Proportion of Aviva Investorsto Group IFRS operating profits

222235236AUM bn

11.6

71%

114

1

14

35

64

FY

2008

1520Europe

1210.9Cost: AUM bps

79%65%Cost: income ratio

(1)-Asia

813North America

1428UK

Aviva Investors

3661Total

H1

2009

H1

2008Operating profit m

Operating profits of 36m reflects lower investment markets

* Excluding Aviva Investors

Business structured to meet client needs


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Positioned for growth


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Achieved to date:

Third party and cross border sales progress made in cross border sales

Investment performance - improving, with more work to do

Continuing to transform and integrate the global business

Attracting talent to lead a high performance organisation

Contacts

8/7/2019 Aviva UK: Investor Update Dece

aviva uk: investor update december 2009

Documents