Chair's speech - George Culmer
Good afternoon everyone, and a very warm welcome to Aviva’s 2022 Annual General Meeting.I’m George Culmer, your Chair, and I’m delighted to be standing here in front of you this afternoon.
Our AGM is an important event. It lets us update you on the company’s progress and gives you a chance to tell us what’s on your mind.
For the last couple of years, of course, we’ve had to do all this virtually, so it’s a particular pleasure today to finally gather in person.
Today though, we also have the best of both worlds. And welcome, also, to all of you who have joined the meeting online, taking advantage of the technology we relied on last year to join the proceedings from wherever you happen to be.
Having that flexibility and convenience to give more shareholders, more opportunities to be part of our AGM is surely a good thing.
In the same hybrid spirit, joining me here on stage is your CEO, Amanda Blanc, your CFO Jason Windsor, our Company Secretary Kirsty Cooper and Non-Executive Directors; Shonaid Jemmett-Page, Martin Strobel, Pippa Lambert, Patrick Flynn, Andrea Blance, Jim McConville and Michael Mire.
I’d especially like to welcome Martin, Shonaid and Andrea, who are new to the Board this year, and who bring with them exceptional experience and expertise.
Meanwhile, with us via videolink are Mohit Joshi, Patricia Cross and Belen Romana Garcia. Belen and Patricia will both retire after this meeting and I’d like to thank them for their outstanding contribution to this Board.
Jason Windsor will also not be standing for re-election, following the announcement in January that he will resign as CFO with effect from July. Jason has been a valued colleague since he joined the group over a decade ago and I would like to thank him for his commitment and contribution during his time with Aviva.
Now, with introductions out of the way, I can confirm that in line with our Articles of Association, we have the necessary quorum of shareholders in the room and joining virtually, so we can crack on with the meeting.
The Notice of Meeting was made available to shareholders in early April and sets out the resolutions being put to the meeting today. I’m not going to read out each resolution now, but I will give an overview in the formal part of the meeting later on.
To give those joining virtually time to place their votes online, I now declare voting open on all resolutions for any shareholder, proxy or corporate representative who is entitled to vote, and it will remain open for the duration of the meeting.
The resolutions and voting options should appear on your screen. Instructions on how to vote and ask questions can be found on the home page, as well as on the online guide you can find in the documents tab.
For those of you present in the room and who are entitled to vote, you will have been given a white poll card at registration, and you will get to use these in a little while.
Before that, however, and before handing over to Amanda, I’d like to give just a very brief flavour of the year from my perspective.
As I wrote in the annual report, for me, 2021 was the year Aviva began to deliver on its promise. We are on the road to becoming the business that our customers, our colleagues and you, our shareholders, deserve it to be.
I’m not going to go into all the details but in the last 12 months we made great progress against our strategy, and delivered a strong financial performance.
We’ve announced a £4.75 billion capital return.
We’ve set ourselves ambitious goals for the top line, for better business performance and for growth in capital and cash.
And we have set a new dividend policy.
Now we still have a long way to go, of course. But overall, I’m very proud of what everyone has achieved, and that our people have never lost sight of the vital role we play in our customers’ lives, living up to our purpose to be with you today, for a better tomorrow.
And this brings me to my final point- our duty as a business to act at all times in a responsible, sustainable way.
We have been very clear that acting sustainably is an integral part of our approach, and a foundation of our strategy.
That is why this year we have placed such an emphasis on extending our leadership on environmental, social and governance issues, and fleshed out the steps needed to hit our ambition to be Net Zero by 2040.
As we did last year, we remain committed to seeking an advisory vote from this meeting on our Climate-Related Financial Reporting, which is covered today under Resolution 3.
It only remains for me to thank all our people for their extraordinary efforts over the past year. The challenge has been enormous, but Amanda, her team, and the entire community of Aviva colleagues are continuing to do a tremendous job.
I will now hand over to Amanda.
Group CEO's speech - Amanda Blanc
Thank you, George, and hello everyone.
Like George, I’m delighted to see you all here and to see how important Aviva’s performance is to you. After all – as our shareholders - it’s your company.
As life has returned to something like normal over the last few months, I’ve finally been able to get out and about with our people, our customers and our investors. It’s great to be back and as you’ll hopefully soon see, it’s great to see Aviva back.
Because we are now a much more focused, stronger, and higher performing business than we were 12 months ago.
And I’d like to echo George in paying tribute to the huge amount of work that every single Aviva colleague has put in over the last year. It wasn’t easy but they remained 100% focused on delivering for our customers. And in recognition of that, we will give all 22,000 of our people £1,000 worth of shares so they benefit from the value they’ve helped to create.
It’s been a good year. But really, it’s only the start.
Everything we’ve done in the last 18 months or so has created very solid foundations. Now we need to build on them for the next phase, delivering Aviva’s promise, and realising the full potential of this business.
And the way we built those foundations - at speed, with certainty and with excellent execution - gives me real confidence that we can fulfil the potential inherent in Aviva.
We’ve focused the portfolio, completed 8 disposals, and collected £7.5 billion in proceeds.
Aviva is now a much simpler company, with market leading positions in our attractive core markets: Canada, Ireland and of course our home market of the UK, where we’re part, I think, of the very fabric of this nation.
The successful disposal programme didn’t just allow us to become much more focused. It also allowed us to rebuild our financial strength.
That means that we are in a position to recommend a substantial return of capital to you, our shareholders, which will hopefully be approved this afternoon.
And on top of that, we’ve cut our debt, improved our leverage, and have healthy liquidity.
So, we have focused and strengthened the company. You will not hear me talk about those elements of our strategy again – they’re done.
Because it’s the third and final element- the transformation of our performance - that gets me really excited. It’s where this business will start producing for you our investors, and our customers in a way we perhaps have never done before: delivering on the promise of this great company.
And you can see that we’re really starting to motor. Aviva is growing - and we’re growing profitably.
Our last set of results showed just that.
Life new business sales grew by 23%; driven in part by a record £6.2 billion of Bulk Purchase Annuities.
General Insurance premiums were up 6% and at their highest level for over a decade. Canada GI had a record year for both premiums and profits.
Savings & Retirement Net Flows were up 17%, climbing above £10 billion - that’s another record.
And Aviva Investors showed improved fund performance, increased external net flows, and a 7% reduction in the cost to income ratio.
But we aren’t just growing the business. We’re also operating much more efficiently, and we’ve already delivered a £244 million cost reduction. We’ve also done what we need to do in order to meet our £300 million commitment in 2022. And we’re going to go further, as we target top quartile efficiency across the business.
This all translates into cash generation, and a 22% increase in cash remittances to £1.66 billion for 2021.
And that gives us the confidence to give you clear guidance on future dividends, which are so important for our investors.
For 2021, we’ve declared a dividend of just over 22 pence per share, up 5% year on year.
Following the share consolidation that will accompany the capital return, assuming it is approved this afternoon, for 2022 we anticipate a dividend of around 31 pence per share, rising to 32.5 pence per share in 2023. And we expect sustained low-to-mid single digit growth in the dividend thereafter.
This is an attractive payout level, and crucially, we believe it is sustainable in the long-term.
Any surplus capital above our 180% Solvency Ratio, that isn’t reinvested in the business to generate more value, will also be available to return to shareholders over time. We won’t retain excess capital where we can’t put it to good use.
Our performance over the past year has also given us the confidence to invest further - and prudently - in the business, as well as set more ambitious targets.
We’re going to invest a further £200 million to make our business more efficient and simpler, which will reduce costs further. And we are investing £300 million to accelerate our organic growth plans which we expect will benefit operating profit by £100 million by 2025.
Our priorities include expansion in UK GI commercial lines; innovating to grow in UK GI personal lines; investing in technology for our Bulk Purchase Annuity business; and launching a full range advice model to retain more assets as our customers retire.
You’ll have already seen our acquisition of Succession Wealth in March, which is a really exciting development. It’s going to enhance our ability to offer financial advice to 6 million customers, and boost our already strong position in the market.
So, we’ve had 12 months of clear progress. But that’s behind us now. It’s what comes next that matters. What we’re going to do with the fantastic foundations we worked so hard to lay down.
And to do that, we’re focused on four strategic priorities. Growth. Customer. Efficiency. And Sustainability.
Starting with growth. Aviva combines market leading positions across every one of our business lines - Insurance, Wealth and Retirement.
We are the number one provider of workplace pensions. We are the leading player in individual annuities; number two in the bulk purchase market; and the leading UK GI insurer.
And our model gives us real competitive advantage.
We’ve got more than 18 million customers. We can deliver more value with our outstanding brand - we’re number 1 in terms of trust in the market – as well as through our distribution strength, great products, and our customer engagement and service.
That scale, along with our shared capabilities, and outstanding people, gives us a real competitive edge.
Because there’s so much more we can still do for our customers, serving more of their needs and solving more of their problems. And when we deliver for them, we can deliver so much more for all of you.
The next step for us is to convert that scale and the power of our model into truly outstanding performance, and take full advantage of the attractive growth opportunities available across our markets.
In Wealth we see a £1.6 trillion market opportunity to participate in. This grows to £2.1 trillion in 2024. This represents a 7% increase in Compound Annual Growth Rate.
In Insurance, we are in desirable and growing markets, and operating in the most attractive segments of those markets.
And Retirement is another area where an ageing population naturally leads to a growing need for retirement solutions for both corporates and individuals, and we are extremely well placed to meet that need.
Turning next to customers - they are the heart of what we do, and truly central to our strategy.
Our priority now is to put ourselves in a position where we are regularly and consistently delivering an outstanding experience to those customers.
We are on a mission to make our customer experience amongst the best in the market, making it far easier for our customers to do business with us and to give them every reason they’ll ever need to join, and to stay, with Aviva.
Part of that will depend on getting our digital offer right, so that we can bring the full breadth of our products and our services to all our customers, in a way that works for them.
By giving our customers greater influence over how they interact with us, we will relieve our people of many of the repetitive, data entry tasks they currently undertake, allowing them to spend more time with our customers on the things that matter to them.
And another part of this agenda will be keeping ahead of the changing needs of our customers, particularly as technology evolves – ensuring we continuously innovate to develop new, attractive products and services.
Our third priority area is efficiency.
We have made excellent progress on our cost targets, with strong momentum on things like simplifying our systems, slimming down the number of products, and using less office space.
But we’re by no means done yet, and have issued an even more stretching target for savings by 2024.
Finally, our fourth priority area is Sustainability.
Our customers increasingly expect that companies act in a sustainable and ethical way. Aviva has a powerful 30-year heritage here, and I’m determined we will continue to lead UK Financial Services on Sustainability.
We led the pack on climate with our commitment to being Net Zero by 2040.
So far, we have invested £7.6 billion into green assets. We’re aligning our underwriting and investment policies to our climate transition plan. And we’re offering more choices to our customers, such as our award-winning ESG funds, and Aviva Zero.
But sustainability is more than just climate action, of course. We’re building stronger, more resilient communities too, investing £10bn in UK infrastructure and real estate to support economic and social development.
And we’re committed to reinvesting 2% of our profits into communities, primarily in the UK, Ireland, and Canada.
We are also changing the way we do business, ensuring ESG considerations feature in our decision making across Aviva… and using our influence to encourage others to do the same.
There is a lot of change happening here, but change is exciting. It opens new horizons, brings new challenges and delivers new opportunities. We’ve achieved a lot, but really, we’re only just getting started.
Looking ahead to 12 months from now, I hope very much I’ll be seeing you all again – either in person or online - like our customers, using whatever channel works for you.
And I want to be talking to you about our further growth; our continued success as a business and how we are exploiting the rich seam of opportunities out there for Aviva.
We know where we’re heading and we’ve got what it takes to get there. We really are on track to deliver on Aviva’s promise and I’m very excited about the year to come.