MARK WILSON 2015 FULL YEAR RESULTS TRANSCRIPT

2015 Full year results and dividend

00:00
Im talking to you today from Avivas Digital Garage here in Shoreditch in London. Its an innovative
place that building a new business and it really is exciting. With Avivas results today we see a trend
of stability and growth amongst a backdrop of market volatility, foreign exchange headwinds, some
of the worst floods weve seen here in the UK in the last hundred years. What we have seen is
actually growth, growth in all our key metrics, all moving in the right direction.
So for example we have seen operating profit up 20% to 2.7 billion, we have seen the value of new
business, our core measure of life sales thats up 24%, and you know on that measure that is now 12
consecutive quarters of growth. I think that is a lot of consistency of growth and results.
Our combined [operating] ratio which is our key measure for our general insurance business, thats
94.6%...and that figure is in fact our best combined [operating] ratio now for 9 years, so thats a
pretty good result from our GI colleagues.
And of course we cant forget Aviva Investors. They have just passed 105 million of operating profit.
That is an important milestone, and thats a 33% increase on the year before. And the flagship range
of funds, thats the AIMS range of funds, its performed outstandingly in the last 12 months. In fact
since inception, its out performed its peers, now that range of funds now has about 3billion in it
and thats a very good start. Our dividend follows our half year trend and we have put that up 15%,
now when you consider over the last couple of years our dividend has actually increased 38%, over
the last 2 years, so we are starting to repay, I think, our investors for their patience with us.
01:50 - Solvency II
So one of the things thats been on investors minds and a lot over the past 12 months is Solvency II.
How will insurance companies transition to it? Will they have enough capital? How will it work?
Were pretty happy with our outcome; we have ended up at 180%, I think that makes us one of the
most-strongest and most resilient in the UK market. We are at the top end of our working range, so
weve got a fair bit of headroom there. And the interesting thing about it is our solvency position is
very resilient, a good example to illustrate that point is over this latest market volatility weve seen,
even at the worst part of that volatility which was in February, our solvency basis would have only
dropped about 6 percentage points.
02:33 - Internal loan
Three years ago all I heard about was the internal loan, this big problematic monster, 5.8 billion.
What are we going to do about it? Was it going to be a drag on cash flow? We put in the target for
that for 2.2 billion by the end of 2015. In fact we got to 1.5 billion, far exceeding our target and
now thats an issue, thankfully, I never have to hear about again.
Three years ago we had pretty modest levels of capital weve now tripled it, as at the end 2015.
You know, I guess it is a long way from just 3 years ago when we probably had one of the worst
balance sheets on the market, to today when weve probably got one of the best balance sheets in
the market, and I think that is a testament to a whole lot of work from a whole lot of people.
03:20 - Integration of Friends Life
Another key focus for the Group in the last 12 months of course has been the integration of Friends
Life; remember that we are only 9 months in. I should remind people why we did it. We did it for
compelling financial and strategic reasons. On the financial side it was about expense synergies, it

was about liquidity, it was about capital. On the strategy side it was also as compelling as we got a
whole lot of customers that we can show a much greater range of Aviva products. So it really was a
good transaction. And its been delivering everything we expected and more. A key focus of that of
course, is the expense synergies and in that we have so far delivered 168 million, out of a total
target of 225 [million], about three quarters of the target, so because of that we have announced
today that we are going to bring forward our target and deliver it 12 months early, at the end of
2016, the end of this year. And I think so far Aviva has delivered everything it said it would do and
more.
04:22 Life insurance
If you look at the UK, remember that is amongst the backdrop of integrating of Friends Life, weve
seen the value of new business actually increase 29%. Now of that 29% youve also seen protection
business up strongly, those two trends we are pretty happy with, and this is after a year, a bit earlier,
where of course weve had all the pension changes, and pension reforms. I think that shows the
resilience of the Group and the strength of the franchises, when you can over come all of those
headwinds, like regulatory change and still grow your new business that much.
And theres other great performers in the year, it was only a couple of years ago I referred to a
couple of our businesses, thats Ireland and Italy, in rather unflattering terms. The reality is that
theyre now behaving, and in the last 12 months or so, a bit more like stars. We have had Italy up in
terms of VNB, and you have had Ireland that has done great job in terms of VNB and combined
[operating] ratios and profit. So you have had all the key metrics moving in the right way because
those teams have made some hard decisions and some tough calls, and now are starting to live with
the results.
And moving to Asia we have had some good progress there as well, with for example we have
opened our Digital Garage, our second sister garage other than Shoreditch here, is in Singapore, and
theyve started doing some fine work there. Singapore as a business has had a good year VNB is up
strongly, remember this was on the back of the choice we made, not to continue with the DBS
relationship, so they have broadened their distribution, they have improved their margin on their
products and I think Nish and the team out there are making some good progress.
06:06 - General insurance
Moving to our general insurance, it was a pretty good year and a some pretty trying conditions for
general insurance. Our COR, our combined [operating] ratio which is a pretty important headline
number that everyone focuses on94.6%. Now that figure is in fact our best combined [operating]
ratio for the group in 9 yearsso thats a pretty satisfactory outcome. Our underwriting profits are
also up 10%. Remember thats after we had the floods, some of the worst floods in a 100 years in
the UK. I have got to say, how our people responded to those floods was just outstanding, we had
100 people on the ground over Christmas, doing what our customers want us to do, and looking
after them. I have seen what the teams have done. I have spoken to some of these customers. It
really was first class.
Canada had a very strong year. We didnt have too much weather to contend with there. They have
made progress in terms of their pricing and their analytics again, and theyve really been the leader
in that. And of course I think one of the highlights for Canada is the deal that we announced recently
for The Royal Bank of Canada (RBC). The RBC is a wonderful franchise, theyre the biggest bank in
that market, and they are a bank that I think culturally is a very nice fit for us and they will be great
partners. It adds growth to our business there, it adds scale, and we bring with that the expertise,
and I have very high hopes for an important business line and a very important market to us, its a
core business.
07:35 - Digital First
A lot of people are asking us where we are at in Digital. It wasnt until we started up this Digital
Garage here that we got a different type of people in there, and it is much more of a fast paced
dynamic environment. Now it already has revenues of 1.3 billion or so, and that is making some

good progress. But the reality is, that whats important here is going to be the traffic to the myAviva
website, where we can put life insurance, asset management, health insurance, general insurance,
all in one place, people only have to put in their details once, its simple its easy and it is going to be
a great deal for the customer. Now were still in pilot phase, were developing, were piloting, were
testing, it is all very dynamic. So far the pilots have been extraordinary, the customer gets a better
deal, and our margin also will increase significantly. This is the future of Aviva, this is the future of
insurance, and theres very few companies, very few composites that could even try what we are
doing.
08:37 - Delivering our key commitments
So we have got high capital, high liquidity, a much simpler business, we have nearly halved the
number of countries were in, to be much more focused. Our profit, as you have seen today, is up.
All in all, weve made somevery satisfactory progress. But I want Aviva to get a name for continuing
to deliver year after year, to be like that Swiss clock I have spoken about so many times before, and I
think after 12 consecutive quarters of valuing new business growth, I think after beating our costs
targets now for quite some time, for a few years now, I think after the ability to prove we can
integrate Friends Life, I think the dividend going up 38% in the last couple of years. Its been a long
journey. We are no where near my vision yet. We still have a long way to go, but I call this a very
good start.
09:32 - Outlook
I think we are entering 2016 from a position of strength, and thats a nice position to be in when you
have volatile markets and a lot of uncertainty. We have many levers to pull, whether it is product, or
geographic, or where we put our capital, or what we do with expenses. Weve got a lot of levers to
pull and were focussed on doing that.
2016 is about Aviva realising more of its future potential.
This video interview contains forward-looking statements relating to Avivas general outlook, future
performance, goals and plans, including its strategic and near-term financial targets for 2015 and
beyond. By their nature all forward-looking statements involve risk and uncertainty and there are
important factors, including the general political, economic environment, regulatory, social and
technological changes, operational risk, climate and integration risk, that could cause actual results
and outcomes to differ materially from those indicated in these statements. A more detailed
description of these risks and uncertainties is contained within Avivas most recent annual report
available on its website at http://www.aviva.com/reports. Due to such uncertainties and risks,
viewers are cautioned not to place undue reliance on such forward-looking statements, which speak
only as of the date that they were made. We do not undertake to update our forward-looking
statements except as required by applicable law and do not provide any representation, assurance or
guarantee that the occurrence of the events expressed or implied in any forward-looking statements
in the video will actually occur.
Important information:
The value of an investment and any income from it may go down as well as up and the investor
may not get back the original amount invested. Past performance is not a guide to the future. Any
views or opinions expressed about Aviva Investors products are those of the author and should not be
viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as
advice of any nature. The AIMS range of funds is defined as the Aviva Investors Multi Strategy range
of funds.