Geographical analysis of life, pensions and investment sales and new business contribution
| Total new business sales | Annual premium equivalent sales (2) | New business contribution(3) |
||||
|---|---|---|---|---|---|---|
| 6 months to 30 June 2004 £m |
Local currency growth(1) |
6 months to 30 June 2004 £m |
Local currency growth(1) |
6 months to 30 June 2004 £m |
Local currency growth(1) |
|
| Life and pensions | ||||||
| United Kingdom | 3,014 | 2% | 547 | 3% | 126 | 8% |
| France | 1,210 | 22% | 145 | 21% | 44 | 27% |
| Ireland | 120 | 3% | 44 | 13% | 10 | (9%) |
| Italy | 714 | (15%) | 89 | (24%) | 21 | (20%) |
| Netherlands (including Belgium and Luxembourg) |
607 | 24% | 119 | 17% | 38 | 79% |
| Poland | 48 | 66% | 18 | 4% | 3 | – |
| Spain | 917 | 9% | 130 | (7%) | 66 | (1%) |
| Other Europe | 208 | 57% | 58 | 38% | (1) | 65% |
| Continental Europe | 3,824 | 11% | 603 | 5% | 181 | 15% |
| International | 276 | (43%) | 74 | (21%) | 17 | (9%) |
| Total life and pensions | 7,114 | 3% | 1,224 | 2% | 324 | 10% |
| Investment sales | ||||||
| United Kingdom | 451 | 41% | 58 | 55% | ||
| Netherlands | 120 | 4% | 12 | 4% | ||
| Poland | 49 | 77% | 6 | 79% | ||
| Other Europe | 91 | 332% | 9 | 332% | ||
| Continental Europe | 260 | 59% | 27 | 60% | ||
| International | 64 | 75% | 6 | 76% | ||
| Total investment sales | 775 | 49% | 91 | 56% | ||
| Total long-term savings | 7,889 | 7% | 1,315 | 4% | ||
| Navigator sales |
323 | 3% | ||||
| (not included above) | ||||||
| (1) Growth rates are calculated based on constant rates of exchange. (2) Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums and 10% of single premiums. (3) Stated before the effect of solvency margin. |
||||||
United Kingdom:
Total sales (including investment sales) on an APE basis grew by 6% to £605 million (2003: £568 million) reflecting a good performance in a relatively flat market overall. Our focus continues to be on value over volume, and new business contribution rose 8% to £126 million (2003: £117 million).
Total pension sales for the first six months were lower at £1,288 million (2003: £1,309 million) reflecting lower sales of group corporate pensions at £352 million (2003: £476 million), offset to some extent by higher individual pensions sales of £936 million (2003: £833 million). Norwich Union continues to focus on the defined contribution group pensions market as employers move away from defined benefit schemes. As a result, combined sales of group money purchase and group personal pensions within total pension sales increased by 25% to £221 million (2003: £177 million).
The investment market shows some signs of recovery. Bond sales for the first six months increased by 12% to £964 million (2003: £862 million) mainly as a result of continued increase in unit-linked bond sales, up 84% to £577 million (2003: £314 million). Sales of with-profit bonds were broadly flat compared to the first half of 2003. Collective investment sales were up 41% to £451 million (2003: £319 million) as a result of increased single premium unit trust business.
Sales of protection business grew by 30% to £194 million (2003: £149 million) reflecting an increase in mortgage protection and creditor business. Whilst the market remains competitive we are confident of continued strong sales, supported by the imminent launch of our term assurance and mortgage protection online underwriting capability which will provide improved processing efficiency.
Annuity sales were 11% lower at £568 million (2003: £641 million). The market continues to be extremely price competitive but Norwich Union remains focused on setting prices to protect profitability.
Total sales1 from our joint venture with RBSG in the first six months were £359 million (2003: £426 million) reflecting lower sales of single premium bonds. Total sales1 on an APE basis increased by 6% to £73 million (2003: £69 million). We have made further progress in integrating the sales force more closely with the bank distribution network and this, together with the introduction of new products later in the year, will further strengthen the distribution model.
Norwich Union has a strong competitive position, with top three positions across the majority of product areas. As depolarisation approaches, Norwich Union is actively progressing discussions with major distributors and is confident of consolidating its market position. Market share grew to 12.5% in the first quarter.
New business contribution was £126 million (2003: £117 million), with new business margin of 23.0% (full year 2003: 22.6%), reflecting pricing for value in a competitive market.
1. Aviva’s share of these total sales and sales by product mix is shown in the supplementary analysis.
France:
Aviva France has outperformed the market in the first half, reporting an increase of 22% in total sales to £1,210 million (2003: £989 million), compared to an estimated increase in the individual life and savings market of 19% during the first five months of 2004. Sales through AFER, the largest savings association in France, have been strong in both euro and unit-linked products. Sales are benefiting from improved equity markets in 2004 with unit-linked products accounting for 15% of AFER sales compared against 5% for the same period last year.
Sales of single premium AFER euro products were 20% higher at £700 million (2003: £581 million) compared with market growth of 12% during the first five months of 2004. This sales performance shows the strength of the distribution capability of AFER, which has approximately 600,000 members. Just over 20,000 new members joined during the first half of 2004, a 55% increase on the same period last year.
In a buoyant unit-linked market, Aviva France sales of unit-linked and other savings products increased by 27% to £478 million (2003: £376 million) including strong growth in SFER equity-backed products sold through AFER. In pursuing growth in value, we continue to identify opportunities to increase the proportion of unit-linked business, including the conversion of existing euro products to unit-linked products for non-AFER customers. We plan to launch two new unit trust funds to AFER customers from the third quarter.
Aviva France launched its Plan d’Epargne Retraite (PERP) product during the second quarter, a unit-linked investment product for private pensions targeted at high regular premium savers, where margins will be most attractive. However pensions are a relatively new market in France and we expect sales to be moderate until there is wider investor understanding of these products.
Plans for the launch of our joint venture with Crédit du Nord in the fourth quarter this year are well advanced.
New business contribution was £44 million (2003: £35 million), with a margin of 30.3% (full year 2003: 29.0%) benefiting from the increasing proportion of unit-linked sales.
Ireland:
Hibernian Life & Pensions, the third largest life and pensions provider in the Irish market, reported a strong first half performance. Total sales on an APE basis increased by 13% to £44 million (2003: £39 million) with an estimated market share of over 11% in the first half of 2004, benefiting from strong regular premium sales. Total sales were 3% higher at £120 million (2003: £116 million).
New regular premium pension sales were up 13% to £26 million (2003: £23 million) and new single premium pension sales were 12% higher at £65 million (2003: £58 million). Sales of regular premium personal and executive pensions benefited from Hibernian’s attractive product and a market-leading range of successful investment funds.
Sales of Personal Retirement Savings Account (PRSA) products have remained disappointing, although increased publicity around PRSAs in the market has helped contribute to the strong sales growth in other pension products.
Life regular premium sales increased to £9 million (2003: £7 million) reflecting strong growth in protection business, helped by the buoyant housing market. Investor caution continues to affect life single premium sales, which decreased to £20 million (2003: £28 million). Responding to this, we introduced a new investment fund to our single premium unit-linked bond in July. This includes a capital guarantee after five years and initial market feedback has been favourable.
New business contribution was £10 million (2003: £11 million), with a margin of 23.0% (full year 2003: 28.5%) primarily reflecting increased competition in the protection market and a change in lapse assumptions in certain product classes.
Italy:
Total new business sales were lower at £714 million (2003: £841 million), following exceptional growth in new business sales in the first half of 2003 and lower single premium one-off direct business of £82 million (2003: £187 million).
Sales through UniCredito Italiano (UCI) were lower at £345 million (2003: £464 million), as 2004 has seen difficult trading conditions for their savings products, which in our case, has been combined with a challenging comparative, as the first half of 2003 saw a concentration of marketing campaigns. We expect these conditions to continue in 2004 although the impact will be somewhat offset by new product launches planned for the second half of 2004, including increased distribution of products through Xelion, the financial advisor network of UCI.
Our most recent agreement with Banca Popolare Commercio e Industria, now part of Banche Popolari Unite (BPU), achieved strong growth with total sales of £138 million (2003: £14 million). Sales benefited from successful limited offers on structured investment bonds. Regular premium unit-linked, protection and individual pension plan products are being introduced to widen the product range for the second half of 2004. We look forward to the benefits from the extension of our agreement with BPU to a further 380 branches, with sales expected from the start of 2005.
Total sales from Banca Popolare di Lodi Group were £121 million (2003: £151 million) and sales through Banca delle Marche were £20 million (2003: £25 million). Both partners launched limited offer campaigns on structured investment bonds during the second quarter, which closed in July, and we expect sales in the third quarter to benefit.
We continue to develop our strong partnerships across Italy and work with our partners to market a range of products to meet our customers’ needs. Our long-term growth potential remains strong, although the timing of marketing campaigns and product launches varies throughout the year resulting in some volatility in sales levels each quarter. Italian pension reform proposals are expected to receive parliamentary approval during the summer and should provide future sales opportunities from 2006 as the retirement savings market develops.
New business contribution amounted to £21 million (2003: £27 million), with margins of 23.5% (full year 2003: 23.2%).
Netherlands (including Belgium and Luxembourg):
Total life and pension sales from Delta Lloyd, our top-five life and pensions business in the Netherlands, increased by 24% to £607 million (2003: £490 million), driven by strong sales growth in group pensions, bonds and savings and protection. Total sales through our joint venture with ABN AMRO were flat at £134 million (2003: £134 million) whilst sales on an APE basis were £35 million (2003: £21 million) with the increase due to stronger regular premium sales of protection business and bonds.
Total pension and annuity sales increased by 23% to £345 million (2003: £280 million) with growth in group pensions of 65% to £221 million (2003: £134 million), partially offset by the decrease in immediate annuity business following our repricing actions taken last year. Whilst rates have increased in the first half, the annuity market remains competitive. Our focus continues to be on group pensions although sales levels by their nature vary quarter on quarter due to the size of the contracts.
Total life product sales rose by 25% to £262 million (2003: £210 million) due to improved single and regular premium bond and saving sales. Unit-linked products continue to be popular, including those sold through ABN AMRO, with policyholders still preferring to select investment funds supported by bonds rather than equities. Sales of protection products increased by 19% to £153 million (2003: £128 million). Investment sales increased by 4% to £120 million (2003: £115 million).
New business contribution amounted to £38 million (2003: £22 million) with margins of 31.9% (full year 2003: 27.7%). The increase in margins is driven by an improved product mix across our business units.
Poland:
Total life sales increased to £27 million (2003: £18 million), reflecting increased demand for single premium investment products. Mutual fund business has also performed strongly, with sales of £49 million (2003: £31 million) helped by the low interest rate environment and improved stock market performance in the first quarter.
Pension sales were higher at £21 million (2003: £15 million), benefiting from sales through the State Agency to members of the workforce without a chosen pensions provider in the first half of the year.
CU Polska remains the market leader in individual life and private pensions with a 15% share of the life market measured by total premium income in 2003 and a 28% share of the private pensions market measured by total assets under management.
Spain:
Aviva continues to be the number one bancassurance group in the Spanish life market and achieved an increase in market share from 10.0% to 10.6% in the first quarter of 2004, based on gross written premiums. New business sales grew by 9% to £917 million (2003: £839 million) following further growth in our developing bancassurance partnerships and including one-off single premium sales of £177 million (2003: £149 million comprising single premium sales of £132 million and regular premium sales £17 million). On an APE basis, sales decreased by 7% to £130 million although after excluding one-off sales for 2004 and 2003, sales on an APE basis grew by 3%. This strong sales performance has been achieved in more difficult trading conditions, as evidenced by a market decline of 5% in the first quarter, based on gross written premiums.
The focus in the first half of 2004 has been on higher margin protection products, with reduced sales of lower margin traditional savings products, compared with the first half of 2003. Sales through Bancaja were lower at £343 million (2003: £457 million) following the strong marketing campaigns during the first half of 2003 for traditional savings products. We achieved underlying growth from our partnerships with Unicaja and Caixa Galicia, which also included a large bulk pension transfer that generated one-off single premium sales of £177 million.
Growth potential is strong across our bancassurance partnerships as we look to increase customer penetration and we continue to develop the product range in all our partnerships. However, quarterly sales are variable due to timing of marketing campaigns and product launches.
New business contribution amounted to £66 million (2003: £68 million), including £3 million from the bulk pension transfer in Caixa Galicia. New business margins for Spain were 51.0% (full year 2003: 54.4%) reflecting the increasing proportion of higher margin protection sales offset by the impact of the lower margin one-off sales.
Other Europe:
Total sales for our Other Europe businesses were £208 million (2003: £134 million), including total sales in Germany of £117 million (2003: £65 million). Sales in Germany include the benefit of a new limited offer bond product which delivered sales of £73 million in the first half of 2004.
In Turkey, where we are a top-five provider, total new business premiums increased to £16 million (2003: £12 million), reflecting encouraging regular premium sales in the newly launched personal pensions market where we anticipate being a leading player.
Sales through our Dublin-based offshore life and savings business were £50 million (2003: £38 million) whilst sales of undertakings for collective investment in transferable securities (UCITS) in Luxembourg increased to £91 million (2003: £21 million), as a result of improved investor sentiment and further development of the broker relationships within this distribution channel, particularly in Italy and Spain.
International:
Total sales including investment sales in our International business decreased to £340 million (2003: £562 million), due to reduced appetite for fixed annuity products in the United States. Total sales on an APE basis were £80 million (2003: £103 million).
Australia: Total life and pension sales on an APE basis were 28% higher at £31 million (2003: £22 million) reflecting continued strong growth from our corporate pension product. Sales of unit trusts were £64 million (2003: £34 million), which benefited from the more positive investor sentiment towards equity markets. Whilst not included in the new business figures, sales of Navigator, our top-five master trust, increased to £318 million (2003: £291 million), benefiting from improvements in equity markets, a more competitive fee structure and the introduction of a “pre-select” investment option. Navigator was awarded a AAA quality service rating by a leading independent financial services research company.
United States: Total life and pension sales were £135 million (2003: £374 million) driven by reduced sales of fixed annuity products, with single premium sales of £123 million (2003: £349 million) and regular premium sales of £12 million (2003: £25 million). We continue to maintain pricing disciplines in a low interest rate environment together with revised product terms.
Singapore and Hong Kong: Total sales through our operation in Singapore were £13 million (2003: £15 million) on an APE basis. We continue to focus on higher margin regular premium business with growth of 17%. The timing of product launches and marketing campaigns results in variation of single premium sales levels each quarter. Sales are generated through both our bancassurance partnership with DBS Group Holdings Limited (DBS) and through brokers. Aviva has a 53% market share of bancassurance regular premium new business and is the market leader in the developing broker market. Total sales through our partnership with DBS in Hong Kong increased strongly, particularly during the second quarter to £11 million (2003: £1 million). Whilst not included in the new business figures, total Navigator sales include £5 million (2003: £3 million) of sales through Navigator Asia in Singapore.
India: Total sales from our joint-venture life business with Dabur Group were £8 million, ranking us ninth in the market. Our 26% share included in our new business sales amounts to £2 million (2003: £1 million). Sales are through our bancassurance partnerships including Canara Bank, India’s second largest bank, and our 1,600 strong direct sales force. The most recent budget in India has approved the increase in foreign investment in life companies from 26% to 49% subject to an amendment to the Insurance Act in parliament. We intend to take the opportunity of increasing our ownership interest in the company once this has been approved.
China: Our joint-venture life business, Aviva COFCO, was launched in Guangzhou in 2003 and has made a solid start. Total sales were £2 million (2003: nil), with our 50% share included in our new business sales amounting to £1 million (2003: nil). Following our approval to sell life insurance products in Beijing in the first quarter, our licence application to operate in Chengdu was granted in May and plans are being developed to start operations in both provinces during the second half of 2004.
Detailed worldwide long-term savings new business analysis
| Single | Regular | Total | |||||
|---|---|---|---|---|---|---|---|
| 6 months to 30 June 2004 £m |
6 months to 30 June 2003 £m |
Local currency growth(1) |
6 months to 30 June 2004 £m |
6 months to 30 June 2003 £m |
Local currency growth(1) |
Local currency growth(1) |
|
| United Kingdom | |||||||
| Individual pensions | 800 | 706 | 13% | 136 | 127 | 7% | 12% |
| Group pensions | 303 | 421 | (28%) | 49 | 55 | (11%) | (26%) |
| Annuities | 568 | 641 | (11%) | – | – | – | (11%) |
| Bonds | 964 | 862 | 12% | – | – | – | 12% |
| Protection | 106 | 70 | 51% | 88 | 79 | 11% | 30% |
| Total life and pensions | 2,741 | 2,700 | 2% | 273 | 261 | 5% | 2% |
| Peps/Isas/Unit trusts/Oeics | 437 | 313 | 40% | 14 | 6 | 133% | 41% |
| 3,178 | 3,013 | 5% | 287 | 267 | 7% | 6% | |
| France | |||||||
| AFER (excluding unit-linked) | 700 | 581 | 20% | – | – | – | 20% |
| Unit-linked & other savings | 462 | 365 | 27% | 16 | 11 | 45% | 27% |
| Protection business | 21 | 20 | 5% | 11 | 12 | (8%) | – |
| 1,183 | 966 | 22% | 27 | 23 | 17% | 22% | |
| Ireland | |||||||
| Life and savings | 20 | 28 | (29%) | 9 | 7 | 29% | (17%) |
| Pensions | 65 | 58 | 12% | 26 | 23 | 13% | 12% |
| 85 | 86 | (1%) | 35 | 30 | 17% | 3% | |
| Italy | |||||||
| Life and savings | 694 | 804 | (14%) | 20 | 37 | (46%) | (15%) |
| 694 | 804 | (14%) | 20 | 37 | (46%) | (15%) | |
| Netherlands (including Belgium & Luxembourg) | |||||||
| Life | 221 | 183 | 21% | 41 | 27 | 52% | 25% |
| Pensions and annuities | 321 | 248 | 29% | 24 | 32 | (25%) | 23% |
| Total life and pensions | 542 | 431 | 26% | 65 | 59 | 10% | 24% |
| Unit trusts | 120 | 115 | 4% | – | – | – | 4% |
| 662 | 546 | 21% | 65 | 59 | 10% | 20% | |
| Poland | |||||||
| Life and savings | 20 | 10 | 129% | 7 | 8 | (4%) | 69% |
| Pensions | 13 | 4 | 244% | 8 | 11 | (12%) | 61% |
| Total life and pensions | 33 | 14 | 164% | 15 | 19 | (8%) | 66% |
| Mutual funds | 48 | 30 | 77% | 1 | 1 | 91% | 77% |
| 81 | 44 | 105% | 16 | 20 | (6%) | 71% | |
| Spain | |||||||
| Life and savings | 626 | 620 | 1% | 27 | 32 | (16%) | – |
| Pensions | 249 | 158 | 58% | 15 | 29 | (48%) | 41% |
| 875 | 778 | 12% | 42 | 61 | (31%) | 9% | |
| Other Europe | |||||||
| Life and pensions | 167 | 100 | 66% | 41 | 34 | 29% | 57% |
| UCITS and other | 91 | 21 | 332% | – | – | – | 332% |
| 258 | 121 | 112% | 41 | 34 | 29% | 95% | |
| International | |||||||
| Life and pensions | 225 | 476 | (49%) | 51 | 52 | 4% | (43%) |
| Unit trusts | 64 | 34 | 75% | – | – | – | 75% |
| 289 | 510 | (39%) | 51 | 52 | 4% | (35%) | |
| Total long-term savings | 7,305 | 6,868 | 7% | 584 | 583 | 1% | 7% |
| Analysed: | |||||||
| Life and pensions | 6,545 | 6,355 | 4% | 569 | 576 | – | 3% |
| Investment sales | 760 | 513 | 48% | 15 | 7 | 113% | 49% |
| Total long-term savings | 7,305 | 6,868 | 7% | 584 | 583 | 1% | 7% |
| Navigator sales | 323 | 294 | 3% | – | – | – | 3% |
| (not included above) | |||||||
| (1) Growth rates are calculated based on constant rates of exchange. | |||||||
Analysis of UK long-term savings by distribution channel
Sales
| Single | Regular | Total | |||||
|---|---|---|---|---|---|---|---|
| 6 months to 30 June 2004 £m |
6 months to 30 June 2003 £m |
Local currency growth(1) |
6 months to 30 June 2004 £m |
6 months to 30 June 2003 £m |
Local currency growth(1) |
Local currency growth(1) |
|
| IFA | |||||||
| – life & pensions products | 2,085 | 2,008 | 4% | 219 | 210 | 4% | 4% |
| – investment products | 191 | 173 | 10% | 1 | 1 | – | 10% |
| 2,276 | 2,181 | 4% | 220 | 211 | 4% | 4% | |
| Bancassurance partnership with RBSG | |||||||
| – life & pensions products | 184 | 222 | (17%) | 8 | 10 | (20%) | (17%) |
| – investment products | 30 | 46 | (35%) | 13 | 5 | 160% | (16%) |
| 214 | 268 | (20%) | 21 | 15 | 40% | (17%) | |
| Other partnerships / Direct | |||||||
| – life & pensions products | 472 | 470 | – | 46 | 41 | 12% | 1% |
| – investment products | 216 | 94 | 130% | – | – | – | 130% |
| 688 | 564 | 22% | 46 | 41 | 12% | 21% | |
| Total UK long-term savings | 3,178 | 3,013 | 5% | 287 | 267 | 7% | 6% |
| (1) Growth rates are calculated based on constant rates of exchange. | |||||||
Annual premium equivalent (1)
| Life and pensions sales | Investment sales | Total sales | ||||
|---|---|---|---|---|---|---|
| 6 months to 30 June 2004 £m |
Local currency growth(2) |
6 months to 30 June 2004 £m |
Local currency growth(2) |
6 months to 30 June 2004 £m |
Local currency growth(2) |
|
| IFA | 428 | 4% | 20 | 10% | 448 | 4% |
| Bancassurance partnership with RBSG | 26 | (18%) | 16 | 67% | 42 | 1% |
| Other partnerships/Direct | 93 | 6% | 22 | 130% | 115 | 18% |
| Total UK long-term savings | 547 | 3% | 58 | 55% | 605 | 6% |
| (1) Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums and 10% of single premiums. (2) Growth rates are calculated based on constant rates of exchange. |
||||||
Analysis of sales via our principal bancassurance channels
| Total new business sales |
Annual premium equivalent sales(2) |
|||
|---|---|---|---|---|
| 6 months to 30 June 2004 £m |
Local currency growth(1) | 6 months to 30 June 2004 £m |
Local currency growth(1) | |
| Life and pensions | ||||
| United Kingdom | ||||
| Royal Bank of Scotland Group | 192 | (17%) | 26 | (18%) |
| 192 | (17%) | 26 | (18%) | |
| Italy | ||||
| UniCredito | 345 | (26%) | 41 | (34%) |
| Banca Popolare di Lodi | 121 | (20%) | 14 | (34%) |
| Banca delle Marche | 20 | (20%) | 11 | (27%) |
| Banche Popolari Unite | 138 | – | 14 | – |
| 624 | (5%) | 80 | (20%) | |
| Netherlands | ||||
| ABN AMRO | 134 | – | 35 | 67% |
| 134 | – | 35 | 67% | |
| Spain | ||||
| Bancaja | 343 | (25%) | 47 | (23%) |
| Caixa Galicia | 328 | 99% | 37 | (1%) |
| Unicaja | 98 | 42% | 17 | 31% |
| Caja Espana | 71 | (44%) | 10 | (51%) |
| Caja de Granada | 45 | – | 9 | – |
| 885 | 8% | 120 | (8%) | |
| International | ||||
| DBS | 24 | (53%) | 14 | (6%) |
| 24 | (53%) | 14 | (6%) | |
| Total life and pensions | 1,859 | (2%) | 275 | (8%) |
| Investment sales | ||||
| United Kingdom | ||||
| Royal Bank of Scotland Group | 43 | (16%) | 16 | 67% |
| 43 | (16%) | 16 | 67% | |
| Total bancassurance sales | 1,902 | (2%) | 291 | (6%) |
| (1) Growth rates are calculated based on constant rates of exchange. (2) Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums and 10% of single premiums. |
||||
Analysis of total new business sales via our joint venture with Royal Bank of Scotland Group (RBSG)
Total sales through our joint venture with RBSG are provided below on a 100% basis and for Aviva’s share. In reporting our life and pensions results, we have included our 50% share of sales written through the joint venture life company and 100% of single premium with-profit bond sales written through a Norwich Union fund. Investment sales represent our 50% share of the collective investment sales.
| Total RBSG sales | Aviva’s share | |||
|---|---|---|---|---|
| 6 months to 30 June 2004 £m |
6 months to 30 June 2003 £m |
6 months to 30 June 2004 £m |
6 months to 30 June 2003 £m |
|
| Single premium with-profit bond sales | 111 | 140 | 111 | 140 |
| Other life and pensions sales | 162 | 184 | 81 | 92 |
| Total life and pension sales | 273 | 324 | 192 | 232 |
| Collective investment sales | 86 | 102 | 43 | 51 |
| Total RBSG bancassurance sales | 359 | 426 | 235 | 283 |
Life profits reporting
In reporting the headline operating profit, life profits have been included using the achieved profit basis. This is used throughout the Aviva Group and by many in the investment community to assess performance. We have focused on the achieved profit basis, as we believe life achieved operating profit is a more realistic measure of the performance of life businesses than the modified statutory basis. The modified statutory basis is used in our financial statements and, on this basis, the life operating profit before tax on continuing operations amounted to £548 million. The basis used for reporting achieved profit is consistent with the guidance set out by the Association of British Insurers.
| Definitions of Group key performance indicators and other terms | ||
| Achieved operating profit | – | Is stated before amortisation of goodwill and exceptional items. |
| Achieved operating earnings per share | – | Operating profit on an achieved profit basis before amortisation of goodwill and exceptional items, after taxation, attributable to equity shareholders. |
| Annual premium equivalent (APE) | – | Is the UK industry standard for calculating life, pensions and investments new business levels. It is the total of new regular life premiums and 10% of single life premiums. |
| Modified statutory operating profit | – | Is stated before tax, amortisation of goodwill, amortisation of acquired additional value of in-force long-term business and exceptional items. |
| Net asset value per ordinary share | – | Is calculated based on equity shareholders’ funds, adding back the equalisation provision of £375 million (30 June 2003: £342 million; 31 December 2003: £364 million). |
| Assets under management | – | Represents all assets managed by the Group including funds held on behalf of third parties. |
| New business contribution | – | Is calculated using the same economic assumptions as those used to determine the embedded values at the beginning of each year and is stated before tax and the effect of the solvency margin. |
| New business margin | – | The ratio of new business contribution to sales measured on an annual premium equivalent basis. |
| Combined operating ratio (COR) | – | The aggregate of incurred claims expressed as a percentage of earned premiums and written expenses and written commissions expressed as a percentage of written premiums. |
| Implicit items | – | The specific amounts by which prudential margins within life technical provisions may be adjusted to give a more appropriate measure of assets available to meet the Group’s solvency requirement. In order to take allowance for implicit items FSA approval must be granted and the FSA must be satisfied that sufficient prudential margins exist to allow this adjustment. |
| Free asset ratio (FAR) | – | The excess of the regulatory value of assets over total liabilities divided by the regulatory value of total liabilities, expressed as a percentage. |
| Solvency cover | – | The excess of the regulatory value of total assets over total liabilities, divided by the regulatory value of the required minimum solvency margin. |
| Orphan estate | – | The assets of the long-term with-profit funds less the realistic reserves for non-profit policies, less asset shares aggregated across the with-profit policies and any additional amounts expected at the valuation date to be paid to in-force policyholders in the future in respect of smoothing costs and guarantees. |
| CGUII | – | A principal UK general insurance company and the parent of the majority of the Group’s overseas general insurance and life assurance subsidiaries. |
| EU solvency | – | The excess of assets over liabilities and the worldwide minimum solvency margins, excluding goodwill and the additional value of in-force long-term business, and excluding the surplus held in the Group's life funds. The Group solvency calculation is determined according to the UK Financial Services Authority application of EU Insurance Groups Directive rules. |
