Aviva plc: Worldwide long-term savings new business– 12 months to 31 December 2008
Long-term savings
Europe
Our European region comprises the mature markets of France, Spain, Italy and Ireland, together with the central and eastern European, higher growth markets of Poland, Russia, Turkey, Hungary, Romania and the Czech Republic. In addition, we operate in the Netherlands, Belgium and Germany through our Dutch business Delta Lloyd. Our European business is an excellent example of Aviva’s diversity; we meet customers’ long-term savings needs in 15 markets, with a broad range of products, through a range of distribution channels. In France and Poland the majority of our sales are through retail channels, while bancassurance channels dominate sales in Spain and Italy. Customers in Ireland are served evenly through both retail and bancassurance.
Bancassurance is an important element of our distribution strategy and we are confident that it will play a significant part in Aviva’s future growth, although in 2008 it has been particularly impacted by the current economic uncertainty and liquidity concerns in the banking sector.
Our European life and pensions sales increased by 8% to £16,990 million (2007 restated: £15,684 million), buoyed by the strong euro. On a local currency basis sales were down 7%. Turbulent equity markets made customers reluctant to invest. This has also resulted in investment sales that were lower at £764 million (2007: £1,572 million).
In France sales were up 2% including the beneficial effect of the euro. On a local currency basis sales were down 12%, in line with the market. The decline in the French market was a consequence of volatility in the equity markets, which reduced consumer demand for unit-linked contracts. However, this impact was offset by growth in our euro-based business1, particularly in products with guarantees which offer customers a safe and attractive investment option in the current market conditions.
In Poland our life and pension sales increased by 64% driven by the success of the individual regular premium product we launched in late 2007 and significant volumes of short-term endowment policies sold through Deutsche Bank in the first half of the year. The impact of the current challenging conditions and volatile investment markets adversely impacted growth in the second half of the year.
Sales in Italy were down 22% but our acquisition of Avipop2 and UBI Vita3 helped to lift sales of protection and pension products respectively. In Spain, our sales increased by 4%, boosted by the distribution agreement with Cajamurcia, which came on stream in the last quarter of 2007 and contributed £304 million in 2008, including one-off transfers of £151 million.
In Ireland our sales were down 27% because of reduced demand for unit-linked products across both our retail and bancassurance channels. Consumers were deterred by volatile equity markets, the slowdown in economic growth and property market uncertainty.
Other Europe includes a number of markets which have high potential for future growth, comprising Russia, Turkey, Hungary, Romania and the Czech Republic. Sales in these markets increased by 124%. Romania’s performance was significantly higher, largely due to a one-off payment of £545 million as part of the introduction of compulsory pensions.
Sales through Delta Lloyd were up 31% including the beneficial effect of the euro. This performance includes a significant increase in corporate pension sales, as a result of Delta Lloyd’s success in securing five large group contracts which contributed a total of £1,106 million. Sales of annuity products were lower due to increased competition from the banking sector, which is now allowed to offer unit-linked savings and pension products on the same terms as insurers.
In 2009 we will manage growth in sales consistent with our focus on prudent capital management and seeking the greatest returns on capital. In line with contracting new business markets across much of the region, we expect our new business sales to be more subdued than 2008.
- Euro funds are savings products that receive an annual bonus declaration based on the investment performance of the underlying funds.
- 14 December 2007.
- 18 June 2008.
