Aviva plc: Worldwide long-term savings new business– 12 months to 31 December 2008
Long-term savings
Asia Pacific
Our life and pension sales grew by 8% to £1,720 million (2007 restated: £1,595 million), driven by strong growth in China and first-time contributions from new joint ventures in South Korea and Taiwan. On a local currency basis these sales were in line with the prior year. In common with our other regions, total long-term savings sales in Asia Pacific were 19% lower at £3,466 million (2007 restated: £4,255 million), reflecting consumers’ reticence to buy investment products in the current volatile market conditions.
We achieved a 66% increase in sales through our joint venture in China, Aviva-COFCO. In 2008, we expanded our distribution network there significantly and are now in nine provinces, with a total of 39 city branches (2007: eight provinces, 25 city branches). Aviva is the second largest foreign life insurer in China1.
In India, we’ve changed our assumptions with regard to lapses following regulatory changes to a large number of products and current economic conditions. Sales were 7% down on the previous year reflecting market conditions and merger activity in bancassurance partnerships.
Life and pensions sales in Singapore were up 2% when taking the benefit of exchange rate movements into account. Changes in pension legislation during the year limited sales of certain products in Singapore, but we have partly offset this impact by introducing new products. Investment sales were dampened by the economic climate and a change to local pension laws which restricts external contributions from the government pension fund.
In Australia, life and pension sales were down 19% against a 2007 result which included the benefit of a one-off transfer of group pensions business of £64 million and a £21 million benefit from a favourable change to superannuation legislation. The 2007 changes to superannuation legislation boosted prior year investment sales by £227 million. Together with the difficult economic climate, this resulted in investment sales being 28% down on the prior year.
Our products in Hong Kong are mainly investment-related and cautious investor sentiment in the face of volatile investment markets, plus a highly competitive environment, resulted in a 42% decrease in our sales in that market.
Despite the global economic and financial turbulence, Asia remains an attractive growth region. In 2009, while we will continue to grow the business in line with the market we will also focus on the efficient use of our capital. Aviva has a sound business in Asia Pacific with successful, established partnerships and a strong financial position and we remain committed to building a strong presence in this region.
- Aviva-COFCO ranked second among 26 foreign life insurers in terms of total premium income in January to November 2008 (source: China Insurance Regulatory Commission).