Worldwide long-term savings new business 9 months to 30 September 2007
Aviva Europe
Aviva Europe's long-term savings sales, including investment sales, grew by 17% to £11,556 million (2006: £9,968 million). Life and pension sales grew by 14% to £10,442 million (2006: £9,261 million), despite low levels of market growth in France, the Netherlands and Southern Europe. New business margin remained strong at 3.8% (2006: 4.0%). This performance reflected the strength of Aviva's distribution within a diversified portfolio of businesses in countries currently experiencing varying market growth conditions.
Our businesses in Southern Europe achieved impressive profitable growth, with sales in Italy and Spain increasing by 17% to £3,875 million (2006: £3,353 million).
In Aviva Italy, total sales grew by 16% in a market which has declined during 20076. This growth reflects the continuing development of our relationships with our bank partners and the success of marketing campaigns. New business contribution and margin increased, reflecting both the growth in sales and the benefit of a change in sales mix, with an increased proportion of regular premium products. The transaction to acquire a shareholding in the Bipielle financial advisors network, which completed on 26 September 2007, will provide further distribution opportunities.
The excellent performance of Aviva Spain, up 19%, reflected successful product diversification. Sales of savings products, including the new PIAS7 products, were very strong, and offset lower sales of mortgage linked protection business, which declined as the housing market cooled. New business margin remains very strong at 8.1% (2006: 9.9%), with the reduction in margin reflecting the change in business mix. Distribution via Cajamurcia is expected to begin later this year.
Our businesses in Central and Eastern Europe have continued to grow strongly. Total sales grew by 62% to £1,111 million (2006: £687 million).
The business in Poland has grown by 74% with performance driven by successful product development supporting increased sales through the bancassurance channel. Investment sales were significantly higher, supported by the launch of umbrella funds at the end of 2006, the benefit of marketing campaigns and buoyant equity markets. New business contribution has grown by 20%, with changes to the product and distribution mix leading to a new business margin of 3.9% (2006: 5.2%).
Life and pension sales in Aviva's other Central and Eastern European businesses in the Czech Republic, Hungary, Romania, Russia and Turkey achieved growth of 33%. All the businesses have shown strong growth, with the major contribution to overall growth coming from Hungary and Turkey. The growth achieved in 2007 builds on the strong growth achieved in 2006, which itself benefited from the one-off positive impact of increased sales in advance of tax and regulatory changes. The merger of Aviva Turkey's life and pensions business with AK Emeklilik, which is expected to be completed later this year, will create a strong basis for future growth.
In Northern Europe we achieved sales growth of 12% to £6,570 million (2006: £5,928 million). Our business in Ireland continued to strengthen, with total sales increasing by 46% to £1,303 million (2006: £902 million). Market conditions remained challenging in France and the Netherlands, where life and pensions sales remained stable. The Netherlands' investment sales grew strongly.
The excellent growth in Ireland has been achieved by growing sales through both the bank and broker channels, supported by major product initiatives to boost sales and improve margins. The 2007 new business margin of 1.4% improved slightly against the full year 2006 margin of 1.2%, although declining in comparison with Q3 2006, which did not include the effect of adverse assumption changes made in the final quarter of that year.
While the market has declined in 20078, Aviva France has maintained sales at 2006 levels and had a very strong third quarter. This was principally driven by product modernisation and successful marketing campaigns, notably by our partner AFER, France's largest savings association and included one-off single premium sales of £56 million. New business profitability continues to be good.
In the Netherlands, Delta Lloyd life and pension sales were stable year-on-year, and 10% higher excluding the one-off effect of the £125 million Delta Lloyd pension scheme premium reported in the first quarter of last year. Investment sales were 114% higher, reflecting strong inflows into Delta Lloyd's high performing flagship funds. New business margin has increased to 3.3% (2006: 2.7%), principally reflecting higher interest rates.
- 6. Market decline 7% based on new business single premium plus regular premiums at the end of July 2007 compared to the first seven months of 2006.
- 7. PIAS are newly introduced savings contracts with tax benefits if they are in force for ten years and if an annuity is purchased at maturity.
- 8. In GWP terms the French market has declined by 4% in the first nine months of 2007.
