Dame Amanda Blanc

Lorraine: Hi, Amanda.

Thank you very much for joining me here at Direct Line's Riverbank House office to talk about Aviva's half year financial results.

So we'll get to those in just a minute.

But before we do, I have to ask, how is the Direct Line integration going?

Amanda: Well, Lorraine, first of all, let me say thank you very much for having me here. It's brilliant to be here.

So how is it going?

Well, we were delighted that we were able to complete the acquisition on the 1st of July, which was actually just six months after we announced the recommended offer. So I think that was great news.

And in recognition of such an important milestone, what we were able to do is offer all of the Aviva colleagues and Direct Line colleagues £500 worth of free Aviva shares, which will be given in September.

In terms of the integration. I think it's going really, really well.

So Aviva is in control, we have a leadership team in place and customer service hasn’t missed a beat, which I'm sure you know better than anybody.

And the focus now, I think going forward, is really thinking about the integration process and ensuring that we deliver a better performance, but also the financial synergies that we've said that we would deliver. So really that's our focus now.

But a lot more on that in November when at our Q3 results we’ll talk in more detail about what we expect from the Direct Line deal.

Lorraine: Thanks, Amanda.

It's such an exciting time to be part of Aviva.

So we're at the halfway point of the financial year. How are we performing?

Amanda: These are really great set of results at the half year. Really strong progress across all of the metrics. We're making great strategic progress. And what's good is that there's lots more opportunities that are still to go after.

So operating profit is up strongly but also cash and capital generation are up.

But I'm really, really pleased about the progress that we're making with customers.

We now have 5.5 million customers with two or more Aviva products. And over the last 12 months, the Net Promoter Score has increased by seven points and it's now over 50.

So we are growing and delivering great customer service.

Lorraine: It sounds like a really very strong first half. Could you share some of the highlights from the markets?

Amanda: So our strategy; to be the go-to customer brand, is the right one for Aviva. And we're delivering a great set of results across the diversified business. So let me just take you through those.

In Insurance, Wealth and Retirement. First of all, in our Wealth business. We're extending our lead as the number one platform in Wealth. And we are still growing, which is great news.

In the Protection business we're continuing to grow margins following the acquisition of the AIG business last year.

In Health, the business is really growing strongly. And very importantly with a low 90s combined operating ratio.

And finally, in Retirement, we've written £2 billion worth of Bulk Purchase Annuity business at attractive margins, really well supported by the Aviva Investors real asset origination team.

Now, if we move on to the UK General Insurance business, really strong operating profit, but also really strong growth in the business. So an excellent performance from the team there.

And in Canada, operating profit is up and the business is also growing.

Lorraine: You said at the beginning you were really proud of what we've delivered for customers. Can you tell me a bit more about that?

Amanda: Yeah so I think making it click for our customers is really what we're all about. And that's what really gets us up in the morning.

So if we think about the progress on customers, with the Direct Line acquisition we now have globally 25 million customers and in the UK 21 million customers. So to put that into some sort of context, four out of ten people in the UK have a policy with Aviva, which is sort of, you know, touching where the major banks are.

So we're really pleased about that.

And I think what's important is we're serving more of their needs.

So we've spent the last number of years unlocking marketing permissions. And we now have over 9 million permissions in the UK. And what that has resulted in is that 42% of our sales are now to existing customers. So this is great news.

But what's equally as important as the experience that we've been able to deliver for those customers, we've invested very, very heavily in delivering better experience right across the board.

So we're now able to offer more personalised interactions via MyAviva. And that's led to an Online Experience Score of over 70%, which is great news.

And that gives us the opportunity to offer those sort of experiences to the Direct Line customers.

Lorraine: Thank you so much. It's been so lovely talking to you today.

Have you got any final words you'd like to share?

Amanda: So I guess what I really should say is thank you to all of the Aviva colleagues for the fantastic results that they've delivered today. We just simply would not be able to do it without them.

Their relentless focus on delivering great customer experiences is, I think, what makes these results so good and the Aviva experience so special.

And with our new Direct Line colleagues we’ll be able to achieve even more together.

Thank you.

Guy Johnson

Joining us now is Amanda Blanc. She is the CEO of Aviva. Its numbers have just come out onto the screen. First half IFRS profit after tax, 819, well ahead of the estimate of 634. The combined ratio, big number for the insurance sector, 94.6 versus 95.4 year-on-year. Operating profit, 1.07. Again, ahead of expectations. Nice numbers. Good morning.

Amanda Blanc

They are. Good morning.

Guy Johnson

You're confident about meeting your targets?

Amanda Blanc

Yes. Very confident about meeting target.

Guy Johnson

So where does that confidence come from? These numbers seem to suggest the momentum is good.

Amanda Blanc

Yeah. Momentum's excellent. Outstanding results. 22% up on operating profit. We've seen the dividend increase by 10% to 13.1P. Obviously, we've just completed the acquisition of Direct Line, but there's really strong trading performance in the business. Operating profit in the general insurance business is up 30%. And we've seen flows onto our wealth platform. Our wealth platform is the biggest platform in the UK. 209 billion flows up 16%. So really strong trading performances. We're very pleased about it.

Guy Johnson

Confidence of meeting group tar ... Are those targets going to change? Now you've got the keys to Direct

Line. Are we going to get an update anytime soon in terms of what new numbers are going to look like?

Amanda Blanc

Yeah, of course. So actually, we only set the targets last year, but with a Direct Line acquisition, we do need to come back to the targets. In November, we're going to do a sort of mini deep dive on Direct Line, what we found, what we're going to do, how we're going to achieve all the benefits that we've committed to, and we'll talk about that then.

Guy Johnson
Okay.

Kriti Gupta

Let's talk about another leg of your business, if you can, in terms of the growth story. You already have plenty of wealth offerings over at Aviva as well. There's been a big push on both sides of the Atlantic to really tackle the retail base as to get that kind of next leg of growth. How is Aviva thinking about targeting that audience?

Amanda Blanc

So the way that we think about that, we've got a very big workplace business, so the defined contribution pension business. We are the biggest player in the UK. We've got 4.9 million members of those workplace schemes. One of the biggest opportunities is looking at that area where we know that in the UK, there are 12 and a half million people who will not have enough money to save for retirement. So it's really how do we use Aviva's wider offerings to those workplace pension customers to offer them other savings products so that they can be better prepared for their retirement. So there's huge opportunity for us there. And I think that's what you're seeing with the results coming through today, that we're just really at the foothills of that. So much more potential to go.

Kriti Gupta

Well, Amanda, it's interesting that you mentioned the pension fund story. We had the LSEG CEO, David Schwimmer, around the table a couple of days ago. And he was talking about the idea of tax incentives for pension funds ultimately being conditional on greater investments in the UK. How are you viewing that? Would you agree that's the way to go?

Amanda Blanc

So look, from our perspective, we are big investors in the UK. We invest £40 billion in the UK, 30 billion of which is in real assets, in infrastructure. So it's important for us, for the UK to do well. We believe that through things like Solvency UK, we get good capital treatment on that. Probably, we could continue to do better there. But we are committed to investing over 25 billion over the next 10 years in the UK. I think as pension funds, we've obviously thinking about the long term. So for us, it's a great investment opportunity.

Valerie Tytel

And Amanda, can we have a few words on what you think about the rising competition when it comes to the pension risk transfer business? We know that the likes of Apollo and Brookfield have recently done deals to get into that kind of space. What do you make of these new entries? And do you think that in some way, this tougher competition could impact your business?

Amanda Blanc

So it won't impact our business. And the reason why is that we have spent the last three years ... We're a very diversified business, so we can take you from your very first junior ISA to your equity release mortgage and everything else in between. But purchase annuities is just one part of our business. And we've moved our earnings from 47% capital-light three years ago to 66% as we sit here today. That's going to get to over 70%. So we're unlike some of the other players in the UK. We're not reliant on the bulk purchase market. It's just one of other strings to our bow. So yes, of course, that is going to bring competition. There's no doubt about that. But we feel very confident that a diversified business gives us plenty of other opportunities to go after.

Valerie Tytel

Right. So the positives in the diversified business lines that you have. I've also read that it's your fifth

anniversary at Aviva. Would you consider your job done? What's left to tackle?

Amanda Blanc

Oh, no, my job's not done at all. Five years. There has been a profound transformation in Aviva in the last five years. It really is a business now that has got huge momentum. And with the Direct Line acquisition just completed, the job's just beginning, really. We've got so much opportunity to go after.

Guy Johnson

Just a couple of ... You said a few interesting things. Capital-light. Do you think that demands a higher multiple? Do you think the stock should trade on a higher multiple as a result of a more capital-light model?

Amanda Blanc

Well, that is definitely the theory because obviously you're using less capital, and so you're able to return

more capital to shareholders, provided ....

Guy Johnson

Do you think that's being recognised by the market yet?

Amanda Blanc

Well, I think if you look at our share price performance, I like to remember that when I walked in through the door, the share price was £2.73. As I looked at it, I don't know what it'll be this morning, but yesterday it was £6.58, I think, when we closed. So I think there's been ... The share price has performed really, really well, but we still believe that there is plenty of opportunity to go after.

Guy Johnson

Alright, Okay. You also ... Kriti asked you about retail. Can I just come back on that? Would you consider acquisitions? Would you consider a way of bulking out that wealth side of the business to include a bigger retail offering?

Amanda Blanc

So we already have a direct wealth offering, which we relaunched last year. And we've got 90,000 additional customers in the first half of this year. So we're making really strong progress on that. I think in terms of M&A, we've literally just done the Direct Line deal. That's the focus of our attention.

Guy Johnson

Haven't got a taste for it. You don't feel like another one?

Amanda Blanc

I think we need to digest this one first.

Guy Johnson

Okay.

Kriti Gupta

All right. Amanda Blanc. Amanda Blanc, CEO of Aviva, joining us around the table this morning for your

earnings picture. We thank you so much for your time.

Important Disclaimer

Although strenuous efforts are made to ensure the accuracy of interview transcripts, Executive Interviews and its associated companies accept no liability for what is said, for any discrepancy between the spoken and written word, or for any errors and omissions. Where doubt arises, please refer to the original broadcast video interview.