Preliminary results year ended 31 December 2008
05 March 2009
5 – Geographical analysis of fund management
| 2008 £m |
Restated1 2007 £m |
|
|---|---|---|
| United Kingdom | 64 | 70 |
| Europe | 35 | 43 |
| North America2 | 14 | 27 |
| Asia Pacific | 1 | 7 |
| Aviva Investors | 114 | 147 |
| United Kingdom | (18) | (10) |
| Netherlands | 10 | 23 |
| Other Europe | 4 | 4 |
| Europe | 14 | 27 |
| Asia Pacific | 13 | 15 |
| Total | 123 | 179 |
- Full year 2007 has been restated to reflect the new management structure to include France, USA and Canada. Norwich Union’s retail investment business and the collective investment business with RBSG do not form part of Aviva Investors UK operations.
- Following the establishment of Aviva Investors, the fund management portion of the US business has been separately identified and transferred to fund management. This has increased the North America 2007 IFRS operating profit by £24 million.
Our worldwide fund management operating profit decreased by 31% to £123 million (2007 restated: £179 million) on an IFRS basis.
Aviva Investors
On 28 February 2008, as part of the “one Aviva, twice the value” vision, we announced our plans to combine the asset management companies within Aviva to create a single, globally integrated asset manager to be known as Aviva Investors.
The combined Aviva Investors businesses achieved a reported operating profit of £114 million (2007 restated: £147 million) in a year of unprecedented investment market volatility with all regions experiencing downward pressure on fee income. In the United Kingdom, the decline in operating profit to £64 million (2007: £70 million) was driven by the decline in investment income, partially offset by strong performance fees and higher returns on stock lending activities. The market driven decline in the value of financial investments in North America contributed to the deterioration in the result to £14 million (2007: £27 million). Asia Pacific’s result of £1 million (2007: £7 million) was impacted by the costs of developing our distribution reach into this expanding market.
Other fund management businesses
United Kingdom operating loss of £18 million comprises £6 million loss (2007: £1 million) from our Norwich Union retail investment business and £12 million loss (2007: £9 million loss) from our collective investment business with RBSG.
Europe operating profit of £14 million (2007: £27 million) reflected lower investment management fees from funds under management in our Dutch business which has been affected by volatile stock markets.
Asia Pacific, comprising our Navigator business in Australia and Singapore, contributed £13 million (2007: £15 million).
Total funds under management at 31 December 2008 increased by 6% to £381 billion (2007 restated: £359 billion).
| 2008 | Restated 2007 |
|||
|---|---|---|---|---|
| Life and related businesses £m |
General business and other £m |
Total £m |
Total £m |
|
| Total IFRS assets included in the balance sheet | 307,928 | 46,634 | 354,562 | 321,326 |
| Third party funds under management: | ||||
| Unit trusts, OEICs, PEPs and ISAs | 22,616 | 24,427 | ||
| Segregated funds | 48,104 | 50,018 | ||
| 425,282 | 395,771 | |||
| Non-managed assets | (44,176) | (36,342) | ||
| Funds under management | 381,106 | 359,429 | ||
| Managed by: | ||||
| Aviva Investors | 236,178 | 235,309 | ||
| Other Aviva managers | 120,054 | 99,906 | ||
| Total funds managed by Aviva | 356,232 | 335,215 | ||
| External fund managers | 24,874 | 24,214 | ||
| Funds under management | 381,106 | 359,429 | ||
Funds managed by Aviva Investors were £236 billion (2007: £235 billion) at 31 December 2008. In common with the asset management industry in general, market factors had an adverse impact on the value of our funds under management. However the fall in equity and property capital values and outflows from some open-ended property funds was more than offset by exchange gains as sterling declined against other major currencies towards the end of the year, increasing the value of our non-sterling investments.
Funds managed by other Aviva managers increased by 20% to £120 billion (2007: £100 billion). The increase is driven by favourable movement in the euro on funds managed in the Netherlands, the funds acquired in Swiss Life and an increase in cash or cash equivalents held by our businesses.
