Aviva plc: Worldwide long-term savings new business – 12 months to 31 December 2006
Aviva International
France:
Aviva France’s sales were £989 million (2006: £1,134 million) and new business margin increased to 4.2% (2006: 4.0%). Comparative sales in 2006 were buoyed by strong equity market performance and the reinvestment of ‘Plan d’Epargne Logement’ (PEL) banking products.
Overall, the market decline for the two months to February was 9%1 as the long-term savings market in France has been affected by volatility in the financial markets and uncertainty surrounding the forthcoming presidential elections. Market decline among traditional insurers was reported as 3%; however, this decrease is reduced by some peers including Fourgous transfers in their new business figures. As a result of combined efforts with AFER, Aviva France led the market on Fourgous policy conversions in 2006 and in the first quarter of 2007 generated transfers of £0.3 billion. Unit-linked funds are more capital-efficient and Aviva France focused on these transfers enabling a higher proportion of future sales from existing customers to be invested in higher margin funds and providing policyholders with the opportunity to enjoy a greater flexibility in managing their funds. Since transfers commenced towards the end of 2005, the total value of Aviva France’s conversions amounts to £4.4 billion. Aviva France does not include these conversions in new business sales.
Sales through France’s largest savings association AFER decreased by 11% to £465 million (2006: £535 million). Within this total, unit-linked sales fell by 17% to £135 million (2006: £165 million) reflecting the volatility in financial markets. Operationally, AFER recently launched an advertising campaign highlighting the competitiveness of its policy charges.
Sales through the partnership with Crédit du Nord were also affected by the market slowdown and reduced by 10% to £242m (2006: £273m). This reduction was in line with the bancassurance market, which declined by 10%.
Excluding sales through AFER and the partnership with Crédit du Nord, sales were £282 million (2006: £326 million), mainly reflecting a reduced demand for Euro fund sales. At the same time, the proportion of unit-linked saving sales increased to 82% (2006: 75%) due to the success of Aviva France’s products with a phased investment into equities.
The new business margin of 4.2% was in line with the margin at the 2006 year end, with a new business contribution of £42 million (2006: £45 million) as a consequence of lower sales.
The outlook for 2007 will be influenced by the outcome of the presidential elections during the second quarter and the financial markets. Aviva France’s strong track record in responding to changes in the economic and regulatory landscape puts the operations in good shape to face the challenges in 2007.
- Based on gross written premium.
