Profile: Aviva PLC (AV.N)
9 Dec 2013
Aviva plc (Aviva) is an insurance group. Aviva is engaged in the provision of products and services, such as long-term insurance and savings, fund management and general insurance. Aviva provides over 43 million customers with long-term insurance and savings, general and health insurance, and fund management products and services. Its business is managed on four geographic regions: United Kingdom, Europe, North America and Asia Pacific. The four regions, together with Aviva Investors, function as six operating segments. The UK region is split into the UK Life and UK General Insurance segments, which undertake long-term insurance and savings business and general insurance, respectively. Its products and services include long-term business, general insurance and health, fund management and other activities. On May 6, 2011, the Company ceased to hold a majority of the shareholder voting rights in Delta Lloyd. On September 30, 2011, it sold RAC Limited (RAC) to The Carlyle Group. On October 1, 2011, it sold its Australian fund management business, Aviva Investors Australia Ltd, to nabInvest, National Australia Bank’s direct asset management business. In January 2012, Aviva announced the sale of Aviva Czech Life, Aviva Hungary Life and Aviva Romania Life & Pensions to MetLife Inc. In April 2013, the Company transferred its holding in Spanish joint venture Aseval to Bankia. In October 2013, the Company sold Aviva USA Corporation, its United States life and annuities business (Aviva USA), to Athene Holding Ltd (Athene).
The Company’s long-term insurance and savings businesses offer a range of life insurance and savings products. Its products are split into the categories: pensions, annuities, protection, bonds and savings, investment sales and other. Pensions provide income in retirement for an individual and possibly his or her dependants. Its pension products include personal and group pensions, stakeholder pensions and income drawdown. Annuities is a type of policy that pays out regular amounts of benefit, either immediately and for the remainder of a person’s lifetime, or deferred to commence from a future date. Immediate annuities may be purchased for an individual and his or her dependants or on a bulk purchase basis for groups of people. Deferred annuities are asset accumulation contracts, which may be used to provide benefits in retirement, and may be guaranteed, unit-linked or index-linked. Protection is an insurance contract that protects the policyholder or his or her dependants against financial loss on death or ill-health. Its product ranges include term assurance, mortgage life insurance, flexible whole life and critical illness cover. Bonds and savings accumulate products with single or regular premiums and unit-linked or guaranteed investment returns. Its product ranges include single premium investment bonds, regular premium savings plans, mortgage endowment products and funding agreements. Investment sales consist of retail sales of mutual fund type products, such as unit trusts, individual savings accounts (ISAs) and Open Ended Investment Companies (OEICs). Other includes equity release and structured settlements.
The United Kingdom consists of two operating segments: UK Life and UK General Insurance (UK GI). The principal activities of UK Life are life insurance, long-term health and accident insurance, savings, pensions and annuity business, while UK GI provides insurance cover to individuals and businesses, for risks associated mainly with motor vehicles, property and liability, such as employers’ liability and professional indemnity liability, and medical expenses. UK GI also includes the Company reinsurance result and the results of run-off agency business. Its savings and investment products include individual savings accounts (ISAs), investment bonds, funds, base rate trackers, investments with guarantees and with-profits products. The pensions and retirement products it offers include stakeholder and personal pensions, equity release, annuities, income drawdown and with-profits products. It is a general insurer in the United Kingdom and Canada.
During the year ended December 31, 2011, the Company provides a range of general insurance products focused on personal and commercial customers with a business mix of approximately 60% personal lines and 40% commercial lines. Its products include personal motor, home, travel, payment protection, commercial motor, commercial property and commercial liability insurance. Its personal motor insurance product range includes cover for cars, motorcycles and vans. For businesses it offers cover for fleets and commercial vehicles. Its home insurance products include building and contents insurance and home emergency cover. It also offers single trip and annual travel insurance. Its commercial products focus on insurance for small and medium enterprises (SMEs) and the UK CSR market.
Aviva Europe operating segment exclude operations in the United Kingdom and Delta Lloyd but include those in Russia and Turkey. Principal activities are long-term business in France, Ireland, Italy, Poland and Spain, and general insurance in France, Ireland and Italy. The Company has a major presence in the five markets of France, Ireland, Italy, Poland and Spain, which between them represent over 90% of its Europe new business premiums. It offers a range of life, pensions, and general and health insurance. The Company is geographically focused on the markets of France, Ireland, Italy, Poland, Spain, Russia and Turkey. It operates a composite model, selling life and pensions products, general insurance products in all locations, except Russia and Spain, where it only sell life products. Aviva France provides a range of insurance solutions include life and long-term savings, general insurance and asset management through Aviva Investors France. The products sold through its life channel are long-term savings, pensions and regular premium products and a range of protection products. It is the manufacturer and main distributor of the Association Francaise d’Epargne et de Retraite (AFER) product. Aviva France holds interest in Union Financiere de France (UFF). In the general insurance market, the Company product range includes household, motor, health, legal protection products and also a range of insurance products for farms, craftsmen, tradesmen and small to medium-sized entities and specific products for building firms and motor fleets.
Aviva Spain is the long-term insurer. The Company offers a range of bonds, savings and protection products. Investment products include both unit-linked and traditional plans. Its traditional plans include savings schemes and income products. Pension savings products have valuable tax advantages. It offers a flexible range of individual and group plans with alternative investment choices. It also offers protection products, covering both mortgages and credit loans typically providing cover for the family in the event of death or disability. Aviva Italy is the life insurer. The Company’s long-term insurance and savings business offers a range of products covering protection, bonds and savings and pensions. The segment is single premium savings and investment products. These include unit-linked policies linked to a range of investment funds, as well as profit-sharing policies where there is a minimum annual return credited to the policy and the potential for an additional bonus. The Company also provides index-linked products. It focuses on selling protection products. Its general insurance business in Italy mainly provides motor and home insurance products to individuals, as well as small commercial risk insurance, including marine insurance, to businesses.
Aviva Ireland’s long-term insurance and savings business offers a range of protection, bonds and savings and pension products. The Company’s protection products include life insurance, mortgage protection, and specified illness and guaranteed whole life cover products. The pension range covers retirement and investment products, including government promoted personal retirement savings account (PRSA) schemes. Its general insurance business provides a range of products, including property, motor, travel, farm and business insurance. Its health insurance business provides a range of plans in both the personal and company plan sector. Aviva’s is a life business in Poland provides a range of unit-linked, annuities and bonds and savings products. For individuals it offers unit-linked life policies, annuities, single premium savings and health insurance. For institutions it offers group life insurance and employee pension programmes, which are both unit-linked products. Its pension business offers a standard product for all customers as part of the privately managed second pillar pensions market. The Company offers general insurance products to both commercial entities and individuals in Poland. For institutions, it offers selected commercial lines risks, such as fire and loss-of-profit insurance, technical insurance, insurance against loss of property during transportation, civil liability insurance and commercial health insurance. For individuals, it offers home, accident and travel insurance, which are primarily sold by tied agents, as well as motor insurance, which is sold primarily through its direct operation.
AvivaSA is the Company’s long-term insurance and savings business in Turkey. AvivaSA’s life and savings products include unit-linked pensions, supplemented by protection insurance and other savings products, which are medium to customers and the leading national and multinational corporations in Turkey. Aviva Sigorta sells a diverse range of products, including personal motor, household, commercial property, SME, personal accident, marine and travel insurance. In Russia, the Company sells a range of products, including credit life and standalone personal accident products, which are distributed through the bancassurance channel. It sells group life contracts (including accident, disability and death cover), which are distributed through a dedicated corporate channel and through brokers. It also sells personal accident products, which are distributed through a worksite marketing channel, and voluntary (Pillar III) corporate pension plans. Aviva Russia has 21 distribution agreements with banks, operating in 63 out of 83 Russian regions.
Aviva North America consists of two businesses: an indexed life insurance and annuity business in the United States, and a general insurance business in Canada. Aviva USA’s broad product portfolio offers flexible solutions to a range of customer needs. The Company offers both protection and savings products, with traditional fixed, as well as indexed accumulation options that pay interest based on the movement of a market index. Aviva USA also offers an array of optional extras or ‘riders’ that can be added to policies to meet customised individual needs, such as Wellness for Life rider, which allows life insurance customers to reduce the cost of their policies if they maintain certain medical criteria. In the savings market, Aviva USA’s fixed annuity portfolio offers tax-advantaged savings opportunities and protection against the risk of outliving one’s assets.
The Company provides a guaranteed lifetime withdrawal benefit, a feature that allows customers to make guaranteed minimum withdrawals from their annuity for the entirety of their lives. It also operates within the managed account guaranteed investment contract (GIC) market with a product that leverages the investment management capabilities of both its life insurance business and those of Aviva Investors North America. Aviva also issues funding agreements in the institutional market. The general insurance products the Company provides through its Canadian companies are personal, home and motor insurance, small and medium-size enterprise commercial insurance, including motor, property, liability, boiler and machinery, and surety, and niche personal insurance products, including holiday and park model trailers, hobby farms, boats, as well as antique, classic and custom cars.
The Company’s activities in Asia Pacific consist of its long-term business operations in China, India, Singapore, Hong Kong, Sri Lanka, Taiwan, Malaysia, South Korea, Vietnam and Indonesia. Aviva’s Asia Pacific business operates in 10 countries across the region through associates, joint ventures and wholly owned operations. The Company’s Asian businesses offer a range of protection, bonds and savings and pension products, including universal life, participating and non-participating endowments, unit-linked single and regular premium life insurance, other savings and pensions products and a range of accident and health insurance products.
Aviva Investors operates in most of the regions in which the Company operates, in particular the United Kingdom, France, the United States and Canada and other international businesses, managing policyholders’ and shareholders’ invested funds, providing investment management services for institutional pension fund mandates and managing a range of retail investment products, including investment funds, unit trusts, Open Ended Investment Companies (OEICs) and individual savings accounts (ISAs).
The Company’s product range covers a range of asset classes. In Europe, the Company has a range of Societe d’investissement a capital variable (SICAVs) (open-ended collective investment schemes), which are in France, Luxembourg and Poland. These funds have different share classes depending on the size and type of investor. Its traditional distribution model for these funds focuses on wholesale distributors, asset allocators and small to mid-size institutional investors but following its business review it propose to focus the pooled fund range and segregated capabilities on institutional clients’ needs. In the United Kingdom, the Company supplies products to the retail and wholesale markets, principally distributing equity and bond funds in its United Kingdom pen ended investment companies (OEICs) range, and a market range of open ended real estate funds. These are promoted to investors through independent financial advisers (IFAs), fund platforms, fund supermarkets and discretionary asset managers and it remains committed to this business. In addition, the Company has a range of pooled pension funds. These funds are normally defined benefit schemes and tend to be advised by investment consultants.
The Company manages hedge funds in the United Kingdom and the United States. These funds are generally registered offshore and are primarily sold to the hedge funds industry, although it also promotes single strategy funds to institutional clients, family offices and wealth managers. The asset classes include fixed interest, multi-asset and convertibles. It also has an expanding range of specialist property funds. These funds are targeted at specialist real estate buyers and large institutions, and provide real estate solutions to a range of risk appetites, ranging from secure income generating funds to highly leveraged growth funds. It has six money market funds, domiciled in Dublin and Paris, addressing the sterling and euro money market segments. These funds are sold by a specialist sales team based in London and Paris and target corporate treasury functions.
Other Group activities
Investment return on centrally held assets and head office expenses, such as Group treasury and finance functions, together with certain taxes and financing costs arising on central borrowings are included in ‘Other Group activities’. Similarly, central core structural borrowings and certain tax balances are included in ‘Other Group activities’ in the segmental statement of financial position. The Company also included in Other Group activities are consolidation and elimination adjustments.
The Company competes with Standard Life, Prudential, Legal & General, Lloyds Banking Group, Direct Line Group, RSA, AXA, Zurich, Allianz, The Admiral Group, Anadolu, ING, AEGON, Intact Financial, John Hancock, Hartford, Pacific Life, American Equity, Royal Bank of Scotland Insurance, Zurich, Generali and Prudential.
St Helen's, 1 Undershaft
LONDON ENG EC3P 3DQ