Regional overviews: Europe

Spain

Aviva Spain is the country’s third-largest life insurer, with a market share of 9.5%. The life insurance market is dominated by bancassurance distribution and Aviva has partnerships with Bancaja, Caja España, Caixa Galicia, Unicaja, Caja de Granada and, more recently, Cajamurcia. We also distribute through an agency-based network via Aviva Vida y Pensiones (AVP).

In June 2007 we announced a new joint venture with the Spanish savings bank Caja de Ahorros de Murcia (Cajamurcia) to form a joint venture life company. The new life company will distribute life and pensions products via Cajamurcia’s network of 413 branches.

Earlier in the year we successfully launched a new savings product (PIAS), which is optimised to the new tax environment and in which Aviva Spain is the market leader. Sales of savings products, including PIAS, were very strong, and offset lower sales of mortgage linked protection business, which were affected by the slow down in the Spanish housing market. Pension sales were boosted by the efficient transfer late in the year of a portfolio of pension policies into the new joint venture with Cajamurcia.

Life EEV operating return increased to £239 million (2006: £221 million) reflecting overall growth in new business together with good returns on the in-force book of business. Total sales continued to show strong growth, up 15% to £2,392 million (2006: £2,059 million). Increased sales of savings products which offset the decline in protection products, led to an overall increase in new business contribution to £189 million (2006: £184 million) with a new business margin of 7.9% (2006: 8.9%).

The outlook for 2008 is more cautious, with the bancassurance market expected to continue to be impacted by the slowdown in the mortgage market and the Europe-wide credit squeeze. Long-term growth potential, however, remains strong in the market and Aviva Spain continues to develop its bancassurance relationships.