Key performance indicators

Our IFRS earnings per share for 2010 was 50.4 pence (2009: 37.8 pence). This reflects strong growth in UK, Europe and the US.

• Focusing on earnings per share allows us to align our strategic priorities with what our shareholders receive.
• Total IFRS return takes into account everything affecting shareholder value, not just operating profits.

Our board has recommended a final dividend of 16.00 pence per share (2009: 15.00 pence). This brings the total dividend for the year to 25.50 pence and gives a dividend cover of 2.1 times (2009: 1.8 times) based on IFRS operating earnings after tax.

• Our intention is to pay a dividend on a basis judged prudent using dividend cover of 1.5–2.0 times, while retaining capital to fund future growth.

IFRS operating profit increased by 26% to £2,550 million (2009: £2,022 million). MCEV operating profit increased by 5% to £3,760 million (2009: £3,592 million).

These results reflect the improvement in our operating performance in the year, fuelled by the sales growth we observed on our UK, European and American markets.

• We aim to achieve steady sustainable growth in our operating profit, both on an IFRS and market consistent embedded value (MCEV) basis. In seeking to achieve this growth, we continue to adopt strict financial management disciplines underpinned by strong corporate governance.

* On an MCEV basis from 2007. Prior years presented on an EEV basis.

Total worldwide sales increased by 4% in 2010 to £47,059 million (2009: £45,068 million).

Long-term and savings sales increased by 4% to £37,360 million (2009: £35,875 million). General insurance and health sales of £9,699 million (2009: £9,193 million) were up by 6%.

• While our focus is on capital efficiency and profit rather than volumes, sales remain an important indicator. Worldwide sales comprise the PVNBP of long-term savings new business sales and net written premiums from the general insurance and health businesses.

Our focus on operational capital generation enabled us to generate £1.7 billion of capital in 2010, up from £1.0 billion in 2009, as we continue to benefit from our combination of life and general insurance businesses.

This excludes the impact of the Delta Lloyd longevity assumption changes of £0.2 billion.

• Operating capital generation is the operating movement in our free capital in the year.

Return on Equity shareholders’ funds on an IFRS basis increased to 14.8% (2009: 10.9%) benefiting from the growth in operating profits.

• Return on equity shareholders’ funds is calculated as after-tax operating return, before adjusting items, on opening equity shareholders’ funds, including life profits on an IFRS basis.

In addition to reporting on our financial performance, it is important that as a forward thinking company we are aware of our wider responsibilities and report on the non-financial aspects of our performance. We consider that our employees and customers are fundamental to the success of our business; as such, they form the basis for our non-financial measures, which include:

• Employee engagement and leadership
• Customer advocacy

Key performance indicators relating to our employees’ views on Aviva are based on questions in our annual global “Employee Promise” survey. We report and set targets in line with global financial service (GFS) benchmark norms and monitor our internal performance by using our historical data to assess annual progress.

• Employee engagement represents the degree to which people believe Aviva is a great place to work and are contributing to help meet our collective goals and ambitions.
• The survey results are used each year to determine and implement actions with the aim of achieving continuous improvement. The survey measures employees’ perceptions of leadership, engagement and more, verifying alignment with our strategic direction and immediate business plans.
• Our aim is to improve both measures over time and meet or exceed a global financial services benchmark.

The 2010 Net Promoter Score® survey showed results broadly consistent with 2009. We maintained the proportion of businesses operating in the upper quartile (relative to local competition) despite an element of uncertainty in some of Aviva’s markets. Our geographic diversity means we are well positioned and optimistic about the long-term prospects for growth.

• Customer advocacy gives us, in a single, simple measure, an accurate predictor of customer retention and cross-sell opportunity.