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29 March 20123958aviva_tv/customers/this_is_aviva_youtube_full_hd/this_is_aviva_youtube_full_hd224,480,816This is Aviva
"This is Aviva" tells the story of Aviva in the words of our customers and employees. Filmed in three of Aviva's key markets - UK, Canada and Turkey - it gives an insight into how Aviva makes difference to the lives of our 43 million customers around the world.
Transcript:
Caption: This is Aviva
Caption: 43 million people rely on Aviva...
Caption: ...for prosperity and peace of mind
Caption: We help our customers to protect what’s important to them & save for their futures
Caption: We’ve been doing this for over 300 years
Rachel Cater: This is Evie, she’s now 6 weeks old and we’ve just taken out the free life insurance for new parents. I definitely think that this new life cover that we’ve taken out has given me peace of mind that we’ve got something there for Evie if anything, touch wood nothing would happen, but if anything did happen to myself or Evie’s dad.
Simi Shasanya: Aviva’s approach to sustainability means a lot to me as an employee, because it means we’re focused on not only being profitable, but making sure we take the right decisions now to ensure that we’re here for the long term.
Thomas Aldridge: About a year ago I got that bad phone call from the fire department saying that my restaurant had been destroyed, there was just a big black cave here. And within four hours I was talking to a senior representative from Aviva Canada.As I tell my story to my clientele they’re waiting for that “Oh my god, how bad was it?”. And when they hear from me how good it was, they’re actually like doing the “Hmmm, Aviva” or “What’s your insurance company’s name” or “I’ve never heard a sort of true happy story about insurance”
Dominic Clayden: We’ve got a lot of experience of claims, our customers will probably have one claim and we need to help them through that process.
Levent Altinisik: The fire started as we were finishing the construction of the hospital. As we refer to it, when the insurance was most vulnerable. If I had to describe Aviva in one word I would say responsive. They were by our side faster than we could ever have expected.
Gunnur Celik: When our customers need our help we do everything we can to provide them with the best service. We try to make a difference.
Tracey Harrison-Green: My husband got diagnosed with lung cancer. Then I told him about the life insurance policy that I have with Aviva, which then gave him the peace of mind of knowing that he wasn’t going to leave us with the money problems.It was December, it was nearly Christmas, I had the funeral to organise, and the fact of just going to the York branch of Aviva, and somebody helping me fill out that form, taking that extra pressure off me. And so it paid off the mortgage so I didn’t have the money worries of having to take out a second job etc to look after myself and my son.
Claire Chambers: I think we’re a modern company but we’ve got traditional values. We haven’t forgotten about our core purpose and why we are here and that’s to protect the important things for people, whether it’s their life, their health, their possessions, their home.
Jocelyn Dobinson: We heard the dog barking, and there was a massive fire in the roof and I guess it was coming all through the house. It’s devastating, and there was a lot of crying.
Rick Dobinson: You don’t realise how much emotion you get until you see your house burnt, ok and you deal with that part of it. And then as you start trying to think about things that are, you know “what did you lose?” “Well I have nothing”.Aviva supported us with the funds which was a big thing. We had money coming in when we needed it. You know we made the claim and the money was there for us.
John Russel: One of the customers that really impacted me came in to our mobile office in Athabasca. Her apartment building had burned down and I was able to write her a cheque for $25,000 and she broke down in tears, but was also full of happy emotions as well too that we were there to respond and assist her, and it just, you know, it impacted me quite a bit.
Caption: A big issue facing society and governments today is funding for retirement...
Caption: ... we help millions of customers save for their retirement and support them in old age
Caption: While you have beenCaption: watching this film
Caption: we have paid
Caption: around £250,000
Caption: in claims and benefits
Caption: That’s £33 billion paid out to customers last year
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You Are the Big Picture 20113880december/Jack_Jenny_11_08_10224,480,816You Are the Big Picture - Reuniting Jack Dobson with his loved one
When Jack Dobson’s beloved old Land Rover was stolen, we were happy to pay up. But the story didn’t end there.
Two years later, Jack came across the vehicle on a website. The police recovered it, but without a legal owner, it was in danger of being written off. We received the Land Rover from the police, inspected it to make sure it was safe, and then sent it back to Jack, free of charge. “They returned it complete with a red ribbon. It was a very exciting day” said Jack.
Transcript:
Jack Dobson: I'm Jack Dobson, and I live in Bath.
Jenny: Hi, I'm Jenny, and I'm Jack's partner.
Jack: My story relates to a rather elderly Land Rover.
Jenny: Have a love-hate relationship!
Jack: She's affectionately called "The Old Girl".
Jenny: She's like the other woman.
Jack: She's a 1964 Series 2A.
Jenny: He told me he had a black convertible.
Jack: She's a short wheel base, soft top.
Jenny: He turned up with this really old.
Jack: Land Rover!
Jenny: Which was a convertible, so he had told me some kind of truth.
Jack: I remember going out to where I'd parked it. It just wasn't there.
Jenny: When The Old Girl was stolen.
Jack: Three years ago, from Bath.
Jenny: I really knew how much it meant to Jack. How much of a part of his life it was.
Jack: It became very clear that it was really gone.
Jenny: For the first six months, he was unbearable.
Jack: Absolutely devastating!
Jenny: He put up flyers, posters, he went on local radio.
Jack: Two and a half years went by with me searching. Eventually, I found the Land Rover for sale on eBay. Painted a different colour, different number plates. But I knew it was mine.
I made a call to the police first. They were able to ascertain that it was my Land Rover. I also spoke to Aviva fairly quickly. I was conscious that they technically owned the vehicle.
Aviva gave it back to me for free. I didn't have to buy it back. They also paid for it to be recovered from Weymouth.
They returned it - with a red ribbon - on the back of a trailer. So it was a very exciting day.
Jenny: I think he knew if he kept searching he'd get it back. And he did - quite amazing.
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You Are the Big Picture 20113878december/Gael_Roux224,480,816You Are the Big picture - Helping customers after a hurricane
In early 2010, Hurricane Xynthia cut a swathe of destruction across western France. In its wake came Gaël Roux, an Aviva advisor. Amongst the dozens of people he helped that day was an oyster farmer, to whom he advanced €3,500 to make immediate repairs. “I made it clear I would always be there for them” said Gaël, speaking of the customers he helped that day.
Transcript:
Gael Roux: Hello, my name is Gael Roux, I’m an Aviva general insurer. The storm happened on a Saturday night.
The TV had given it as a red alert, so we were expecting something serious and we were a little apprehensive.
When I got up the next day, it was sunny and everything seemed fine. We all thought there hadn’t been much serious damage – perhaps just a few fallen branches and broken tiles.
It was afterwards, when I put the TV on, that I could see that there had actually been something like a tsunami over la Rochelle and the whole area.
Aviva contacted me immediately, giving me full powers to go and help them. So right away, I got on my bike and went to see what was going on - it was a disaster.
There were cars everywhere, fridges in the middle of the road, boats lodged in shop windows.
A big problem in la Rochelle, was that the oyster farmers had lost their whole infrastructure.
The oysters were kept in parks and the sea water had swept in and destroyed everything.
So they had to start again from scratch.
I love oysters, so obviously, I had to help.
I went out to see them and made it clear that we would always be there for them, that adjusters would soon arrive, and that we would give them an initial cheque to help them immediately.
We felt that the relationships between ourselves, as insurers, and our claimants, had really changed. They saw us not only as insurers, but also, and most importantly, as human beings who were there to help them.
It really is extremely satisfying for me to be able to help them today and in the months to come.
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You Are the Big Picture 20113876december/Dorothy_Sherri_Cut224,480,816You Are the Big Picture - Reassuring Dorothy after the robbery
Dorothy returned home from a family party to find she had been robbed. Newly divorced and on her own for the first time in a long while, the break-in left her “scared to death”.
Dorothy was assigned Sherri Voutier of our London (Canada) office, as her adjuster. Sherri had herself been a victim of a home robbery and understood the shock, fear and other emotions created by an event such as this one.
For weeks after the robbery Dorothy was afraid to stay in her home because she no longer felt safe or protected. Sherri was always there to listen and even assisted by making arrangements for a contractor to not only fix the doors, but also change the locks. Dorothy always knew that she could count on Sherri to listen and provide her encouragement to move forward.
Transcript:
Dorothy Fraser: Hi, is that Sherri? Is it really? Oh my God!
Sherri Voutier: Oh, hi!
Dorothy: Hi, I'm Dorothy Fraser, from St Catharines Ontario.
In 2008, my home was robbed - oh, goodness.
Ok. In 2008, my home was robbed.
I had been recently divorced... and had never dealt with the insurance company... my husband always took care of it.
When I called, crying hysterically... I ended up getting Sherri on the phone.
Sherri: Hi, I'm Sherri from Aviva Canada, London, Ontario.
I received a call from Dorothy. Her home had been broken into... and she was visibly upset about what happened.
Dorothy: When I called, I was scared to call... not scared, but just - it's intimidating... to call an insurance company... and Sherri was everything but what I thought she would be.
Sherri: You know, so much is taken from you... when you're broken into, and myself being broken into... you know, I knew what that felt like.
Dorothy: Yeah.
Sherri: And I shared that with you: "I know what you're going through." And I'm not saying that because I'm paid to say that.
Dorothy: You know, you go in your bedroom... and they've ripped all your clothes out... and even gone in the freezer... and stole stuff out of the freezer... and my kids' bedrooms and that's a horrible feeling.
Sherri: Any time she kept on apologising and I said: "You know, my goal is to get you back in this house in 10 days." - Remember?
Dorothy: Yeah.
Sherri: Not sleeping on the couch, but in your bed.
You know, there's scripts that you read... they give you scripts that you're supposed to start with... or go by with claims.
I'm not really a script reader.
I don't want you to feel like we're the big bad insurance company.
Dorothy: Yeah, I did though. I did until I picked up the phone... not because of anything that... I'd never even talked to an insurance company before... so I didn't know what to expect... I just know that it was the perception people had.
When she answered the phone... it actually felt like she cared. She wanted to help you.
That was the difference with Sherri, telling her... whether I was babbling or not - she cared.
Sherri: And I hope I did that for you.
Dorothy: Oh my God, of course you did!
Sherri: That's our story!
Dorothy: That's our story! That's our story!
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You Are the Big Picture 20113874december/00_STEVE_WIM_rough32_224,480,816You Are the Big Picture - Investing with integrity
At Aviva Investors we are entrusted with £269 billion* of clients’ assets and understand that it is our duty to invest this money responsibly, in companies which strive for sustainability. We believe in doing our bit to shape the future our clients are saving for. We support organisations which not only drive shareholder value, but also provide help for those who need it most.
Oxfam approached us along with a number of other Investors to assist GlaxoSmithKline in finding a way to reduce the price of a life-prolonging HIV drug. Our commitment to the case contributed to its success and to the prolonging of 10,000 lives. We continue to work closely with the Access to Medicine Foundation and other such organisations to ensure that we are investing our clients’ money conscientiously.
*As at 30 June 2011.
Transcript:
Steve Waywood: Hi I’m Steve. I’m the head of sustainability research and engagement at Aviva Investors. My job is to make sure that the companies that we invest in are doing what they can to predict the future challenges of sustainable development.
What it means in practise is meeting non governmental organisations or charity’s like Oxfam to understand what concerns they have about the future and understand how those concerns are embedded in the portfolios that we run.
Our clients of course, care about making money, At Aviva Investors we’ve been looking at our clients concerns for many years and in the last three years in particular we’ve seen a significant growth in the number of pension schemes and other institutional investors, as well as individuals who are asking us what it is we’re doing about these issues in the way that we’re running their money.
Ten years ago, Oxfam bought to us and a number of other investors in the city a concern they had about the pharmaceutical industry. The people, who had the greatest need of the healthcare and the pharmaceutical drugs that organisations like GlaxoSmithKline produce, couldn’t get it. If you need anti retro viral medicine that cost of that drug is something like $10,000. How frustrating it must be to need that drug and not be able to access it.
We and others took that case to John Pierre Garnier, the then chief executive of GSK. A few weeks later, I’m very pleased to be able to say that Glaxo recognised the case and committed to providing access to the medication that they could offer at cost. So that 10,000 people then had access in the very first year afterwards, that was 2002.
Since then, GSK has continued to double and then double again and double again the amount of access that it provides, to such a point now that it is leading what’s called the Access to Medicines Index.
Wim Leereveld: My name is Wim Leereveld and I am chair of the Access to Medicine foundation and the Access to Medicines Index.
I had only 25 minutes to convince Steve and Steve recognised the value of the Access to Medicines Index, and it was a very important moment because together we cooperated with Aviva Investors to find out how to best fine tune the matter we asked of big pharma companies.
I was amazed by the quick analysis of such a big investor on what the problem was in the developing countries and how we could influence and can influence today, big pharma.
I’m convinced that a big amount of people stayed alive because of the cooperation of Aviva with the Access to Medicine Index.
Big CEO’s of big pharmaceutical companies today really care about this index and they really care about the opinion of investors, like Aviva.
Steve Waywood: so what you’ve achieved over the last four years if we think through another decade or two, perhaps we might be in a future where everyone who needs access to medicine has that access, so we’ve worked together to take the first step, on that journey.
Wim Leereveld: That’s right. That’s how I would look at it.
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You Are the Big Picture 20113872december/Street_to_School_224,480,816You Are the Big Picture - Preparing Deepak for school
Deepak lives under the Nehru Place flyover with his father and step-mother. Deepak was lured into substance abuse by other children and started inhaling correction fluid. There was no time or money for school.
Now, Deepak’s life is changing with the help of Street to School, an Aviva initiative that helps street children into education. He attends a local centre in India funded by Aviva and run by Save the Children where he’s being prepared for full-time school.
Aviva’s Street to School programmes worldwide recognise that every child living and working on the street has the right to fulfil their potential. We aim to help 500,000 children by 2015. To date we’ve helped 128,000 children and Aviva employees have dedicated over 26,000 hours of volunteering to Street to School programmes.Transcript:
Carolyn: Hi my name is Carolyn.
Suhita: My name is Suhita.
Carolyn: I work with Save the Children in Kolkata. We have been implementing a project called Street to School with support of Aviva. We have around 122 children.
Suhita: The difference is already noticeable, you know, their behaviour, their discipline, and their enthusiasm.
Now they are aware that if they are educated they can actually fulfil their dreams.
Deepak: I am Deepak I am nine years old, I want to be a policeman when I grow up. We play a lot here and we study here too.
Gopal: My name is Gopal. I want to become a policeman, when I grow up and help kids like myself.
Kali: I am Kali and I am 12 years old. I would like to teach children.
Chutka: My name is Chutka. I am five years old.
Ramzaan: My name is Ramzaan. I want to become a doctor so that i can treat and help others.
Suhita: To see one child grow and develop in front of your eyes, it’s something which is very precious.
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29 March 20123958aviva_tv/customers/this_is_aviva_youtube_full_hd/this_is_aviva_youtube_full_hd224,480,816
This is Aviva
"This is Aviva" tells the story of Aviva in the words of our customers and employees. Filmed in three of Aviva's key markets - UK, Canada and Turkey - it gives an insight into how Aviva makes difference to the lives of our 43 million customers around the world.
Transcript:
Caption: This is Aviva
Caption: 43 million people rely on Aviva...
Caption: ...for prosperity and peace of mind
Caption: We help our customers to protect what’s important to them & save for their futures
Caption: We’ve been doing this for over 300 years
Rachel Cater: This is Evie, she’s now 6 weeks old and we’ve just taken out the free life insurance for new parents. I definitely think that this new life cover that we’ve taken out has given me peace of mind that we’ve got something there for Evie if anything, touch wood nothing would happen, but if anything did happen to myself or Evie’s dad.
Simi Shasanya: Aviva’s approach to sustainability means a lot to me as an employee, because it means we’re focused on not only being profitable, but making sure we take the right decisions now to ensure that we’re here for the long term.
Thomas Aldridge: About a year ago I got that bad phone call from the fire department saying that my restaurant had been destroyed, there was just a big black cave here. And within four hours I was talking to a senior representative from Aviva Canada.As I tell my story to my clientele they’re waiting for that “Oh my god, how bad was it?”. And when they hear from me how good it was, they’re actually like doing the “Hmmm, Aviva” or “What’s your insurance company’s name” or “I’ve never heard a sort of true happy story about insurance”
Dominic Clayden: We’ve got a lot of experience of claims, our customers will probably have one claim and we need to help them through that process.
Levent Altinisik: The fire started as we were finishing the construction of the hospital. As we refer to it, when the insurance was most vulnerable. If I had to describe Aviva in one word I would say responsive. They were by our side faster than we could ever have expected.
Gunnur Celik: When our customers need our help we do everything we can to provide them with the best service. We try to make a difference.
Tracey Harrison-Green: My husband got diagnosed with lung cancer. Then I told him about the life insurance policy that I have with Aviva, which then gave him the peace of mind of knowing that he wasn’t going to leave us with the money problems.It was December, it was nearly Christmas, I had the funeral to organise, and the fact of just going to the York branch of Aviva, and somebody helping me fill out that form, taking that extra pressure off me. And so it paid off the mortgage so I didn’t have the money worries of having to take out a second job etc to look after myself and my son.
Claire Chambers: I think we’re a modern company but we’ve got traditional values. We haven’t forgotten about our core purpose and why we are here and that’s to protect the important things for people, whether it’s their life, their health, their possessions, their home.
Jocelyn Dobinson: We heard the dog barking, and there was a massive fire in the roof and I guess it was coming all through the house. It’s devastating, and there was a lot of crying.
Rick Dobinson: You don’t realise how much emotion you get until you see your house burnt, ok and you deal with that part of it. And then as you start trying to think about things that are, you know “what did you lose?” “Well I have nothing”.Aviva supported us with the funds which was a big thing. We had money coming in when we needed it. You know we made the claim and the money was there for us.
John Russel: One of the customers that really impacted me came in to our mobile office in Athabasca. Her apartment building had burned down and I was able to write her a cheque for $25,000 and she broke down in tears, but was also full of happy emotions as well too that we were there to respond and assist her, and it just, you know, it impacted me quite a bit.
Caption: A big issue facing society and governments today is funding for retirement...
Caption: ... we help millions of customers save for their retirement and support them in old age
Caption: While you have beenCaption: watching this film
Caption: we have paid
Caption: around £250,000
Caption: in claims and benefits
Caption: That’s £33 billion paid out to customers last year
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8 March 20123956aviva_tv/customers/systems_thinking_hd/aviva_systems_thinking_hd224,480,816Systems thinking
Over the last three years, we've been changing the way we look after our customers in the UK. We've been creating a culture that puts the customer at the heart of everything we do, simplifying processes to ensure we're providing the best possible service. It's made a difference to our employees and our customers; employee engagement and customer satisfaction have both increased.
Much of the cultural change has been led by the people who know our customers best - those at the front-line of the organisation. We call this new approach "systems thinking." Hear more about it from the people who are making it happen.
Transcript
Caption: At Aviva, we’ve been changing the way we look after our customers
Caption: We’ve been putting them at the heart of everything we do, to ensure we provide what they really want from us
Caption: Here’s how we are doing it…
Aviva employees speaking
Employee 1: Welcome to Aviva you’re through to Kylie Read how can I help?
Employee 2: Hello my name is Samantha I’m calling from Aviva.
Employee 3: Good morning speaking.
Speaker 1: Hi Kylie it’s Amanda from Age Partnership.
Employee 4: Oh hello Amanda.
Employee 5: It gives me great job satisfaction.
Employee 6: In my mind it’s like a commonsense approach.
Employee 7: A fantastic piece of brilliance.
Employee 8: To me it’s just great leadership.
Employee 9: It’s Aviva trust in us to do the right thing by the customer.
Employee 10: It’s actually giving the customers what they want not what we think they want.
Employee 11: I couldn’t believe that we hadn’t done it sooner really.
Employee 12: I think Systems Thinking has been a phenomenal transformation for Aviva ’cause it’s about putting the power into the front end of the business so the people that deal with customers, the people that sell customers day to day those are the people that can really, really work out the best way of running our processes, the best way of structuring our business.
Employee 13: A customer can’t understand you’ve got to take so many calls in an hour, they want to be treated correctly.
Employee 14: Well Systems Thinking is an everyday thing, it’s all a matter of finding out exactly why the customer’s calling us and making sure that we do everything to meet their requirements.
Employee 15: What steps we’re doing that we don’t actually need to be doing and what is value within that work by removing the waste you’re then improving the capability to do even more work.
Employee 16: We put all post-it notes over the walls of the system and we looked at how much non value and waste there was and started picking bits out and eventually we came up with a much more user friendly process which suited our customers.
Employee 17: I’ve gone from taking 100 calls a day to maybe 10, 15 calls a day. I know the customers are going away with what they want and I know they won’t have to call back.
Employee 18: We’ve trained all of our staff so they’re multi skilled so what that’s meant is actually we’ve seen huge efficiency savings.
Employee 19: We've improved the time it takes to pay customers their money on equity release and now we can release that when they are on the phone and it’s in their account in a matter of days. We can also now pay them their money they're borrowing against their property in half the time we use to when there was repairs that needed to be fixed.
Employee 20: When you focus on targets you lose focus on the customer themselves.
Employee 21: The fact that Mr and Mrs Smith have phoned up and you can hear in their voice how pleased they are in what we can do for them, what me as a person, what Aviva as a company can do for them.
Employee 22: We learnt this version of Systems Thinking from Vanguard who have worked with us over the last three years. The most mature areas that are using Systems Thinking now have customer satisfaction somewhere between 80 and 90%.
Employee 23: People can recognise they’re calling Aviva now where before it was just another company. People kind of feel the difference in the experience they have.
Employee 24: You hear it all the time that the customer now will say you did such a good job on my motor insurance can I have a quote for my home insurance?
Employee 25: We’ve been hundreds of years putting a business together that’s a significant business and we’ve got lots of customers. This is about continually changing the way that we think about those customers to give them something better.
Employee 26: The things that make me love working for Aviva now is the fact that we really are starting to demonstrate that we do care, and not just for our customers, but for our people as well.
Caption: In the words of our customers
Customer 1: The service and amount we’ve had has been very, very good, we couldn’t fault anything. Very, very pleased.
Customer 2: The really encouraging thing for us is that, you know, you’re willing for change.
Caption: Systems Thinking initiatives have supported an increase in customer satisfaction and employee engagement
Caption: We have seen, in our existing annuity business, a 26 point improvement in our Transactional Net Promoter ScoreTM
Caption: And a reduction in our call volumes by around 20%
Caption: We have a culture that we are proud of
Employee 29: I would never go back to the old way of working. It’s a world away from where we are going.
Caption: www.aviva.com and #aviva
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13 May 20113767Clive_Bolton160,224,480,816,102413 May 2011: Aviva Real Retirement Report - Overview by at retirement director Clive Bolton
Aviva feels that it is important to fully understand and communicate with the "at retirement" age group. As part of this it has carried out comprehensive and sustained activity to address the issues and concerns of the older generations.
Aviva launched the Real Retirement Report in February 2010, a quarterly report which has helped to position Aviva as an authority on the issues facing the UK's over-55s. The report includes a series of tracking questions, designed to measure the standard of living of UK pensioners, along with analysis of their incomes, expenditure and net assets. This is the latest overview of Aviva's findings from March 2011.
Transcript:
Hello, I’m Clive Bolton and I’m Aviva’s at retirement director, here in the UK. And I’m here to talk to you about Aviva’s Real Retirement Reports. We commission these reports to understand what’s really going on when people retire, and what it’s like if you’re aged 55 through to 75 and beyond, and the views that these people have, as they’ve gone through, really tough times over the last year or so.We’ve now been doing the report for a year and we’ve just launched our fifth report which is focusing on the amount of debt that people have in this age group. You don’t have to go back more than a decade or so to when the conventional wisdom was that you paid your debt off by the time you retire. But now we’re finding, actually that’s not the case. And 23% of people over 55 don’t think they’ll be able to pay their debts off until they’re 75. And around about one in seven people don’t think they’ll ever be able to pay their debts off.
Managing debt at retirement
So what should people do if they’re in debt at retirement? Well, firstly, I’d just like to mention that debt in itself is not bad It’s just when paying back the interest or the actual capital sum borrowed becomes difficult, that’s when it becomes an issue.
So, the first thing to do is just review all debts, both secured and unsecured. So that’s things like credit cards, right the way through to mortgages, so you have a clear idea of the total amount that is owed.
Secondly, think very carefully before taking out additional borrowing, about how both the interest on the loan will be repaid, and how eventually the capital sum will be paid back as well.Thirdly, think what inflation will do, both to your savings and your ability to pay it back. 83% of people in our survey of that age actually said inflation and the rising cost of living was their biggest concern. And finally, have a nest egg for unexpected expenses.
It’s much easier to deal with these if you can pay them out of your savings - and we’re talking things like the clutch going in the car, or mending the boiler - rather than immediately having to go to take out another loan. And actually, 39% of customers in that age group said that was their biggest worry.
Retirement and the recession
The recession has had a profound impact on the views of this age group. If you go back to 2007, when the economy was booming, the most important issue for this age group was health - both their own health and those of their loved ones.
If we wind forward until 2010, as the recession began to bite, we see that tax increases was the most important issue - and this was because that was election time and that was what all the politicians were talking about.
If you look at the attitudes today, the most important issue is the rising cost of living, and if we compare the finances of this age group, this year, compared to last year, what we see is debt has increased and savings has gone down.
Managing credit card debt
One of the most surprising and worrying aspects of this research is the reliance that 75 year olds have on credit card as a form of debt. For those who have that debt, the average is around about £3,300.
I think the reason why they are such users of credit cards - compared to other forms of loans such as unsecured or mortgage - is by the time they reach that age it is not available to them. And what our research shows is that 35% of those people don’t think they’ll ever be able to pay their loans off.
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13 September 20113881november/mobile_learning_center_launch03224,480,81613 September 2011: Street to School - Mobile Learning Centre Launch
As a result of our You Are the Big Picture campaign, Aviva raised enough money to fund two new Mobile Learning Centres, run by Save the Children in Delhi India. The buses, which hit the road in April 2012, provide a bright, engaging learning environment for children. They will head out across Delhi to markets, railway stations and other places where street children often spend their time.
The two existing centres funded by last year’s campaign have already reached hundreds of children in Kolkata. These centres help Save the Children bring street children closer to education by providing a place where they can work directly with them, their employers, families and communities.Transcript:
Manabendra Nath Ray, State Manager, Save the Children ,WBO
It’s a very proud moment for Save the Children to launch the mobile learning centre supported by Aviva and Street to School. We have worked with Aviva since 2009 and we are reaching out to underprivileged children who are on the street or on the pavement and try to ensure their right to education.
Despite that effort there is still a group of children who are being deprived of their basic right to education and this initiative is actually trying to make education available on their doorstep. There are children that are still not working; there are children that are not allowed to have access to any education services or facilities.
Two such vehicles will be moving through the city in different areas where there are a high number of children on the street and out of school.
This van will have the facilities, like you can see, of interesting materials that we will be using in this vehicle and it will be catering to the need of children 6-14 years of age. So, we have started with these and then we will assess the learning needs of the children and increase the stock of books which will be used by the children.
It will also have audio visual facilities which we can use for interesting games and different types of learning materials.
This van will also have two trained educators and a councillor and a community mobiliser who will actually be travelling in the bus to different locations. They will actually interact with the children, interact with the communities, with the employers and other stakeholders and to mobilise the process of the children who are out of school and cannot access school, they are participating and engaging with this type of process. Prepare them through these types of services and then integrate them with the mainstream schools.
We have a plan to reach out to 10,000 children over two years out of which we will be providing direct services to 3000 children, prepare them to school standard and then integrate them with government sponsored schemes and schools. That is the idea of the mobile learning centre.
This year Aviva has a plan to continue with the Big Picture campaign and part of the donations that will be received from the Big Picture campaign will ultimately be impacting this particular initiative and another programme called Street to School which we are implementing through Aviva support in India.
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11 April 20113766Marie_Sigsworth160,224,480,816,102411 April 2011: Marie Sigsworth, group corporate responsibility director, Aviva plc
Marie Sigsworth, group corporate responsibility director, discusses our success in the 2011 FTSE4Good ratings.
Transcript:
The FTSE4Good ESG ratings are an assessment of 2,600 companies in the FTSE4Good index. We’re really proud of the fact that we have been rated the top insurer in that index and also in the top five global companies. This recognises the work that has been done so far here at Aviva but also recognises, and is a strong indicator, of the work that we have to come.
Question: Why is this something for Aviva to be proud of?
Everyone at Aviva plays a part in delivering the ESG factors. It’s not just about the CR teams it’s about everybody in the Aviva Group. We can all be proud of the part we play in delivering this service to our customers whether that be from reducing our carbon footprint through to how we treat our customers at times of claims. We all have a part to play.
Question: What do the FTSE4Good ESG rankings stand for and how did we perform?
So let’s just take a look at those ESG factors and also take a moment to celebrate the fact that we scored 100% across those factors.
So environmental first. Aviva was the first insurer to commit to being carbon neutral and we look at our strategy through a number of lenses. We look at strategy through the impact we have from our own operations on the environment. We also look to influence the companies we invest in and also through our supplier chain, working with people that provide products and services to Aviva, ensuring that they too have a focus on environmental impacts.
Then there is social and under this banner we embrace our Talking Talent processes, the promise we make to our employees, and also our career development processes. All of those are recognised as strong through this index.
And then finally there is governance. Again, Aviva has a strong record on corporate governance and also is highly recognised for the work it does around its reporting in this area.
So, we are really proud of how far we have come but we know there is lots more to do. We are really excited about the agenda ahead.134
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24 August 20113823august/clivebolton_fpp224,480,81624 August 2011: Clive Bolton – Future Prosperity Panel
Clive Bolton, at retirement director, Aviva Life UK, discusses Aviva’s the research findings from the Future Prosperity Panel.
To find out more about Aviva's Future Prosperity Panel visit http://www.aviva.com/fpp
Transcript:
Hello, I’m Clive Bolton and I’m the at retirement director at Aviva Life UK.
What is the Future Prosperity Panel all about?
Well, as Andrew Moss said, we bought together the Future Prosperity Panel to tackle one of the really big global financial issues of today and therefore the panel consists of nine experts accomplished in their fields to kick-start the debate.
What could people do to prepare for retirement?
Well there are a couple of examples that really stood out for me; firstly was Carl Honore. He talked about how we could use gaming, particularly with younger generations of people in their 20’s, who use online games to learn and to stimulate engagement. He asked whether we could use that in the context of planning your future finances.
And another one is Alain de Botton, who talked about the slightly negative attitude that we have towards saving. It can sound very bloodless or misally and in actual fact saving is a precursor to giving and really we should attach it to the human spirit of generosity.
Have a plan. There are some people who do save well for their retirement and actually know what they want to do, but a lot of people put it to the back of their mind. For instance, they say they’re going to sell up and move to a cottage in Dorset without actually working out if cottages in Dorset are any cheaper than the house they are currently living in. Therefore even at the most basic level we urge people to look at what they’ve got, what pension arrangements they have and match them against their plans.
Health is a really important issue and in fact in some ways health is your biggest financial asset as you reach that later life stage. It’s all very well saying you’re going to work into your 60’s but the thing that will actually keep you doing the job that you may actually even enjoy will be the fact that your heath is sufficiently good to allow you to do that.
How can people get involved with the Future Prosperity Panel?
Well I think it’s important to separate what individual companies like Aviva are doing with the bigger debate that we need to have in society - this is not only in the insurance industry but with regulators, government and also with society as a whole. Therefore what we’re doing at Aviva through things like the Future Prosperity initiative is adding to that debate so we can move to some sort of consensus.
Well we’d really welcome people to join and share their views and so therefore if they want to do that and want to share or talk about what they think, they can go to our website on the subject at aviva.com/fpp and let us know.
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6 July 20113774july/andrewmos224,4806 July 2011: Andrew Moss, group chief executive, Aviva plc
Andrew Moss, introduces the Future Prosperity Panel.
As part of the "You are the Big Picture" campaign, Aviva has brought together some of the world's leading thinkers from public policy, business and behavioural economics backgrounds to take part in a Future Prosperity Panel (FPP).
Recognising that trust in the financial sector has fallen in recent times and people are not preparing enough for the future, the aim of the FPP is to provoke renewed debate about safeguarding future prosperity and building a culture of sustainable saving.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fpp
Transcript:
Simon Meadows: Andrew, we’re here to talk about the Future Prosperity Panel and its new report – so what’s it all about?
Andrew Moss: What we’ve decided to at Aviva is ask nine different people, from different geographical backgrounds, and different work backgrounds, what they think about the big issue that we’re all facing today, which is that we need to save more money for our future. And Aviva is about prosperity and peace of mind, that’s the reason we exist as a Company. So we’ve been doing some listening, but I hope it’s going to form some views about what we do in the future, as well.
Simon Meadows: It sounds very interesting, but why do it now?
Andrew Moss: People are living longer, and in a number of developing markets, people are also getting wealthier, and they’re having to think about different ways of saving, and what they’re actually going to do in retirement. And governments also are having to do some pretty hard thinking about the way they are taking things forward – the fact is that in many developed economies, they’re not going to be able to provide for people in retirement the way that they have done historically; we’re seeing those issues in the UK, but it’s true across all of our business, right across Europe and some other markets as well. So we think it’s timely.
Simon Meadows: You took part in the debate yourself, so what was your experience of that?
Andrew Moss: Well, I think to have people from completely different backgrounds coming at these issues was really refreshing – it certainly got me thinking about some of those issues in different ways – and of course, the perceptions of financial services companies, in the minds of people in other parts of industry, or in other walks of life, is actually a key issue in this, so I think getting those third-party views in a fresh way was really stimulating and enjoyable.
Simon Meadows: It’s clearly a complex issue – so what do the thinkers actually suggest?
Andrew Moss: Well, you know, they come up with a whole host of new ideas. Some of them are similar to what we’ve thought about before; we know financial education, for example, is a big issue, wherever we do business. But actually, some of the, perhaps more radical thinking, around encouraging saving by getting people involved in gaming, for example, which I think it’s Carl Honore has as one of his ideas, I think is fascinating, and really keys in to one of the audiences that we want to key into, which is younger people – because people get to this issue and they start saving early, then they have to save less to make a difference as they go forward in their lives.
Simon Meadows: There’s lots to think about here, but what is Aviva already doing?
Andrew Moss: Well, a great deal, and I’m very proud of the things we’re doing. So, for example, on financial education, we’re already investing in helping young people in schools to improve their financial literacy, and really that’s a common theme that runs through all of these essays. More specifically, as regards the annuity market here in the UK, we’re very interested in promoting what we call the open market option, so we want a more transparent market in annuities, so that people can shop around, and can get the best value for money when they’re buying annuities as they head into retirement. And in Europe, for example, we’re pushing on governments to give people annual pension statements. You know, the problem is, at the moment people don’t really have visibility of what they’re actually going to be receiving in retirement through whatever retirement schemes they have. As with all things, if you get a regular statement, and you look at it, you focus on it, and it makes you think about whether you should be doing more.
Simon Meadows: So what specifically will Aviva do differently as a result of the Future Prosperity Panel and its new report?
Andrew Moss: Well, I think there’s a couple of themes – the first is simplicity. Now we’ve been working on this for a number of years already, but I think this will stimulate us again to go and look at the way we communicate with customers, to be as simple and clear as possible when we do that, and to develop products, as well, which are as simple as possible, which help them on that path. The second issue, I think, is related to some of the more innovative ideas – so very specifically, I’ve asked my team to look at this idea of gaming, and whether we can stimulate young people into thinking about saving using some of the things that they’ve now grown up with, and, you know, gaming is genuinely competitive, it is interactive, and I think one of our thinkers actually is trying to say, well, look, you know, what could we actually encourage younger people to think that saving is a cooler thing to do? I don’t know, but I do think it’s a debate really worth having, because it will make a real difference to them later in their lives.
Simon Meadows: So Andrew, what do you see happening next with this?
Andrew Moss: Well, as I say, we’re publishing it, really, to promote the ideas that have come through in the essays – but more than that, we’re going to be much more proactive, we’d love to hear people’s views back. So all of this is on the website, the aviva.com website, I think it’s /fpp that you need to add to that – but we’d love to get some input from anybody who wants to read the essays and have their say in this debate.337 -
6 July 20113757july/rama224,480,8166 July 2011: Rama Bijapurkar, independent director and author
Rama Bijapurkar talks about how to create a new savings paradigm for emerging markets.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fppTranscript:
The biggest challenge to boosting future prosperity is also the biggest opportunity. Over the next few decades we will have several billions of people who are going to be, for the first time in their lives, consuming, and saving, investing, and borrowing.
So we have an unprecedented opportunity to be able to rewrite the rules of how we play this entire financial services game. My main argument is that we must put the individual at the centre of business strategy, rather than manage at the micro-level – I argue that it has to be country-specific, rather than bulk all... bracket all emerging markets together.
If you take a country like India, where you have hardly any organised employment, no social security, and a financially optimistic culture, I think you need to look at benchmarks completely differently.
First I think that all companies in the financial services business must make a commitment to find a new way for the new markets – secondly, this means they must develop country-specific strategies, country-specific products and services. This is also good business, because emerging markets are large markets with several modest-income consumers, so you need new business economics, and new kinds of products.
Thirdly, I think that, while global standard regulation’s nice, I think regulators have to regulate for the comfort of an individual market, given its specifics, and exchange views as they currently already do.
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6 July 20113758july/diane_coyle224,480,8166 July 2011: Diane Coyle, economist, Enlightenment Economics
Diane Coyle explains her idea of savings made simple.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fppTranscript:
There are two big challenges facing people at the moment.
One is that our lives have become very much more complicated than they used to be, and so, whereas people used to have often a job that would last them for a whole career, they’re much more likely to change now – and so the needs for savings have become much more complicated – and on top of that, the level of savings that we have in the UK, which is a very rich country, is just too low. A third of households don’t have any. Lots of others don’t have enough.
In my essay I talk about the need for the financial services industry to rebuild trust, because there has been a real decline in the trust that people have – and also for the complexity about savings to be decreased generally.
To give one example, the UK is a rich country – in a very poor country, Kenya, there has been innovation that helps people navigate the complexities of life through mobile phones. So now you can save money, transact, pay bills, get your wages paid to you, through SMS messages on a mobile phone. People themselves need to accept responsibility for saving enough, and for saving in ways that will help them deal with all the issues that life is going to throw at them and their families.
There’s a role for more financial education – I don’t think kids are well taught in schools about what they need to know to compare mortgages or save enough for university or for their pension, however many years away that seems from now – and then the regulatory framework, I think, massively needs simplifying, it’s just much too complicated, and it scares people, actually, it’s not protecting them, it’s scaring them.
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6 July 20113759july/alaindebotton224,480,8166 July 2011: Alain de Botton, author
Alain de Botton talks about rebranding saving.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fppTranscript:
Increasing savings is not just about the nuts and bolts of kind of financial instrument savings rates, government policy etc – it’s at one level also about values.
You won’t get people saving more until you change how people look at what is good, what’s respectable, what’s cool. We have to make savings cool. And that’s a very deep challenge, that goes right back through history, you know – how do you change a society from thinking only of today to thinking more of tomorrow?
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6 July 20113760july/janefuller224,480,8166 July 2011: Jane Fuller, co-director - Centre for the Study of Financial Innovation
Jane Fuller explains how to make the connection and empower savers.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fppTranscript:
One of the big challenges is that people have to take responsibility for their own saving, because of the demise of final salary pension schemes provided by their employer.
So this means that saving has to be made more attractive to them, and also they have to get round some of the mixed messages they’re getting in terms of low returns, or being concerned about high charges. So it’s got to be made into more of a positive experience for them.
One of the main themes of my essay is that, because people have to take more responsibility, they need to have a more direct link with the destination of their funds. I think here the concept of prosperity’s very important, because it’s not just prosperity for the individual, preserving their wealth, and building it up for a better retirement – it’s also understanding that by doing that those savings can be directed into investment in business, in infrastructure, maybe into some sort of cause that they believe in.
People are getting more into DIY finance, they are being more active, but they can only do that if they really understand the process better, and have confidence in it. And there’s a message here for the industry, which is that particularly some of the larger providers are in the same position as some of the giant retail chains – they can provide simple, low-cost products that provide good value for money, and so that people understand what they’re getting, and believe that they’re being charged the right amount.
And if they could behave more like that, start off with what does the customer want, and design around that, they would ... I think that they would take the people with them, and that saving would become a much more positive experience than it is at the moment.
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6 July 20113775july/carl_honore_no-star224,480,8166 July 2011: Carl Honore, journalist and author
Carl Honore explains his play to win idea.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fpp
Transcript:
I think one of the big challenges to boosting future prosperity is actually getting people to want to save.
We all know that we need to put away money for the future, but we find it very hard to do, and I think one reason is that the message is always couched in doom and gloom – we’re told relentlessly that our nest-eggs are shrinking into oblivion, that we’re going to have to work longer and harder; that our retirement is all going to be about penury – and I think that doesn’t inspire people to want to save, it does quite the opposite.
It turns us off, that we’re living through a gaming revolution thanks to the new technologies mankind is spending three billion hours a week sitting in front of screens playing games, you know, games pull in more money now than movies and DVDs.
And what interests me is how we can harness that gaming instinct to inspire people to do things that they would not normally want to do, like saving for retirement, I think we can use the architecture, the tricks, the techniques of, especially social gaming, which brings together this extraordinary cocktail of collaboration, competition and the sort of viral nature of the beast, to get people to save, to make saving rewarding, interactive, and even fun.
There are lots of things that the financial services industry can do to tap into this gaming revolution, you know – smart phone apps that allow savers to track their pension pots in real time, or setting up online mini-leagues, where savers compete and collaborate with friends, family, colleagues.
You can imagine a scenario where, you know, you’re walking down the street, you’re about to go into Starbucks, and an e-mail or text alert arrives, telling you that your gym partner, Sarah, has just deposited £10 into her pension pot – and instead of going into Starbucks and dropping £5 on a latte and a muffin, you send that £5 straight to your pension pot, and you send Sarah a message saying, you’ve just saved me £5, and 500 calories.257 -
6 July 20113762july/annpettifor224,480,8166 July 2011: Ann Pettifor, director - Advocacy International and fellow - New Economics Foundation
Ann Pettifor, discusses savings and the alchemy of credit.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fpp
Transcript:
What I try to show in my essay is that, the old-fashioned idea was that we need savings for investment and prosperity, and I try to show that it’s the other way round, that we have a banking system.
We have a sophisticated, well-developed banking system, we have a monetary system, we live in a monetary economy, which enables us to generate the credit - and I’d like you to think of quantitative easing, and the central banks of the world generating 16 trillion dollars overnight, to save ... to bail out the banking system – or think about Japan, post-tsunami – the Japanese government generated 3.2 trillion dollars, overnight, to help reconstruction in Japan.
So what that shows us is that the banking system can generate the credit which generates economic activity, ie work and employment – and from there we get income, and from there we get savings.
In my opinion the next steps are, not for individuals, but for central bankers, and governments, and regulators, to get the banking system in order, to create the credit, at a low rate of interest, that is needed for companies to be able to invest and to thrive and to generate income, and then savings.
It’s up to governments and central bankers to fix the banking system so that it becomes servant to the economy, not master of the economy, and it gives the economy, small businesses, big businesses, individuals, the credit they need to generate jobs, and jobs, and employment, and work, will generate income, which will generate savings.
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6 July 20113763july/pawel224,480,8166 July 2011: Pawel Swieboda, president - demosEUROPA - Centre for European Strategy
Pawel Swieboda talks about pensions, their portability and prosperity.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fppTranscript:
The challenges are two-fold; first of all they have to do with the economic and financial crisis from which we are just emerging and secondly they have to do with the demographic trends.
The point is that these two challenges coincide as we speak and they have to be addressed at the same time. The baby boomers generation is close to retirement; in Europe we will have the shrinking of the working population from 2012 onwards. My paper is about mobility in Europe and about the reform of Europe’s pension systems and the two issues are very closely interlinked because in order to have mobility of labour you need to have transferability of pension requirements.
At the moment in Europe only 2% of the population are mobile meaning they look for jobs in other countries. In well functioning economies such as the one in The United States, it is about 7% of people who look for jobs else where in another economy.
Europe has started working on this but there is a long way to go so what needs to happen is the system needs to be simplified, people need to have their pension accounts set up for… in order for the transfers of entitlements to materialize in a simpler fashion.
We also need to have an exercise in the sharing of risks because the major change in Europe from the defiance benefit to defiant contribution shifts the burden of risk to the individual.
Finally we need to have the tracking of the pension entitlements, once the accounts are in place we need to make sure that individuals can trace the money as they move from one country to the next.
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6 July 20113764july/simontay224,480,8166 July 2011: Simon Tay, chairman - Singapore Institute of International Affairs
Simon Tay explorers Asia's rebalancing and the implications for future prosperity.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fppTranscript:
We’ve reached this in juncture where, while Europe and America remain important, we’re going to see that Asia ... it’s a kind of rebalancing, a shifting towards the emerging economies in here, in Asia – and for Asians themselves, I think rather than just dealing with the immediate questions of where the next meal’s coming from, we’re starting to think longer-term.
There’s a tremendous amount of savings here in Asia – globally, Asian countries are the ones with surpluses, whereas the West is largely in deficit, both at the public level, but also at the household level. But savings per se will not be enough for Asia’s sustainable prosperity.
What we have to find are ways to unlock the savings, and utilise them. The phenomena also in Asia is they have some very rich people – you’ve some very rich countries – and yet we’re also a region where millions, in fact perhaps over a billion people, live in absolute poverty – under two dollars a day.
And so we’ve got to see that in Asia’s future, there is a way to redress this, to make the development, the growth for the future, be much more inclusive, or we’ll see a rising middle class – and this rising middle class in Asia will provide a much broader stream of demand for goods and services.
At a national level, Asians must cease this compulsory belt-tightening, and without becoming uncompetitive, they must see as their goal to share the prosperity more widely across their own societies, and let people earn a good living wage, which they can then spend and invest.
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6 July 20113765july/matthewtaylor224,480,8166 July 2011: Matthew Taylor, chief executive - Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA)
Matthew Taylor discusses how to foster a new culture of saving.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fppTranscript:
There are challenges at three different levels – first of all globally; we need a more integrated financial system globally, which means that we allocate resources globally more rationally – at a national level, I think we have to try to make investment savings work for us better; and then I think at the individual level, we’ve got to have a new approach to thinking about asset.
My own view is that saving is good for people; I think it gives people a sense of efficacy; and I think deferred gratification is a good habit for people to learn.
In relation to society as a whole, you know, it’s a difficult question – I mean really what we need people to do at the moment is to spend – I also think financial literacy is really important, but I don’t think it actually works to teach kids, or people, financial literacy in the absence of them having money – so I would like to encourage, for example, policies like schoolchildren having small amounts of money which they get when they go to school and which they can use in school to develop social enterprises, or to think about forms of investment.
I also think there are challenges here for the financial services sector – I think it’s got to come clean about the fact that its practices in the past have not been brilliant. It’s got to have a new compact, a new relationship with citizens, and new products which help us to manage our assets throughout our life in a much more... an imaginative way.
There are lots and lots of companies now, at the interface with consumers, who want to do different things about sustainability – want a completely different business model – and what they say is; the problem is engaging the investment community. And I think it’s great that Aviva has taken the lead in engaging that community and saying “We’ve got to get behind good, sustainable business practices”.
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4 October 20103644Rama_Bijapurkar_FPP_Oct10160,224,480,816,10244 October 2010: Rama Bijapurkar, independent director and author
The Future Prosperity Panel convened on 4 October in London's Somerset House.
Transcript:
What also struck me was the emerging world being completely different to the developed world – it seems to be exactly the polar opposite. But yet a lot of the solutions that people talked about for the developed world in different ways are also relevant for the emerging world.
So I’m going to go back and think about that.
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4 October 20103640Diane_Coyle_FPP_Oct10160,224,480,816,10244 October 2010: Diane Coyle, economist, Enlightenment Economics
The Future Prosperity Panel convened on 4 October in London's Somerset House.
Transcript:
I’m most interested in trying to understand what sort of institutional framework will help people save and guarantee their own future prosperity. And we tend to think of it as being the responsibility of the individual to do something or the responsibility of the government to do something.
And actually it’s a social question. Are there social structures like the savings club that I had at school when I was a kid? What’s the role of the schools? What sort of collective action should people take? What sort of relationships between businesses and customers do we need to have?
I’m interested in the policy implications obviously because we think we’re not in a good place at the moment and we’d like that to improve. And the final session is going to bring together the issues that we’ve talked about at the individual level and the company level, into what’s the policy context and the macro context. So I’m looking forward to that debate.
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4 October 20103637Alain_De_Botton_FPP_Oct10160,224,480,816,10244 October 2010: Alain de Botton, author
The Future Prosperity Panel convened on 4 October in London's Somerset House.
Transcript:
I think the most interesting thing to have come out of today is that increasing savings is not just about the nuts and bolts of financial instruments: savings, rates, government policy etc. It's at one level also about values. You won't get people saving more until you change how people look at what is good, what's respectable, what's cool!
We have to make savings cool and that's a very deep challenge that goes right back through history. How do you change a society from thinking only of today to thinking more of tomorrow and a lot of the discussion around the table has been around that and I think for me, that's the most fascinating challenge.
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4 October 20103641Jane_Fuller_FPP_Oct10160,224,480,816,10244 October 2010: Jane Fuller, former Financial Times journalist and consultant
The Future Prosperity Panel convened on 4 October in London's Somerset House.
Transcript:
The exciting part is probably trying to link what motivates people in terms of – everything – from their sense of fun, taking part in games for example, to whether or not they’re getting good or bad incentives through something nitty-gritty like the tax system.
Trying to link those sort of behavioural motives to this sort of long term goal of building up savings, not just for the sake of it so that the government will be able to afford pensions in the future but also to give people a sense of well-being through owning assets.
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4 October 20103639Carl_Honore_FPP_Oct10160,224,480,816,10244 October 2010: Carl Honoré, journalist and author
The Future Prosperity Panel convened on 4 October in London's Somerset House.
Transcript:
It’s an incredible barrage of ideas so it’s been very exciting and difficult to latch onto things but the one idea that’s come to the surface for me and really jumped out is the dialogue between people from the developing world, China – the Chinese–Indian world and the West and how we in the West can learn from what’s going on around micro finance and new ways of thinking – new paradigms – in financial services in the developing world and that turns everything on its head and its exciting.
I think the key question here is how we engineer a cultural change around the whole matter of savings so there’s a lot of talk about the specifics of what do we tweak in regulation and what kind of financial instruments can we create?
A lot of that it seems to me will end up be tinkering at the margins unless we get down below the surface and really move the tectonic plates so we have a profound change in our culture about what we think about saving.
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4 October 20103638Ann_Pettifour_FPP_Oct10160,224,480,816,10244 October 2010: Ann Pettifor, director, Advocacy International
The Future Prosperity Panel convened on 4 October in London's Somerset House. Please see below for a selection of views from the participants present on the day.
Transcript:
I was really fascinated by Diane’s work in Kenya where Kenyans can, you know, ping a number on their mobile phone and deposit some savings in a bank or transfer their money from their current account to a savings account. I thought that was really amazing and what I was interested in was how difficult it was to do that here.
So that was one of the things that came out of the discussion that I found very interesting and I also found Carl’s point about encouraging people to game in the way that they game in California around smart energy cards comparing their performance, their use of energy in their home to their neighbours. Could we have a smart gaming system whereby we could compare our savings to our neighbours’ savings?
And I think that’s an interesting thought from the micro-economic point of view. From the macro-economic point of view, it worries me sick!
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4 October 20103643Pawel_Swieboda_FPP_Oct10160,224,480,816,10244 October 2010: Pawel Swieboda, president, demosEUROPA
The Future Prosperity Panel convened on 4 October in London's Somerset House.
Transcript:
The most exciting thing for me was to understand to what extent the motivation for people saving is changing. It’s changing because of the economic crisis. It’s changing also because of our evolving habits and the big question is how to respond.
And I think the right way to respond is to empower the individual – to empower the consumer – and there is a lot of scope for corporate partners to approach that subject.
Empowering the consumer means giving him or her the right choice. It means facilitating access to information. It means making them understand what decisions they are taking.
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4 October 20103645Simon_Tay_FPP_Oct10160,224,480,816,10244 October 2010: Simon Tay, chairman, Singapore Institute of International Affairs
The Future Prosperity Panel convened on 4 October in London's Somerset House.
Transcript:
I think the term “future of prosperity” has two very rich words in there. The future right now I think after the crisis is really quite uncertain and sometimes Europeans – the young Europeans – think that the future will not be as good as it was for their parents. And the picture in Asia is the other way around.
And the other word is prosperity. Prosperity doesn’t just mean raw economic growth any more nor does it just mean saving and investments. It really is a much richer term which talks about the sustainability, the environmental, and also the social sustainability of really “keep going, keep growing”, and who benefits from that – the question of social inclusion as part of who becomes prosperous.
I think these are really rich questions which hopefully we’ll tease out over the next few months.
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4 October 20103642Matthew_Taylor_FPP_Oct10160,224,480,816,10244 October 2010: Matthew Taylor, CEO, Royal Society for Arts
The Future Prosperity Panel convened on 4 October in London's Somerset House.
Transcript:
Well, for me it’s a real learning process. I think deeply about human psychology and about policy and about culture, but applying those ideas to the specific challenges facing the financial services industry and policy-makers in general, you know, it’s absolutely fascinating to try to apply those questions to this specific example.
So what I’m going to get out of the next couple of sessions is just thinking more deeply about those issues and also hearing from perspectives that perhaps I wouldn’t normally hear.
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8 March 20123955aviva_tv/investor/andrew_moss-youtube/a_moss_youtube224,480,816Andrew Moss 2011 preliminary results interview
Andrew Moss, group chief executive, discusses Aviva's full year 2011 results, how we have been transforming Aviva and the outlook for 2012.
Transcript:
Highlights from 2011
Interviewer: Andrew, you’ve announced your 2011 results, so, from your point of view, what are the key headlines on those numbers?
Andrew: Well, I’m pleased with the numbers. I think it was a good year, the operating results were strong, something like 6% on an underlying basis, that’s without Delta Lloyd, which we’ve now sold the majority of. I think, that was done in the face of a, you know, obviously difficult external environment, particularly in the second half of the year, when European markets were extremely volatile.
We’ve been able to put the dividend up by 2% on the back of that strong operating performance. We’ve beaten all of our financial targets that we set for ourselves, on operating capital generation, on the combined operating ratio, internal rate of return on new business in the life business, it’s as high as it’s ever been, and we’re on track to meet the cost savings targets that we talked about, so, overall, I’m very pleased.
Interviewer: From your perspective, what in particular would you say is behind that operating profit of £2.5 billion?
Andrew: Well, I think, as always, with our business, the first place you go is the UK, and we’ve seen our UK life business, which is still our biggest business, reporting record profitability in 2011, the profits were up something like 8%, and, perhaps more importantly, when you look at it over the long term, they’ve doubled in something like the last five years. And that’s really about the products that we sell to our customers, we’re making progress with our customers all the time in terms of our reputation, really pushing forward in market share, in terms of annuities and the protection book.
So, we’re really achieving many of the things that we want to in that business, and then that’s backed up by the UK general insurance business, where profitability’s been going up with the combined operating ratio coming down.
And, again, that’s because of strong underwriting performance in the current year, but also, as always, taking more costs out of the business and making ourselves the most efficient player in the market. That’s our objective, we’ve achieved a lot in that regard, we’ve still got a bit more to do, but the results are beginning to really come through. Europe, too, I think has been a strong performance in the face of what’s been a difficult market.
Interviewer: Regarding the UK business, you are quite clearly very encouraged.
Andrew: Yeah, absolutely. I mean, I think, you know, if you’d told me five years ago this was where we were going to be, particularly in the UK life business, I’d have been absolutely delighted. We’re writing new business at a rate of return of something like 15%.
So, that is a very attractive return in what is a very stable and regulated market. And we’ve been able to do that and put capital to work in particular areas, such as annuities, where we have, I think, competitive advantage in terms of pricing. We’ve been able to grow distribution, particularly for the protection book.
So, you know, in the last year alone, we’ve put in place new agreements or enlarged agreements with HSBC, with Barclays, with Santander, and there’s more coming down the track there.
So, our reputation and our cost efficiently allows us to win that business. So, we’ve seen our protection market share going up from about 11% up to about 15% in the course of the last three years, and on track to grow further.
Interviewer: Now, in Europe, there has been significant uncertainty, so how have you achieve growth there?
Andrew: Well, look, our businesses in Europe are strong, strong businesses, and we have, you know, strong customer franchises and strong distribution in our businesses. And that starts with France. You know, France is our third most profitable business in the group, and it reported increased profits again in 2011.
So, that was encouraging to see, and, on the back of that, we have Spain recording record profits as well, Poland doing very well, more on the protection side, actually, than the pensions side. And, you know, I think the overall outlook for those businesses continues to be very strong, despite the market volatility that we saw in the second part of the year.
Italy was more challenging, as was Ireland, and we’re doing things about those two businesses, making some quite radical changes to the Irish business, bringing it under the umbrella of the UK, which definitely served customers well in Ireland, and we remain very committed to the Irish market, but providing product out of the UK which will be cheaper for customers and more profitable for us. So, a real double benefit in that regard.
Focus on the balance sheet
Interviewer: What about the strength of Aviva’s balance sheet, how much of that has been a priority?
Andrew: Well, we’ve, over a period of time, built capital strength in the Aviva balance sheet. And certainly since 2008 and the financial crisis, you know, that’s been an absolute priority for us, to maintain strength in the balance sheet. We built our capital strength up through to the end of the first half of 2011, and that served us well when things got really choppy in the second half of 2011, particularly in Europe.
So, you know, both on the IGD measure and on the economic capital measures, we were able to withstand some very big market moves, particularly in sovereign debt valuations in the second half of 2011. So, whilst we saw the capital ratios coming down a little bit towards the end of the year, what we’ve reported today is, actually, they’ve come up again substantially in the first part of 2012.
So, I think the message is a clear one. The balance sheet is strong, the capital position was built up to withstand shocks, there was a shock in 2011 in the second half, but we came through it well and the capital ratios are back up now.
Progress on strategy
Interviewer: Can you give us an update on your strategic developments, what progress are you seeing there?
Andrew: Well, good progress, I think. 2011 was really encouraging in that respect. And let’s just remember what the strategy is about. First and foremost, it’s growing, in our key markets, and so the UK is a fantastic example of that. We’re growing market share in the Life business, we’ve been growing market share again in the general insurance business, premiums are up something like 8% in 2011. We had something like 400,000 new motor policies in the UK in 2011.
So, that’s the first really important part, I think, of the strategic debate. Now, the other side of that is that, whilst we’re allocating capital to our big key markets, we have made decisions to exit some of the markets, and we’ve made good progress on that in 2011.
So, we sold down another slug of Delta Lloyd, so we’ve deconsolidated Delta Lloyd in the Netherlands. We sold the RAC, which is a non-core business here in the UK, at, I think, a good price, representing something like 17 times earnings, we did that in June of last year.
And, just recently, early this year, we’ve announced the sale of our activities in the Czech Republic, in Romania, Hungary and Slovakia. So, all of that, I think, augers well for the future in terms of making sure that we’re allocating capital to the businesses that we want to, and making progress on getting out of the businesses that we don’t want to be in for the long term.
Focus on our customers
Interviewer: You’ve spoken very passionately in the past about putting customers at the heart of everything Aviva does, so how is that working, how is that progressing?
Andrew: Well, the Customer Agenda, I think, has made fantastic progress in the course of the last two or three years. We’ve measured ever more rigorously, I think, what customers are saying about us, thinking about us. And the results of that have been, I think, there for all to see.
Our Net Promoter Scores have been going up, so that’s pleasing to see. We’ve still got work to do on that front. And this is about providing good service to customers and good value to customers, in terms of the products that we provide. So, certainly in the UK, I think we’ve made good progress on that, and that’s true on a number of other markets, in Canada, in the US, and in some of the European markets, as well.
But it’s something – you mentioned I’m passionate about it – I think that my real priority there is to keep pushing that agenda. Because I think, whilst we’ve made good progress, I think it can be a source of real competitive advantage to us as we push forward. So, pleased with where we’ve got to but demanding more from our people in terms of getting further.
Outlook for Aviva
Interviewer: So, Andrew, looking ahead, and in your view, what is the outlook for Aviva in 2012?
Andrew: Well, look, the world’s still a reasonably uncertain place, I mean, you know, the second half of 2011 proved that, I think. But I think, at the end of the day, the strength of the businesses we have, and you see, you know, our operating performance, stronger again in 2011, over a strong 2010, proves that, essentially our strategy is working. And the choices we’re making about where to allocate capital are coming through now in terms of our key markets.
So, the 12 key markets that we’re focusing on, profits were up something like 9% in 2011. We’ve got to push on, on an operational front, from there. And to help us do that, we’ve set some new targets for 2012, which actually push up the internal ratio return requirements in the business above 13%. We’re keeping the combined operating ratio requirements. And the operating capital generation targets, we’re upping guidance on that, as well.
So, I think that signals confidence in the things that we can control to make sure that we continue to make progress that comes through to the bottom line. Over and above that, of course, there are a lot of things going on in the outside world, and managing the risk associated with that is an equally important task, and I think we’ve got a good track record of doing that over the course of the last few years, but we will continue to devote energy and resource to that side of things, as well.
Interviewer: It’s always good to hear your views, thanks for your time.
Andrew: Thank you, Simon.
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8 March 20123954aviva_tv/investor/Pat_regan_pr/aviva_pr_youtube224,480,816Pat Regan 2011 preliminary results interview
Pat Regan, chief financial officer, talks about Aviva's 2011 full year results, including what's driving the group's performance, increased operating targets and the priorities for 2012.
Transcript:
Interviewer: So, Pat, let’s begin by looking at what you’ve announced today. Talk us through the headline numbers.
Pat: Sure, thank you. So, the headline numbers, operating profit at over £2.5 billion, again, up some 6% on an underlying basis. Operating capital generation, which I think is a stand-out feature in our results today, at £2.1 billion, up some 25%. Life new business profitability at over 14%, which is a record high for us, I think. And our combined ratio at 96.8% and another improvement in the general insurance profitability.
Interviewer: Now, clearly significant is the increased net operating capital generation, what’s behind that?
Pat: Yeah, thanks for that. A few things, I think. One is the profitability and cash flow we make off our in-force customers on the life business. We have almost 30 million customers, we do a good job in serving our customers well and keeping our customers, they give us a very predictable and growing stream of profits from our in-force life business.
Second is the increased profitability we make in general insurance, which adds, as well. And the third is, investing less capital, investing capital more efficiently in life new business profitability, which we’ve done, I think, really well over the last couple of years, almost halving the amount of capital we invest in life new business, whilst maintaining almost the same level of sales.
So, the combination of those three things, in-force life profits, growing general insurance profits, and more capital efficiency on the life investments.
Interviewer: Given that the dividend is clearly an important topic for your shareholders, what is driving Aviva’s dividend payment for 2011?
Pat: Yes, we’ve increased the overall full year dividend by some 2%, to 26p. We have a strong dividend yield, that’s one of the strong features of the Aviva story. And our profit cover, those £2.5 billion of operating profits, turn into a profit cover of over two times, and on our operating capital generation, that also translates to a very strong free cash flow yield supporting that dividend, as well.
Interviewer: The life insurance appears to be performing well, so give us some insight into the life result?
Pat: Yes, our life profits are up by some 7% in the year. And a couple of things that are going on there. One is the in-force amount of business that we’re managing has gone up, our in-force reserves have gone up, so we’re keeping more customers, and we’re adding to that stock of customers.
The second thing, as we write new business, we’re writing it at increasingly profitable levels, so that adds to the profitability, as well. And then we continue to get a strong flow of underwriting margin, so when we price business, on expenses, etcetera, we do even better, and we’re getting an increasing profitability stream from that.
Interviewer: Let’s talk about the general insurance business, how is that performing?
Pat: The general insurance business is both increasing profitability and growing at the same time. That’s clearly true in the UK, but true in our other big businesses around the world. Very strong results in Canada, some 95% combined ratio, very strong results in France, a 90% combined ratio, and a 96% combined ratio in the UK business. What’s a strong feature for all of them, we’re growing personal lines well, particularly personal motor.
Our brand’s working really well, we’re getting new customers in the door. We’re also really efficient in terms of how we’re managing that. Our expense ratios are down across the piece, so as we’re adding new customers, we’re doing that as essentially a flat expense base, and all the while sticking to our guns of having really good disciplines around things like underwriting and claims management.
Interviewer: To what extent would you say the 2011 performance was affected by market and economic conditions?
Pat: I think in terms of operating metrics, as you’ve seen, our operating metrics are very resilient. As you would expect, we saw some unrealised movements, our mark to market movements on our investments. And that impacted our bottom line profit before tax, at £87 million for the year, that was both in Delta Lloyd and in the rest of the Aviva business. Now, because they were unrealised, they’ve actually largely reversed, post-year end to the period now.
Interviewer: How have you been managing Aviva’s capital position?
Pat: We’ve done a lot of work over an extended period of time to build Aviva’s capital surpluses. Really, over the last two or three years, that strong net operating capital generation is a big feature of that, plus other kind of bigger things, like the sale of the RAC, the sell-down of Delta Lloyd, now down to a 40% holding from 100% a couple of years ago. Continued to work on our pension scheme and move that into a much better financial position.
So, some big picture stuff. We also worked on smaller things, like product pricing, product guarantee levels. All of that stood, as well, to build up our capital buffers to withstand what’s clearly been a very volatile period, particularly in Europe and the latter half of last year.
Interviewer: And you have a significant presence in Europe, to what extent has Aviva been affected by eurozone issues?
Pat: Well, as I say, clearly, the European financial markets were in a much more uncertain and volatile period, particularly in the second half of 2011. What you saw was corporate spreads move out and government spreads, indeed, move out, as well. In terms of our core operations, though, we increased operating profits in Europe, up some 4% or so, very strong results in places like France, Poland, Spain. And in a number of those areas, our new business sales, as well, were remarkably resilient.
So, I think what we tried to do was focus, again, on keeping our customers, managing them well, doing some good product pricing and managing our capital particularly efficiently in what was a volatile market.
Interviewer: Why have you confirmed your plans to increase Aviva’s targets for 2012?
Pat: Well, I think we feel good about the progress we’re making kind of more broadly. We set the financial targets originally just over a year ago, we beat each in our performance in 2011, so I talked about the operating performance, it’s been really resilient. Life new business profits, general insurance profits, and that operating capital number. So, I think, on the back of what we done in 2011, we felt confident enough to slightly increase those targets for 2012.
Interviewer: Finally, looking at year ahead, what are your thoughts about 2012?
Pat: Well, I think, operationally, again, we’re going to try and carry on doing the things we did in 2011, so, keep our customers happy, manage our expenses well, allocate our capital in a really kind of efficient and disciplined manner, and do all those things so we continue to generate strong profits and continue to generate strong operating capital generation.
Interviewer: Very interesting indeed, Pat, thanks for your insight.
Pat: A pleasure, thank you.
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7 October 20113870december/andrew_moss_cnbceu_07_10_11224,480,8167 October 2011: Andrew Moss interview on CNBC
Andrew Moss was a guest host on CNBC's Squawk Box programme on the morning. Watch extracts from Andrew's interview.
Transcript:
Rebecca Meehan: Today's Stock in 60 is Aviva. Pay very close attention to this because we will have the CEO of the business on a little bit later. You'll be tested on all of these numbers. Looking at the stock analysis to start with and the shares of Aviva yesterday getting a big bump up when we saw stocks around Europe getting a boost.
But some of the more specific figures relating to this company, the market cap almost at £8.5 billion, the dividend deals of nearly 8.5 %, price earnings ratio 6.349 to be specific.
Now let's take a check on what the analysts believe is the case for this stock. The vast majority of analysts that have recommendations out on the shares are in favour of it. Of the 31 analysts who rate the company, 20 of them have a buy or a strong buy, 11 have a hold, no sell ratings on this stock. The shares though have been suffering recently underperforming the FTSE 100 and the stocks and insurance sector.
Andrew Moss: I think it's been a fantastic you know three years when really you've been getting the company through the financial crisis. You're a bit volatile again at the moment, but during that point, you know, during that process company's much leaner, much more efficient, the profits are rising, costs are down from £6 billion to £4 billion.
You know we get through this next leg of crisis, which I'm very confident about, and I think you're going to see the brand working brilliantly in the UK and Trevor is going to make a fantastic difference to that as well. I'm really looking forward to him coming on board.
Geoff Cutmore: Let's go back to Andrew Moss then. Andrew's with us from Aviva. Andrew I was just having a look back at some of the newspaper headlines, you know, knowing that you were coming up and what this one in the Telegraph sort of stuck out for me, 2011 the year Aviva must deliver. Of course you announced a whole slew of targets at the close of last year, not least this reduction of hybrid debt. How's that all going? How are you doing on these targets?
Andrew Moss: Well we're hitting them all frankly, Geoff. I think you know even in what are clearly very difficult markets in the last three months, we're able to announce profits up at 5% in the first half. 21% up in Europe, which is quite interesting given what's going on in the eurozone.
So it just shows I think the strength of the business, the underlying business and you know the eurozone I think is obviously right in the spotlight at the moment but you can't get away from the fact that, ok it's 7% of the world's population but still 35% of world GDP.
So it's incredibly important to the world economy. People have money, they save money and they certainly need to save more because I don't think any of us thinks that governments are going to be able to fund people in retirement the way they have over the last few decades. That's pretty evident in today's world.
And so, you know, we have eight markets in Europe where we have large businesses, that's working very well for us at the moment. That isn't to say that, you know, clearly as we earlier talked about, the asset side of the balance sheet's under a bit of focus at the moment.
But you know we think we've managed down our exposures there and we're in good shape. So we're hitting our targets, we are I think realistic about the external environment at the moment but quietly confident frankly.
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.
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2010 Annual Report3814AINLEY_John_ara_2010224,480,8162010 Annual Report – John Ainley, Aviva plc
John Ainley, Aviva’s group human resources director, explains how Aviva provides prosperity and peace of mind through corporate responsibility initiatives.
Transcript:
Hello, I’m John Ainley, the group HR director. Our purpose in Aviva is to provide prosperity and peace of mind by acting responsibly in the long term.
Our people and CR strategies are integral to this, and key to our overall business success. Over the past three years, we’ve built a strong global human resources function to lead our cultural transformation, the aim, to drive leadership and business performance through the energy and dedication of all our people.
Over the last two years, we’ve introduced new management and leadership programmes to nurture talent and create dialogue with leaders and their teams. As a leader in the insurance industry, we’ve an important role to play in partnership with others to address some of the key challenges that impact our customers, such as climate change, enhancing community development, and promoting financial capability.
On climate change, our established and proven strategy focuses on controlling our own impact and resources including gas, water, electricity and waste, and by pursuing long term policy change working with organisations such as Climate Wise and the CBI Climate Change Board, as well as governments and bodies such as the UN.
This year, we’ve participated in the Cancun Communiqué, and the 2010 Global Investor Statement on Climate Change. We’ve also launched new products, for example, in some markets our customers can opt for lower insurance premiums if they drive vehicles with low COâ emissions.
We are committed to playing our part in the development of our communities, not just through warm words, but by supporting and delivering real practical change. Our flagship global community development programme, Street to School, is a five year commitment to help 500,000 street children fulfil their potential. It’s a fantastic example of our approach in action. Street to School partnerships and programmes are up and running already in 17 of our markets. Let me tell you about just two examples of our work.
In the UK, 7,000 children have been positively impacted, and 2.4 million customers have been reached by our Street to School messages, and the full media reach is estimated at 14 million people. 650 MPs have been contacted, and over £500,000 raised for our UK partner Railway Children.
In China, our Twinkling Stars project works with the issues of children left behind due to economic migration. This year, we’ve built 10 care houses, worked in 20 poor rural elementary schools, and reached 30,000 children. In addition to significant publicity, this has helped us win the award for China’s best corporate citizen. Our work on financial literacy and the research we’ve undertaken on tackling issues, such as the lack of long term saving for retirement, is a key element in helping educate opinion formers, policy makers, and the public about the long term issues that affect us all. But we’re also playing a more active part.
Our affordable micro finance and insurance products for low income earners is a good example of action. We’re helping millions of rural lives in India, and in many cases, offering financial protection for as little as $2 a year. It’s a record we could all be proud of, and it’s increasingly recognised through our inclusion in some of the world’s leading external benchmarks including the Dow Jones sustainability indexes.
These are just some examples of the great work your company’s delivering, and it’s making a real difference. Thank you.
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2010 Annual Report3815DROMER_Alain_ara_2010224,480,8162010 Annual Report - Alain Dromer, Aviva Investors
Alain Dromer, chief executive for Aviva Investors, talks about the highlights of 2010.
Transcript:
I’m Alain Dromer, the CEO of Aviva Investors. I’m delighted to talk about the highlights of 2010. As an asset management firm, I would start with investment performance.
In 2009, already we had a strong year, but 2010, again we had more than 73% of our funds above bench mark over one and three years on average, and against the peer groups, the relevant peer groups who also had strong, very strong deliveries. We, as independent reviews show, have satisfied our clients with the service we provide them, including Aviva.
Most importantly, as we want to develop to third party sales, in 2009, we had a few hundred million outflows. In 2010, we had more than £2.3 billion of net new flows from external clients, and the margin that we achieved on these net flows are significantly higher than the average we have so that we increase the profitability of our business over time.
Over all, we’ve reached assets under management of £260 billion from £250 billion last year and the most important thing is that assets for third party reached £51 billion, up 13% year on year, so over all, a very satisfactory result.
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2010 Annual Report3816HODGES_Mark_ara_2010224,480,8162010 Annual Report - Mark Hodges, Aviva UK
Mark Hodges, chief executive for Aviva UK, talks about our performance in 2010 and looks ahead to our plans for 2011.
Transcript:
Hello, I’m Mark Hodges. I’m the CEO of Aviva’s business in the UK.
In 2010, there have been lots of highlights for us as a business, but to pick out a few that come to mind, I think being voted the top business in both the life, general and health sectors by our distribution partners is a first for us, and a real highlight in 2010, bringing our businesses closer together under one management team, and really starting to look at the opportunities that gives us to do a better job for our customers, and create more shareholder value, has been a real high during the year.
The Aviva brand continues to go from strength to strength. Our brand awareness is at the highest point since we launched the Aviva brand during 2010. Again, that’s a real personal highlight. A lot of effort went into the brand change and really has gone in subsequently to making the brand live internally and externally.
And, I think, you know, whilst the weather in January and December 2010 wasn’t a highlight, the way we’ve responded to our customers needs, the way that we’ve been able to help our customers, both in terms of warning them sometimes before the bad weather hits, but actually dealing with the claims as quickly and efficiently as possible, is a highlight. At the end of the day, that’s what we’re there to do, we’re there to bring prosperity and peace of mind, and help our customers when it really counts.
Looking forward to 2011, I’m really excited about the prospects for the business, building on the hard work in 2010. There’s lots of new product innovation in the pipeline. Lots of things we think will excite our customers. We have new brand campaigns in 2011 to really promote the Aviva brand. We continue to try and simplify our product literature.
We want our customers to really find us as accessible as possible as a company. We want to be the company of choice, the most recommended here in the UK, and I think 2011 is all about continuing that journey, really taking advantage of the unique position we have. We serve 19 million customers here in the UK.
We’re the only large insurer that covers all of the various product types. That gives us a unique insight into what’s going on in the UK market and an ability to respond on behalf of our customers, and at the same time of course, deliver value to our shareholders. And, I’m just really excited about our ability to continue doing that in 2011.
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2010 Annual Report3817HOSKINS_Richard_ara_2010224,480,8162010 Annual Report - Richard Hoskins, Aviva North America
Richard Hoskins, chief executive for Aviva in North America, talks about our performance in 2010 and looks ahead to our plans for 2011.
Transcript:
Hello, I’m Richard Hoskins. I’ve just taken over recently as chief executive of the North American region.
We really have had a tremendous year in North America this year with excellent results across the business, and we enter 2011 with some great momentum behind us. If I look at IFRS operating profit for example, we are up 77% over the 2010 period to £376 million, and that was with a strong contribution delivered from both businesses.
So, in the life and annuity business, the actions we’ve taken around managing our spread on the annuity business has made a huge difference there, and on the general insurance business, our continued focus on excellency and underwriting has really come through in the results as well. And then of course across the region, we’ve been focused on maintaining cost discipline and running our businesses in the most efficient way.
In our US business, our strategy is about being a significant and diversified insurer in the US market, and we continued our focus on our life growth in 2010 with our life sales increasing by 15%. We are actually the biggest writer of protection business at just under a £1 billion across the Aviva Group in 2010.
In our Canadian business, we continue our focus on being a dominant and leading insurer in the general insurance market in Canada. We made some tough decisions in 2010 about exiting some of our less profitable business and making sure that we had the right cost structure to take us forward, and you see those coming through in an improved COR at 97%.
We also continue to focus on our distribution relationships, broadening those relationships and improving the customer service that we deliver across our businesses, and we’ve seen that benefit reflected in our net promoter scores in 2010, specifically in the US business where there was a tremendous increase in that score.
We’ve got strong leadership teams both at the region and in the two businesses and some fantastic talent right across the region. So all in all, I’m feeling very excited about 2011, and I really feel that we’ll have another year of strong delivery.
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2010 Annual Report3818MACHELL_Simon_ara_2010224,480,8162010 Annual Report - Simon Machell, Aviva Asia Pacific
Simon Machell, chief executive for Aviva Asia, talks about our performance in 2010 and looks ahead to our plans for 2011.
Transcript:
Hello, I’m Simon Machell. I’m the chief executive of Asia Pacific for Aviva.
2010 was a very good year for us. We grew our sales by just around 50%, which was a great performance. We also increased our profitability from around a 1% margin in 2009 through to just over 3% in 2010, which was also very encouraging. Our internal rate of return was also around 11%, again a big improvement.
Some of the other highlights for 2010 were really just in terms of how we continued to develop the franchise value of our business. Some particular things of note were we introduced our online motor proposition in Singapore. We got to around 2.2% market share after about nine months of operation, which for us was a fantastic achievement. During the year, we also entered Indonesia, our ninth market across Asia, a fantastic market with over 214 million people living there. We started our business there, and I have great hopes for that for the future.
And the final thing was around Aviva Advisers, our direct selling proposition to the public of life and pension sales done in a very different way to the competition, and again, I’m very hopeful of that for the future.
I’m very excited about the prospects in Asia for 2011. I think, if you look at all the markets in which we’re operating, you’ve still got demographics that are working in our favour. You’ve still got big levels of economic growth, which again, people buying more of the sort of products that we’re selling. So, from a franchise value growth point of view, it’s a fantastic opportunity for us. If you look at working with our partners and the strength of our brand, it gives me huge hope for the prospects that we have in Asia in 2011.114 -
2010 Annual Report3819MACKENZIE_Amanda_ara_2010224,480,8162010 Annual Report - Amanda Mackenzie, Aviva plc
Amanda Mackenzie, Aviva’s chief marketing and communications officer, talks about our brand promise, "no one recognises you like Aviva", and how we bought this to life in 2010.
Transcript:
Hello, I am Amanda Mackenzie, and I am the chief marketing officer here at Aviva. 2010 has been a really good year for us.
A lot of what my team’s spend time looking at is customers, customers around the world, and actually being recommended by our customers more than any other insurance company. That’s what we’re aiming to achieve. So, we’ve put a lot of effort into looking at our customer experience, mapping that across all the countries in the world, to looking at net promoter score, which is our global consistent measure of customer satisfaction, and I’m pleased to say that we’re now in the top quartile for over half of our countries.
Now, I would love that to be better and clearly we’re working extremely hard to make sure that that’s the case, but that is real progress again on a very, very tough measure of customer satisfaction. It’s something very important to us that we really look at how loyal our customers are and we measure success by how long our customers stay with us and how much they do or buy from us and clearly you wouldn’t normally buy or do more with a company if you weren’t willing to recommend them.
2010 also saw our first global brand campaign, which I’m very pleased to say has been our most successful campaign to date. In particular, it’s driven brand consideration across five countries where we ran the campaign. It was particularly interesting, because it really did involve multi-media, and had people downloading photos, we raised about £170,000 for our global charity Street to School, which we’ve set ourselves a global target to get 500,000 children off the streets and into some form of education, so it really began to help, or the money raised will obviously begin to help really achieve that.
And, I think in terms of our brand metrix and how customers see us, and what they see being important for us, really came to life. A particular pillar of that campaign was the customer stories because our brand promises "no one recognises you like Aviva", we really showed examples of where customers have really felt that to be the case, and we have an awful lot of those case histories now, which you can see on line, which make me very proud to be part of Aviva, but also very humbled on behalf of what we can do for customers. Long may it continue.
So, in terms of going forward, really, it is absolutely about understanding what our customers need, how we might deliver against that, but importantly, making sure that what we do for them can really create a sense of recommendation for them, and that they really will feel that no one recognises you like Aviva. Thanks very much.119 -
2010 Annual Report3820MAYER_Igal_ara_2010224,480,8162010 Annual Report - Igal Mayer, Aviva Europe
Igal Mayer, chief executive for Aviva Europe, talks about our performance in 2010 and looks ahead to our plans for 2011.
Transcript:
Hello, my name is Igal Mayer, chief executive for Aviva Europe.
In 2010, the focus was on bringing together our European markets to form one business, operating for the first time under a single Aviva brand across the region to drive more efficiency and take advantage of our scale and market leading positions. We also saw some significant achievements around ensuring we keep our costs down and continue to develop a more simplified range of products for our customers.
Good progress was also made on how we sell to our customers through successful projects to boost retention and cross selling rates, and we grew our already significant bancassurance business in Europe. As a leader in this field, with 55 partnership agreements, we already have access to millions of customers, and our broad offering of life and general insurance products makes us a very attractive partner in this area.
So, as I look ahead to 2011, as a new CEO in Europe, I see massive benefits of working closer together as a region whilst maintaining our detailed knowledge of our customers in each of our local markets. That’s a powerful combination to drive profitable growth going forward.
I’m really excited by the scale of the business opportunity that exists across Europe. Life and pension assets are forecast to grow by $1.7 trillion by 2014, and Aviva Europe is in a great position to capitalise on that growth.
We’ll focus on those key markets in Europe where we have strength and scale, and in 2011, this is about delivering on our full potential stepping up to the work we’ve already done to transform the business in Europe and bringing us closer together as a region. We’ve got so many great people working for Aviva across Europe, and I’m looking forward to working with them at this exciting time.37 -
2010 Annual Report3821REGAN_Pat_ara_2010224,480,8162010 Annual Report - Pat Regan, Aviva plc
Pat Regan, Aviva’s chief financial officer, talks through Aviva’s strong financial performance, top line numbers and increased value in 2010.
Transcript:
Hello, I’m Pat Regan, the chief financial officer of Aviva.
Over the next few minutes, I’m going to take you through Aviva’s top line numbers, which will demonstrate our strong financial performance and increased value in 2010. I also want to talk briefly about the strength of our balance sheet, and our cash and capital generation.
I’m delighted to report that our IFRS operating profit is up 26% to £2.55 billion. This is a significant achievement and is due to the hard work over recent years to transform our business. We significantly improved our ability to reinvest in areas where we could achieve optimal returns by increasing our net operating capital generation by 70% to £1.7 billion. It also means we can pay a healthy and growing dividend.
We’ve delivered profitable growth in both life and general insurance. Our life new business IRR improved to 12.5% with a payback of eight years. Our long-term saving sales are up 4% at £37 billion. Our general insurance group combined operating ratio have 96.8%; it’s significantly better than our 99% in 2009. Net written premiums are up 6% to £9.7 billion, again a significant achievement validating all the hard work we’ve put in over the past few years to re-check the business and focus on profitability.
We took time in late 2010 and January 2011, to highlight to analysts and shareholders, the strength of our cash and capital generation. Indeed, we generate substantially more capital than any other insurer in the UK. Given the strength of our business across life and general insurance with over 30 million customers on long term contracts, a key characteristic of Aviva is the resilience of our cash flows and the strength of our capital position.
It is the strength of our capital generation and our balance sheet that supports a healthy and growing dividend. For 2010, we intend to pay a dividend of 25.5 pence, an increase of 6% over 2009. At this level, the dividend is well covered at 2.1 times up from 1.8 times in 2009.
During the year IFRS net asset value per share increased to £4.54 from £3.74 at the end of 2009. Largely, through the strength of our earnings, and by reducing our pension scheme deficit to zero, but also partly through improving financial markets.
The strength of Aviva’s balance sheet rests on our effective management of credit and insurance risk and disciplined asset management. We have high quality, well managed and diverse fixed income portfolios and our Asset Manager Aviva Investors has helped to deliver consistently strong performance across a number of years on those classes. In line with the prudent management of our balance sheet in the current economic environment, and our strong capital generation, we plan to reduce Aviva’s hybrid debt by at least £700 million over the next three years.
In January 2011, we also provided the market with further embedded value disclosure. This gave additional clarity to the value of Aviva’s future cash flows and allows greater comparability with other UK insurers.
Our 2010 results, as I’ve already said, are down to the hard work of our people to transform Aviva. Our business is in great shape. We’ve delivered strong performance in the UK and Europe. We have a well managed balance sheet and plans to reduce hybrid debt. We’ve increased our customer numbers, and reduced our cost base by 3%, a great platform to build on our success in 2011 and beyond.119 -
2010 Annual Report3822SPENCER_Robin_ara_2010224,480,8162010 Annual Report - Robin Spencer, Aviva plc
Robin Spencer, Aviva’s chief risk officer, talks about the group’s risk management philosophy, the way we’re organised to manage and govern the risks that we take, and gives some insight into our risk appetite.
Transcript:
Hello, I’m Robin Spencer, chief risk officer for Aviva.
I’m going to take this opportunity to describe to you Aviva’s risk management philosophy, the way we’re organised to manage and govern the risks that we take, and finally give you some insight to our risk appetite, that is the boundaries we’ve set to guide decisions.
So, firstly our risk management philosophy. Here at Aviva, we’re committed to putting risk at the centre of everything that we do. Risk management is not a business function, but a management philosophy. Managing risk is central to Aviva’s strategy and enables us to meet our obligations to our customers and to our shareholders.
The type of risk we manage differs from one role to another. For instance, a call centre staff member may be managing the risk of charging the right price, or making sure payment details are correctly logged, whereas a sales manager will be managing different sorts of risks such as commission or credit terms. In a nutshell, we all make business decisions, which have risk inherent within them. These all impact our shareholder value, so in one way or another, we’re all risk managers.
Good risk management ensures that risks are identified, measured, monitored, managed and reported on a continuous basis to address methodically all the risk surrounding our organisation’s activities, past, present and future. It’s vital that these processes are continually reviewed and improved as our business evolves.
So, how are we organised to manage and govern these risks, at Aviva, we operate a three lines of defence model.
The first line of defence are those staff members with day to day responsibility for running the business and the risks inherent within it.
The second line of defence is the risk function. The reason it’s called the second line of defence is that it sits outside of the day to day management of the business. The risk function is responsible for setting the overall risk framework and working with the business to ensure our government’s practices, decision making authorities, risk appetite thresholds and business processes are all fit for purpose. The risk function also includes compliance and financial crime functions.
My job, as the group chief risk officer, and as a permanent member of the Group Exec Committee, is to lead the global risk function and to have oversight of all the material risks we have as a company.
The third line of defence is our internal audit function. It is accountable for providing reliable independent assurance to the board executive management and various committees on the adequacy and effectiveness of the risk management and control frameworks operated by both the first and second lines of defence, which include governance.
This is all overseen by the Aviva board and the board risk committee. It’s the responsibility of the risk committee to provide leadership, direction and oversight of the group’s management of risk including market risk, credit risk, insurance risks and operational risks. In particular, in 2010, the risk committee has focused on strengthening risk management, preparing for Solvency II and monitoring against our risk appetites and limits which I’ll talk to you about in a moment.So we have a strong risk management philosophy and a very robust corporate structure in place to manage our risks, but how do we ensure that our businesses know which risks to take. Again this direction is set by the board and directly relates to our purpose providing prosperity and peace of mind for our customers.
The board is given clarity on Aviva’s risk preferences and places limits on our overall risk exposure. These are set out in the form of risk appetite statements, relating to the level of economic capital and liquidity we need to hold to withstand adverse scenarios and also sets out a clear direction on maintaining our franchise value, protecting the sustainability of Aviva and our relationships with customers.
I believe great risk management at Aviva means that we are able to select, price and manage existing and emerging risks in a mindful and proactive way balancing the long term interest of our customers and our shareholders. Thank you.101 -
20 January 20113646PAT REGAN2_YouTube setting160,224,480,816,102420 January 2011: Pat Regan, chief financial officer - Capital, Cash and Profits II: The balance sheet
Aviva's chief financial officer talks about his analyst presentation on the quality of Aviva's balance sheet.
Transcript:
Well, the presentation today is a continuation of some of the things we talked about last year, so we talked about focus on capital generation was important, we talked about our focused strategy – and today will be how we complement both of those by the quality of the balance sheet and how we manage the balance sheet.
I think some of the themes we’re trying to bring out of that are particularly how we manage things like asset liability risk, interest rate risk, that’s very topical at the moment, we believe we’ve got actually, compared to our peer group, minimal exposure to things like that; the quality of our credit book, and our track record on that we think stands us in very good stead, and stands better than our peer group again; so we’ll be emphasising those, we’ll be emphasizing that we’ve actually re-shaped our balance sheet over the last couple of years, particularly with the eyes to downside risk.
We’ll also be talking about the strength of our cashflows, and how that allows us to thoughtfully slightly reduce our debt over the next two to three years. So we’re aiming to reduce our debt by about £700 million over the next three years, we have the capital generation and cash to do that, so we’re pleased to be able to talk about that as well.
Another of the risk management actions that we’ve taken is around our pension scheme, we’ve talked previously about the number of actions we’ve taken around the pension scheme, the long-term funding agreement, closing the scheme; and we’re going to announce today the result of that, and other changes within the scheme amount to a reduction of the pension scheme deficit from year end 2009.
We’re going to talk about the strength of our economic capital position, a capital surplus of some £5 billion, at the end of 2009, which is calibrated in the range of a double-A rating, so that’s a new piece of information – and then I think kind of relevant in all of the context of that is, if you understand our capital structures, you understand particularly the strength of our credit track record, then our embedded value, our EEV, including credit earnings, becomes, I think, particularly relevant.
We’ve got quite a diversified credit portfolio, so we have corporate bonds, obviously, in all of our major businesses, UK, US, Delta Lloyd, France, government bonds, we have mortgage portfolios, very unique mortgage portfolios in the UK and Holland.
On all of those portfolios our track record is better than the peer group, similarly for each of those relevant peer groups, so I’ll give you a bit of colour on that: in the UK, for example, our corporate bond portfolio has been running at a default or impairment record of about 10 basis points, which is very low compared to the market, or against our pricing assumptions; a similar story in the US, where we’ve been running almost half the default record of the rest of the insurance market on their credit portfolios; our mortgage portfolios have been extremely strongly performing – in Delta Lloyd, running at loss records and loss ratios of one or two basis points, and very low arrears records on our UK portfolio, as well.
And our exposure to things like the sovereign debt is, compared to the other big European insurers, a very low and manageable proportion of our capital, compared to those other big European insurers.
On insurance risk, it’s interesting to look at our general insurance, but it’s; largely speaking, our – the length of reserves is much shorter, so they become a lot more predictable, long-dated things are much less predictable, so we’re going to show a little bit of analysis that shows we’re shorter dated, more predictable as a general insurance reserves; and on the life side, we’ll show our track record of assumption changes, which is, again, very consistent over the last five-year period.
We’re going to show some analysis today on our debt levels versus capital levels, and how that compares to the market; also some analysis of our debt levels versus our profit levels, and how that compares to the market, and in both instances, what that shows is that we’re broadly in line with the market media – generally not above, not below, just broadly in line.
I think, however, as you are thoughtful about being prudent in today’s economic environments, and notwithstanding we think our capital structure’s reasonably well-suited for Solvency II, just being thoughtful about Solvency II world coming on to us, and factoring in our cashflow and capital generation ability, we think a sensible reduction of by about £700 million over the next three years, of tier two debts, compared to tier one debt, makes sense for us in the context of today’s world, and with the advent of Solvency II.
Cautionary statements:
This should be read in conjunction with the documents filed by Aviva plc (the “Company” or “Aviva”) with the United States Securities and Exchange Commission (“SEC”).
This announcement contains, and we may make verbal statements containing, “forward-looking statements” with respect to certain of Aviva’s plans and current goals and expectations relating to future financial condition, performance, results, strategic initiatives and objectives. Statements containing the words “believes"," intends”, “expects”, “plans”, “will,” “seeks”, “aims”, “may”, “could”, “outlook”, “estimates” and “anticipates”, and words of similar meaning, are forward-looking.
By their nature, all forward-looking statements involve risk and uncertainty.
Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements.
Aviva believes factors that could cause actual results to differ materially from those indicated in forward-looking statements in the presentation include, but are not limited to: the impact of difficult conditions in the global capital markets and the economy generally; the impact of new government initiatives related to the financial crisis; defaults and impairments in our bond, mortgage and structured credit portfolios; changes in general economic conditions, including foreign currency exchange rates, interest rates and other factors that could affect our profitability; the impact of volatility in the equity, capital and credit markets on our profitability and ability to access capital and credit; risks associated with arrangements with third parties, including joint ventures; inability of reinsurers to meet obligations or unavailability of reinsurance coverage; a decline in our ratings with Standard & Poor’s, Moody’s, Fitch and AM Best; increased competition in the UK and in other countries where we have significant operations; changes to our brands and reputation; changes in assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, lapse rates and policy renewal rates), longevity and endowments; a cyclical downturn of the insurance industry; changes in local political, regulatory and economic conditions, business risks and challenges which may impact demand for our products, our investment portfolio and credit quality of counterparties; the impact of actual experience differing from estimates on amortisation of deferred acquisition costs and acquired value of in-force business; the impact of recognising an impairment of our goodwill or intangibles with indefinite lives; changes in valuation methodologies, estimates and assumptions used in the valuation of investment securities; the effect of various legal proceedings and regulatory investigations; the impact of operational risks; the loss of key personnel; the impact of catastrophic events on our results; changes in government regulations or tax laws in jurisdictions where we conduct business; funding risks associated with our pension schemes; the effect of undisclosed liabilities, integration issues and other risks associated with our acquisitions; and the timing impact and other uncertainties relating to acquisitions and disposals and relating to other future acquisitions, combinations or disposals within relevant industries.
For a more detailed description of these risks, uncertainties and other factors, please see Item 3, “Risk Factors”, and Item 5, “Operating and Financial Review and Prospects” in Aviva’s Annual Report Form 20-F as filed with the SEC on 30 March 2010.
Aviva undertakes no obligation to update the forward looking statements in this announcement or any other forward-looking statements we may make. Forward-looking statements in this presentation are current only as of the date on which such statements are made.297 -
20 January 20113647PAUL ABBERLY_YouTube setting160,224,480,816,102420 January 2011: Paul Abberley, chief executive, Aviva Investors London - Economic capital management
Chief executive of Aviva Investors London talks about his analyst presentation on fixed income management.
Transcript:
Well, Pat has shown you the scope and scale of our credit exposure across the group, and also the strong track record we have in managing that credit risk. I’m going to explain the role that Aviva Investors plays in the management of that credit risk, and it’s a very close working relationship with the rest of the Aviva Group. Aviva Investors itself has a very strong track record in managing credit, and we have independently-audited track records that we can use to demonstrate that. So, where does that strength come from?
Well, there are a number of factors I draw attention to – the first is the scale of our operations, we manage over £150 billion sterling in fixed income, and over 80 billion of that is in the area of credit. Why does that scale matter?
It gives us a seat at the table. We know what’s going on in credit markets, and when we want to say something, our voice is listened to.
In addition, that scale also means that we’re looking at the markets from many different dimensions, it’s not just a case of running, long-only portfolios – we’re managing annuity-type books, LDI, DC pension and so forth – and because we’re looking through many different lenses, we see all the perspectives that are driving credit market trends, and that gives us a much better understanding of the dynamics of credit markets, and hence our ability to excel in managing that type of credit risk.
The second factor is the critical mass that we have in terms of resources. We’re showing that we have 66 investment professionals focused exclusively on credit risk.
Now not only does that human capital base give us the critical mass we need to do proprietary research, rather than having to rely on third-party suppliers of research, it also enables us to diversify the type of human capital we have; so not only do we have the traditional long-only credit managers, we have people that have worked on the sell side; we also have people that have worked in proprietary trading and, indeed, have run hedge funds.
So again we’re bringing many different perspectives, a much broader view of credit markets than one would achieve if one had a much more narrow remit. The third important factor in our success, particularly in recent years, is the fact that we’ve adapted our investment processes to take advantage of the changes in market dynamics post the credit crunch.
Two examples might suffice here – first, liquidity: prior to 2007, liquidity was a free good, you could pretty much do what you wanted in credit, with almost no transaction cost. That’s dramatically different now. We’ve adapted our investment processes to make sure that when we have good insight, we’re also able to move positions around at will.
Second example of where the processes need to be adapted is taking into account the impact of other asset classes. It’s clear now that global markets are much more interactive and move much more closely than they would have done in the past. We have a major advantage at Aviva Investors in that regard, in the sense that we’re active in many other asset classes, all of the major equity markets, plus tactical asset allocation and so forth.
Now what that means is, again from the outside in, we’re looking at credit from many different dimensions, we understand the dynamics and the impact on credit markets from what is going on in the world elsewhere in capital markets, and that’s a major advantage relative to us being, say, a very narrow credit-only shop, or indeed a pure fixed-income house. Rather than going into more detail, though, with regard to that investment process, I will be summarising a case study which demonstrates how all this comes together, and how we work with Aviva as a group.
Just over a year ago we were contemplating how to deploy the proceeds from the Delta Lloyd transaction; taking into account our risk appetite and economic capital considerations, we decided to deploy £850 million into a corporate bond portfolio, requiring considerable liquidity, we needed to be able to move out of those positions if circumstances changed. We were able to put together that portfolio, and in 2010 it was a great success.
We suffered no defaults, no ratings downgrades; whereas the sum would have thrown off a risk-free rate of about £4 million over that period, it actually returned over £34 million. And that case study shows that we are very much able to deploy the skills and resources we have in Aviva Investors across credit management group-wide, and a critical enabler here is the one Aviva approach, because it provides us with a platform where all the components of the group can work very closely. And that partnership has been demonstrably successful in the area of credit management.
Cautionary statements:
This should be read in conjunction with the documents filed by Aviva plc (the “Company” or “Aviva”) with the United States Securities and Exchange Commission (“SEC”).
This announcement contains, and we may make verbal statements containing, “forward-looking statements” with respect to certain of Aviva’s plans and current goals and expectations relating to future financial condition, performance, results, strategic initiatives and objectives. Statements containing the words “believes"," intends”, “expects”, “plans”, “will,” “seeks”, “aims”, “may”, “could”, “outlook”, “estimates” and “anticipates”, and words of similar meaning, are forward-looking.
By their nature, all forward-looking statements involve risk and uncertainty.
Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements.
Aviva believes factors that could cause actual results to differ materially from those indicated in forward-looking statements in the presentation include, but are not limited to: the impact of difficult conditions in the global capital markets and the economy generally; the impact of new government initiatives related to the financial crisis; defaults and impairments in our bond, mortgage and structured credit portfolios; changes in general economic conditions, including foreign currency exchange rates, interest rates and other factors that could affect our profitability; the impact of volatility in the equity, capital and credit markets on our profitability and ability to access capital and credit; risks associated with arrangements with third parties, including joint ventures; inability of reinsurers to meet obligations or unavailability of reinsurance coverage; a decline in our ratings with Standard & Poor’s, Moody’s, Fitch and AM Best; increased competition in the UK and in other countries where we have significant operations; changes to our brands and reputation; changes in assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, lapse rates and policy renewal rates), longevity and endowments; a cyclical downturn of the insurance industry; changes in local political, regulatory and economic conditions, business risks and challenges which may impact demand for our products, our investment portfolio and credit quality of counterparties; the impact of actual experience differing from estimates on amortisation of deferred acquisition costs and acquired value of in-force business; the impact of recognising an impairment of our goodwill or intangibles with indefinite lives; changes in valuation methodologies, estimates and
assumptions used in the valuation of investment securities; the effect of various legal proceedings and regulatory investigations; the impact of operational risks; the loss of key personnel; the impact of catastrophic events on our results; changes in government regulations or tax laws in jurisdictions where we conduct business; funding risks associated with our pension schemes; the effect of undisclosed liabilities, integration issues and other risks associated with our acquisitions; and the timing impact and other uncertainties relating to acquisitions and disposals and relating to other future acquisitions, combinations or disposals within relevant industries.
For a more detailed description of these risks, uncertainties and other factors, please see Item 3, “Risk Factors”, and Item 5, “Operating and Financial Review and Prospects” in Aviva’s Annual Report Form 20-F as filed with the SEC on 30 March 2010.
Aviva undertakes no obligation to update the forward looking statements in this announcement or any other forward-looking statements we may make. Forward-looking statements in this presentation are current only as of the date on which such statements are made.319 -
20 January 20113650DAVID ROGERS_YouTube setting160,224,480,816,102420 January 2011: David Rogers, chief accounting officer - Embedded value (EEV)
Aviva's chief accounting officer talks about his analyst presentation on Enhanced Disclosure EEV.
Transcript:
We currently report on an MCEV basis. That captures the value of our business if we hedge out all the financial risk. But what it means is that we don’t include the expected benefit from the credit-spread earnings that we’re going to get over the lifetimes of the policies. The European embedded value numbers we’re announcing today include those, and that gives a much better comparison with our competitors, and also lets people see the full value of the Aviva business.
When we report under MCEV, it really only recognises the profits that we’ll expect if all the financial risks of the business are hedged out. Now we expect a lot more to emerge over the lifetime of the contracts, and this is particularly for our annuity business in the UK, in Delta Lloyd and in the United States. So EEV recognises those future profits, and captures those so we can see the full value in the balance sheet of the business.
Now we’re very confident about the emergence of those, and that’s really going to be driven by two things: first, our ability to select good credit risk, and then because our assets and liabilities are well matched. And that’s really what we’ve talked about in the course of our presentation today.
Cautionary statements:
This should be read in conjunction with the documents filed by Aviva plc (the “Company” or “Aviva”) with the United States Securities and Exchange Commission (“SEC”).This announcement contains, and we may make verbal statements containing, “forward-looking statements” with respect to certain of Aviva’s plans and current goals and expectations relating to future financial condition, performance, results, strategic initiatives and objectives.
Statements containing the words “believes"," intends”, “expects”, “plans”, “will,” “seeks”, “aims”, “may”, “could”, “outlook”, “estimates” and “anticipates”, and words of similar meaning, are forward-looking.
By their nature, all forward-looking statements involve risk and uncertainty.
Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements.
Aviva believes factors that could cause actual results to differ materially from those indicated in forward-looking statements in the presentation include, but are not limited to: the impact of difficult conditions in the global capital markets and the economy generally; the impact of new government initiatives related to the financial crisis; defaults and impairments in our bond, mortgage and structured credit portfolios; changes in general economic conditions, including foreign currency exchange rates, interest rates and other factors that could affect our profitability; the impact of volatility in the equity, capital and credit markets on our profitability and ability to access capital and credit; risks associated with arrangements with third parties, including joint ventures; inability of reinsurers to meet obligations or unavailability of reinsurance coverage; a decline in our ratings with Standard & Poor’s, Moody’s, Fitch and A.M. Best; increased competition in the U.K. and in other countries where we have significant operations; changes to our brands and reputation; changes in assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, lapse rates and policy renewal rates), longevity and endowments; a cyclical downturn of the insurance industry; changes in local political, regulatory and economic conditions, business risks and challenges which may impact demand for our products, our investment portfolio and credit quality of counterparties; the impact of actual experience differing from estimates on amortisation of deferred acquisition costs and acquired value of in-force business; the impact of recognising an impairment of our goodwill or intangibles with indefinite lives; changes in valuation methodologies, estimates and assumptions used in the valuation of investment securities; the effect of various legal proceedings and regulatory investigations; the impact of operational risks; the loss of key personnel; the impact of catastrophic events on our results; changes in government regulations or tax laws in jurisdictions where we conduct business; funding risks associated with our pension schemes; the effect of undisclosed liabilities, integration issues and other risks associated with our acquisitions; and the timing impact and other uncertainties relating to acquisitions and disposals and relating to other future acquisitions, combinations or disposals within relevant industries.
For a more detailed description of these risks, uncertainties and other factors, please see Item 3, “Risk Factors”, and Item 5, “Operating and Financial Review and Prospects” in Aviva’s Annual Report Form 20-F as filed with the SEC on 30 March 2010.
Aviva undertakes no obligation to update the forward looking statements in this announcement or any other forward-looking statements we may make. Forward-looking statements in this presentation are current only as of the date on which such statements are made.
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7 July 20103728Aviva_Premiership_Rugby160,224,480,816,10247 July 2010: Mark Hodges and Mark McCafferty talk about Aviva Premiership Rugby
Mark Hodges, chief executive, Aviva UK, and Mark McCafferty, chief executive, Premiership Rugby, talk about the four-year £20 million sponsorship deal announced on 7 July 2010. Which sees Aviva as the new title sponsor of English rugby union's top flight league, and the world leading rugby union competition becoming Aviva Premiership Rugby from September 2010.
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1 March 20123952aviva_tv/thought_leadership/the_economist/aviva_the_economist224,480,816Andrew Moss keynote speech at The Economist's Insurance Summit
On Wednesday 1 March, Andrew Moss, group chief executive, Aviva Group, opened The Economist's Insurance Summit in London. The prestigious event, which was attended by over 100 senior insurance executives, regulators and policy makers, looked at what role the insurance industry should play in society today.
In his key note address Andrew Moss talked about the sustainability of the insurance industry and the need to continue innovating in an ever changing society, ensuring we are in the best position to provide our customers with the products and services they need.Transcript:
Introduction
Andrew Moss: Good morning, everybody, and a big thank you to The Economist for inviting me, last August, I think it was, to come and talk to this group, it looks like a fantastic turnout. I’m not actually going to spend a lot of time talking about things like Solvency II in my speech, because, actually, I’m going to try and focus on some of the other challenges that the industry has, and exactly how we can cope with those.
So, things like, for example, the development of the digital world, and what that means for the industry. So, I’m pretty confident that when we get to the Q&A, things like the Eurozone and Solvency II might be questions that you want to ask me about. So, very happy to talk about those things then.
But, actually, what I’m going to do in my speech is be, actually, resolutely upbeat about the industry. And I hope that will set a tone for the day, because, in my view, I honestly don’t think there’s been a better time to be in insurance, and the reason for that is very simple. Because, I think what we provide for consumers has never been so sought after or so necessary in the society that we now live in.
Some of the macro issues which are facing that society, whether it be energy consumption, climate change, obesity, consumer debt, all of those things have some impact on our industry but, actually, we’re working in an industry that provides peace of mind for human beings, by being experts in managing risk. And that’s really what our industry is all about, and we’ve been doing it for a very long time.
So, Redefining Insurance, which is the title of today’s sort of theme, is actually something that the industry has been doing for something like 400 years, and the industry, of course, has been evolving as society has changed. And, as society redefines itself, so insurance has to follow and become an even greater part of it.
So, a hundred years ago, we didn’t have mobile phone insurance. We could have had pet insurance, but we didn’t, at that time, it’s now quite a popular product here in the UK. But, on the contrary, the first defined benefit pensions were created more than 150 years ago.
So, what I want to do is try and celebrate a little bit of what we are, think a little bit about what we can do better, because, of course, there are things that we don’t always get right; and then celebrate what could be the potential for the long-term of the industry. Because we have, by definition, to be a built-to-last industry. We’re making promises to our customers, sometimes, for 40 or 50 years. So, sustainability is a vital component of everything that we do.The insurance industry’s contribution to society
So, let’s start with what we are, and let’s just be a little UK-centric in that discussion to start with, so, let’s take pride that we here, in the UK, work in Europe’s largest insurance industry and, in fact, the third largest in the world, and we are a major contributor to economic growth and to the economy.
There are some big numbers here, 2½% of GDP, about £10 billion in taxes contributed to the Treasury. Five million small businesses who we take risk away from, so that they can get on running their business. Aviva alone, last year, paid out £33 billion in claims. And by the time I’ve finished speaking here, in about 15 minutes, that’ll be about another million pounds paid out. So, our role in society, intrinsically, is one of responsibility. We invest in infrastructure projects, for health, for education, and for housing, and we employ a lot of people here in this country, about 350,000.
And what do those people do, well, if you go to my call centres and listen to them, actually, what they’re doing is taking calls from people who are in trouble. Recently bereaved relatives, people who have just had a traumatic accident at the roadside, or just been burgled, or just been told that they’re terminally ill.
And, at very raw moments in people’s lives, we have to help them and provide a service and provide them with security that they need at that time. And behind every claim, of course, there’s a more technical side to the industry. There’s a highly trained actuary whose calculations have carefully assessed the risk and determined premiums paid. So, we’re not right at the front line, we’re not nurses, we’re not doctors, but what we do does affect people for the rest of their lives. And I say that leading people in this industry, therefore, is an immense privilege.
And over and above that, of course, we’re a major investor. The UK industry invests around £1.7 trillion across the UK economy. And, of course, we have to work with governments of the day on issues, like now, from flooding to pension reform, and on many other things as things progress.
So, as I said before, society changes, insurance has to change with it. Let’s think about society. I don’t know if any of you in this room have become parents in the last year. Well, if you had a son, he has a one-in-four chance of living to be a hundred. If you’ve a daughter, it’s a one-in-three chance.
At the same time – and it’s not the same one third, it’s not just the female side of the gender, but one third will be obese in their life. And it’s estimated that, on average, they will have 20 different employers by the time they reach retirement.
So, one of the big first order effects of that is that final salary schemes are a thing of the past. And the retirement landscape has undergone a seismic change at a time when state finances are hugely constrained.
There’s no question, therefore, that the partnership between business and government has to be there to deal with one of the most significant challenges facing government and society at large. And on issues like open market options for annuities, we’ve been arguing for some time that there’s a real opportunity to champion the needs of the consumer and bring greater simplicity and transparency and competition to the annuity market here in the UK. And I’m delighted that the ABI are moving in that direction, and we’ll very soon be issuing guidance around those issues.
We were very pleased to see support in the recent European White Paper on Pensions for the concept of annual pension statements for all EU citizens, allowing people to compare projected retirement income against their own expectations and take action in a timely manner as a result. And, of course, it’s not just about pensions, it’s much bigger than that.
Long-term care is one of the things that people worry about more than anything else. And over and above that, the renewal of the country’s infrastructure is another massive financial task that the industry and government need to work together on.
So, all of that, I think is positive, and demonstrates the potential of the industry and what it can do for society. But, also, I have to say, we have to acknowledge that sometimes, in the past, and probably still today, it hasn’t got everything right. So, a little bit of audience participation here, how many of you in this audience have a pension?
Okay. How many of you know, today, what it’s worth? That’s impressive, actually, that’s very impressive. Sometimes when colleagues do that, nobody puts their hand on the second part of the question. But I think there is a real question, do we do enough to help on that? So, you know, pension statements are, I think, generally thought of as virtually incomprehensible.
I was up in York in my Life operation, two or three weeks ago, listening to people who are ringing in three months before their pension matures. And the general status of those people is that they simply do not know what is going to happen, how much their pension is worth, and what their choices are.
And we, for example, in the course of the last year, have changed our policy on that, rather than sending out a letter and a thick pack, which, again, people regard largely as incomprehensible, we ring them up and we talk to them about it. And it’s amazing what that small and simple change can do in terms of helping people to make the right choices.What needs to change?
What about motor insurance? It’s a topical issue at the moment. There was an insurance summit at 10 Downing Street just a few weeks ago, talking about those issues. And there are real issues in that area.
Last summer, my car was sitting quietly in an underground car park, and my neighbour, who regularly parks their car next to me, scratched the side of my car and was kind enough to drop me a note into my flat saying that they’d done that. The process worked very well, their insurance company paid the claim, it was fine. But within just a few days, I was getting texts asking me to claim for my whiplash injury.
It’s a fact, we see it all the time. In Aviva, we often use videotapes of accidents. A recent one that I saw, a car just scraped the side of a bus, absolutely no physical injury to anybody, either in the car or the bus. Four people on the bus made whiplash claims, including the driver.
When you look at the tape, the driver is driving, the impact occurs, there is no perception of movement whatsoever. This is the nature of what is happening in the UK in terms of compensation culture at the moment. So, I think we’ve got to make sure that we don’t lose sight of our business model. We should not be making money from whiplash claims and referral fees, of fraud, or legal expenses. We should be making money from managing risk. And we probably haven’t yet served young people well, managing to find a way to deliver affordable motor insurance for them.
And technology might be on the verge of making this a possibility. And, again, we at Aviva have had a go at this already, we had, back in 2004, 2005, a product which meant we put a black box in the boot of your car, and we were able to monitor speed and time of driving on all of those things and charge on a pay-as-you-go basis.
It did not take off. And it didn’t take off for two reasons. First of all, it was actually uneconomic to put the boxes in the back of the car, and people didn’t like the inconvenience that was necessary in terms of that installation. And, secondly, people didn’t like the sort of Big Brother watching you element of that. But the reality is, this device, even in just five years, has changed the nature of that.
I’ve got an app on here which is something called a cycle meter, and so when you go cycling, it tells you how fast you’ve gone, what altitude you’re at – it’s not very fast in my case, I’ll just hasten to add, except downhill, where the weight starts to tell, I have to say – but the reality is that that sort of technology is going to make that much, much easier, and I think it will become the reality of the way people pay for insurance in the future.
Now, while the industry gets things wrong from time to time, I think the other thing we’ve got to make sure is that regulation does not compound this. Nobody argues that insurance needs to be regulated. If you’re making 30 or 40 year promises to customers and taking their money, actually, it’s hard to think of a definition of an industry that should not be regulated more.
So, it plays a key role in protecting customers, in promoting financial stability, and ensuring that responsible companies operate on a level-playing field. So, it should encourage the sustainability of the industry and fairness for consumers. I think we have to ask ourselves some questions today, particularly in terms of the reaction to the financial crisis, as to whether that was happening. Solvency II is at an enormously delicate stage in its negotiations. So, regulation should be ensuring that we do everything we can to provide peace of mind and not get in the way of it.
And I just want to say that Aviva, because more than half of our business is here in the UK still – we are very, very committed to the UK and to Europe, which remains the heartland of our business. And we believe that it’s actually vital that a British point of view is heard. And, in that, protecting the consumer here in the UK is of paramount importance.Sustainability and future trends
Now, let’s just talk about sustainability for a moment because, as I said, I think our businesses have to be built-to-last, and our customers have to believe that that’s the case, given the length of time that they’re investing with us. We’ve got an interesting example at Aviva. One of my colleagues, a man called John Lister, who’s been the chief actuary in our Life business here in the UK. His father before him was Norwich Union’s Chief Actuary. So, today, John literally lives with the impact and the decisions that his father made.
And it’s not actually a bad way to think about our business in the responsible way in which you should be taking decisions that will withstand all of the tribulations of what might happen in the world in the intervening time. So, sustainability is important but it’s not a new concept to us, it’s actually in the DNA of insurers.
If you ask who has Aviva insured over the years? Isaac Newton, the Titanic, Winston Churchill, John Kennedy, all of those people, or objects, have been insured by Aviva. And running a sustainable business is about how we treat our people, our customers, and our contribution to the communities in which we work. And, of course, the economic growth of the company itself is vitally important. And there’s a tremendous amount of power inherent in the investment choices that we make, because we can influence and create sustainability in other companies if we use that influence correctly.
And that alone, I think, makes an extremely powerful contribution going forward. So, there is a huge amount of potential inherent in the industry. Two years ago, I co-chaired with Alastair Darling, then then Chancellor, an insurance industry working group here in the UK, that was looking at a vision for the insurance industry in 2020.
And one of the key outputs of that, in terms of statistics, was the fact is that, in terms of pension payments, motor insurance payments, accident and health, things like that, about two-thirds of the burden of that falls on government, and about one third falls on the private insurance industry. If you move the dial by just 5%, that is £17 billion which is taken out from the burden of the public purse. That is a vast sum of money, and certainly any government, of course, is interested in that, when the budget deficit and changes in society are so pressing.
And what else is happening in terms of the development of the industry? Well, let’s just think back to insurance products that didn’t exist even 20 years ago, and let’s imagine what might emerge in the next couple of decades. Long-term care. I mentioned it earlier, inextricably linked with pensions, will be radically overhauled, it has to be. People will be saving all of their working lives to fund all of their retired ones.
Oyster Card insurance, it’s definitely on the way. Swipe in, swipe out, you’re charged by the hour or the trip or the event. And given the volume and sophistication of data about people available on their phones, your phone becomes a risk map, which means instant cover can’t be far away.
And insurance for the mobile wallet, again, the phone is fast becoming the hub of all your financial information and a means of payment. And as more and more is done on a digitally smart phone, the notion of how you protect and insure yourself inevitably extends. For business products, for cyber security, to deal with fraud and hacker threats. And community-based insurance, certainly being talked about now, groups of friends buying insurance policies together and pooling risk. Driverless cars.
The technology already exists, it will come, it’s a risk we will have to take on board. And intelligent houses. So, what does all of that mean? Because all of that change is coming and it’s coming fast.
So, it means that while we should be proud of the industry, its ability to endure, and all it means for the UK, it means that we do permanently have to be evolving in a changing society for the customer of the day, never losing sight of the core purpose, to manage risk excellently, to create peace of mind for our customers. And that is a vital pillar of our economic system and of our society itself.
It means also that we have to look honestly at ourselves and improve. And it also means that we need regulation that enables us to do our job for individuals. We should use our investment strength to help government, society, and promote sustainability. And we should innovate probably as never before.
Technology doesn’t change the fundamentals of our industry but fundamentally is changing consumer behaviour around us. I have to say that, as far as I’m concerned, all of that presents an extremely exciting set of challenges. And, in that sense, therefore, I think there has never been a better time to be in insurance.
This feels like a very, very good turnout. I think it’s going to be a good day. And I really do want everybody in the room to feel proud to be part of what is, I think, a very unique and very special industry, thank you.1147 -
1 June 20113733AndrewMoss-HenleyEvent-Chapter-1224,480,816Andrew Moss, group chief executive, recounts his experiences of steering Aviva through the financial crisis at Henley Business School's keynote lecture. Speaking to an audience of Henley Business School Alumni on 1 June 2011, Andrew provides insight into the business challenges faced and the leadership strategy adopted to ensure success. He shared his thoughts on what the future holds and some of the key challenges business leaders face.
Andrew introduces the lecture and summarises the four insights he has gained whilst leading Aviva through the financial crisis165 -
1 June 20113734AndrewMoss-HenleyEvent-Chapter-2224,480,816Andrew Moss, group chief executive, recounts his experiences of steering Aviva through the financial crisis at Henley Business School's keynote lecture. Speaking to an audience of Henley Business School Alumni on 1 June 2011, Andrew provides insight into the business challenges faced and the leadership strategy adopted to ensure success. He shared his thoughts on what the future holds and some of the key challenges business leaders face.
Andrew explains what the financial crisis meant for the insurers and the importance of improving understanding of the industry.311 -
1 June 20113736AndrewMoss-HenleyEvent-Chapter-3224,480,816Andrew Moss, group chief executive, recounts his experiences of steering Aviva through the financial crisis at Henley Business School's keynote lecture. Speaking to an audience of Henley Business School Alumni on 1 June 2011, Andrew provides insight into the business challenges faced and the leadership strategy adopted to ensure success. He shared his thoughts on what the future holds and some of the key challenges business leaders face.
Andrew reflects on how his experience of previous financial crises stood him in good stead to navigate Aviva through the financial crisis.322 -
1 June 20113735AndrewMoss-HenleyEvent-Chapter-4224,480,816Andrew Moss, group chief executive, recounts his experiences of steering Aviva through the financial crisis at Henley Business School's keynote lecture. Speaking to an audience of Henley Business School Alumni on 1 June 2011, Andrew provides insight into the business challenges faced and the leadership strategy adopted to ensure success. He shared his thoughts on what the future holds and some of the key challenges business leaders face.
The importance of listening to customers and the role employees play in Aviva's success.578 -
1 June 20113737AndrewMoss-HenleyEvent-Chapter-5224,480,816Andrew Moss, group chief executive, recounts his experiences of steering Aviva through the financial crisis at Henley Business School's keynote lecture. Speaking to an audience of Henley Business School Alumni on 1 June 2011, Andrew provides insight into the business challenges faced and the leadership strategy adopted to ensure success. He shared his thoughts on what the future holds and some of the key challenges business leaders face.
A stronger company with a clear way forward; Andrew explains his refreshed strategy to focus on markets with greatest potential for profitable growth.235 -
1 June 20113738AndrewMoss-HenleyEvent-Chapter-6224,480,816Andrew Moss, group chief executive, recounts his experiences of steering Aviva through the financial crisis at Henley Business School's keynote lecture. Speaking to an audience of Henley Business School Alumni on 1 June 2011, Andrew provides insight into the business challenges faced and the leadership strategy adopted to ensure success. He shared his thoughts on what the future holds and some of the key challenges business leaders face.
Three challenges; saving for retirement; the changing regulatory environment and the sustainability of business.407 -
1 June 20113739AndrewMoss-HenleyEvent-Chapter-7224,480,816Andrew Moss, group chief executive, recounts his experiences of steering Aviva through the financial crisis at Henley Business School's keynote lecture. Speaking to an audience of Henley Business School Alumni on 1 June 2011, Andrew provides insight into the business challenges faced and the leadership strategy adopted to ensure success. He shared his thoughts on what the future holds and some of the key challenges business leaders face.
Andrew talks about the role of the insurance industry in society and concludes his lecture.290
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6 July 2011: Diane Coyle, economist, Enlightenment Economics
Diane Coyle explains her idea of savings made simple.
To find out more about Future Prosperity Panel visit http://www.aviva.com/fpp
Transcript:
There are two big challenges facing people at the moment.
One is that our lives have become very much more complicated than they used to be, and so, whereas people used to have often a job that would last them for a whole career, they’re much more likely to change now – and so the needs for savings have become much more complicated – and on top of that, the level of savings that we have in the UK, which is a very rich country, is just too low. A third of households don’t have any. Lots of others don’t have enough.
In my essay I talk about the need for the financial services industry to rebuild trust, because there has been a real decline in the trust that people have – and also for the complexity about savings to be decreased generally.
To give one example, the UK is a rich country – in a very poor country, Kenya, there has been innovation that helps people navigate the complexities of life through mobile phones. So now you can save money, transact, pay bills, get your wages paid to you, through SMS messages on a mobile phone. People themselves need to accept responsibility for saving enough, and for saving in ways that will help them deal with all the issues that life is going to throw at them and their families.
There’s a role for more financial education – I don’t think kids are well taught in schools about what they need to know to compare mortgages or save enough for university or for their pension, however many years away that seems from now – and then the regulatory framework, I think, massively needs simplifying, it’s just much too complicated, and it scares people, actually, it’s not protecting them, it’s scaring them.
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3958aviva_tv/customers/this_is_aviva_youtube_full_hd/this_is_aviva_youtube_full_hd224,480,816
This is Aviva
"This is Aviva" tells the story of Aviva in the words of our customers and employees. Filmed in three of Aviva's key markets - UK, Canada and Turkey - it gives an insight into how Aviva makes difference to the lives of our 43 million customers around the world.
Transcript:
Caption: This is Aviva
Caption: 43 million people rely on Aviva...
Caption: ...for prosperity and peace of mind
Caption: We help our customers to protect what’s important to them & save for their futures
Caption: We’ve been doing this for over 300 years
Rachel Cater: This is Evie, she’s now 6 weeks old and we’ve just taken out the free life insurance for new parents. I definitely think that this new life cover that we’ve taken out has given me peace of mind that we’ve got something there for Evie if anything, touch wood nothing would happen, but if anything did happen to myself or Evie’s dad.
Simi Shasanya: Aviva’s approach to sustainability means a lot to me as an employee, because it means we’re focused on not only being profitable, but making sure we take the right decisions now to ensure that we’re here for the long term.
Thomas Aldridge: About a year ago I got that bad phone call from the fire department saying that my restaurant had been destroyed, there was just a big black cave here. And within four hours I was talking to a senior representative from Aviva Canada.As I tell my story to my clientele they’re waiting for that “Oh my god, how bad was it?”. And when they hear from me how good it was, they’re actually like doing the “Hmmm, Aviva” or “What’s your insurance company’s name” or “I’ve never heard a sort of true happy story about insurance”
Dominic Clayden: We’ve got a lot of experience of claims, our customers will probably have one claim and we need to help them through that process.
Levent Altinisik: The fire started as we were finishing the construction of the hospital. As we refer to it, when the insurance was most vulnerable. If I had to describe Aviva in one word I would say responsive. They were by our side faster than we could ever have expected.
Gunnur Celik: When our customers need our help we do everything we can to provide them with the best service. We try to make a difference.
Tracey Harrison-Green: My husband got diagnosed with lung cancer. Then I told him about the life insurance policy that I have with Aviva, which then gave him the peace of mind of knowing that he wasn’t going to leave us with the money problems.It was December, it was nearly Christmas, I had the funeral to organise, and the fact of just going to the York branch of Aviva, and somebody helping me fill out that form, taking that extra pressure off me. And so it paid off the mortgage so I didn’t have the money worries of having to take out a second job etc to look after myself and my son.
Claire Chambers: I think we’re a modern company but we’ve got traditional values. We haven’t forgotten about our core purpose and why we are here and that’s to protect the important things for people, whether it’s their life, their health, their possessions, their home.
Jocelyn Dobinson: We heard the dog barking, and there was a massive fire in the roof and I guess it was coming all through the house. It’s devastating, and there was a lot of crying.
Rick Dobinson: You don’t realise how much emotion you get until you see your house burnt, ok and you deal with that part of it. And then as you start trying to think about things that are, you know “what did you lose?” “Well I have nothing”.Aviva supported us with the funds which was a big thing. We had money coming in when we needed it. You know we made the claim and the money was there for us.
John Russel: One of the customers that really impacted me came in to our mobile office in Athabasca. Her apartment building had burned down and I was able to write her a cheque for $25,000 and she broke down in tears, but was also full of happy emotions as well too that we were there to respond and assist her, and it just, you know, it impacted me quite a bit.
Caption: A big issue facing society and governments today is funding for retirement...
Caption: ... we help millions of customers save for their retirement and support them in old age
Caption: While you have beenCaption: watching this film
Caption: we have paid
Caption: around £250,000
Caption: in claims and benefits
Caption: That’s £33 billion paid out to customers last year
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3955aviva_tv/investor/andrew_moss-youtube/a_moss_youtube224,480,816
Andrew Moss 2011 preliminary results interview
Andrew Moss, group chief executive, discusses Aviva's full year 2011 results, how we have been transforming Aviva and the outlook for 2012.
Transcript:
Highlights from 2011
Interviewer: Andrew, you’ve announced your 2011 results, so, from your point of view, what are the key headlines on those numbers?
Andrew: Well, I’m pleased with the numbers. I think it was a good year, the operating results were strong, something like 6% on an underlying basis, that’s without Delta Lloyd, which we’ve now sold the majority of. I think, that was done in the face of a, you know, obviously difficult external environment, particularly in the second half of the year, when European markets were extremely volatile.
We’ve been able to put the dividend up by 2% on the back of that strong operating performance. We’ve beaten all of our financial targets that we set for ourselves, on operating capital generation, on the combined operating ratio, internal rate of return on new business in the life business, it’s as high as it’s ever been, and we’re on track to meet the cost savings targets that we talked about, so, overall, I’m very pleased.
Interviewer: From your perspective, what in particular would you say is behind that operating profit of £2.5 billion?
Andrew: Well, I think, as always, with our business, the first place you go is the UK, and we’ve seen our UK life business, which is still our biggest business, reporting record profitability in 2011, the profits were up something like 8%, and, perhaps more importantly, when you look at it over the long term, they’ve doubled in something like the last five years. And that’s really about the products that we sell to our customers, we’re making progress with our customers all the time in terms of our reputation, really pushing forward in market share, in terms of annuities and the protection book.
So, we’re really achieving many of the things that we want to in that business, and then that’s backed up by the UK general insurance business, where profitability’s been going up with the combined operating ratio coming down.
And, again, that’s because of strong underwriting performance in the current year, but also, as always, taking more costs out of the business and making ourselves the most efficient player in the market. That’s our objective, we’ve achieved a lot in that regard, we’ve still got a bit more to do, but the results are beginning to really come through. Europe, too, I think has been a strong performance in the face of what’s been a difficult market.
Interviewer: Regarding the UK business, you are quite clearly very encouraged.
Andrew: Yeah, absolutely. I mean, I think, you know, if you’d told me five years ago this was where we were going to be, particularly in the UK life business, I’d have been absolutely delighted. We’re writing new business at a rate of return of something like 15%.
So, that is a very attractive return in what is a very stable and regulated market. And we’ve been able to do that and put capital to work in particular areas, such as annuities, where we have, I think, competitive advantage in terms of pricing. We’ve been able to grow distribution, particularly for the protection book.
So, you know, in the last year alone, we’ve put in place new agreements or enlarged agreements with HSBC, with Barclays, with Santander, and there’s more coming down the track there.
So, our reputation and our cost efficiently allows us to win that business. So, we’ve seen our protection market share going up from about 11% up to about 15% in the course of the last three years, and on track to grow further.
Interviewer: Now, in Europe, there has been significant uncertainty, so how have you achieve growth there?
Andrew: Well, look, our businesses in Europe are strong, strong businesses, and we have, you know, strong customer franchises and strong distribution in our businesses. And that starts with France. You know, France is our third most profitable business in the group, and it reported increased profits again in 2011.
So, that was encouraging to see, and, on the back of that, we have Spain recording record profits as well, Poland doing very well, more on the protection side, actually, than the pensions side. And, you know, I think the overall outlook for those businesses continues to be very strong, despite the market volatility that we saw in the second part of the year.
Italy was more challenging, as was Ireland, and we’re doing things about those two businesses, making some quite radical changes to the Irish business, bringing it under the umbrella of the UK, which definitely served customers well in Ireland, and we remain very committed to the Irish market, but providing product out of the UK which will be cheaper for customers and more profitable for us. So, a real double benefit in that regard.
Focus on the balance sheet
Interviewer: What about the strength of Aviva’s balance sheet, how much of that has been a priority?
Andrew: Well, we’ve, over a period of time, built capital strength in the Aviva balance sheet. And certainly since 2008 and the financial crisis, you know, that’s been an absolute priority for us, to maintain strength in the balance sheet. We built our capital strength up through to the end of the first half of 2011, and that served us well when things got really choppy in the second half of 2011, particularly in Europe.
So, you know, both on the IGD measure and on the economic capital measures, we were able to withstand some very big market moves, particularly in sovereign debt valuations in the second half of 2011. So, whilst we saw the capital ratios coming down a little bit towards the end of the year, what we’ve reported today is, actually, they’ve come up again substantially in the first part of 2012.
So, I think the message is a clear one. The balance sheet is strong, the capital position was built up to withstand shocks, there was a shock in 2011 in the second half, but we came through it well and the capital ratios are back up now.
Progress on strategy
Interviewer: Can you give us an update on your strategic developments, what progress are you seeing there?
Andrew: Well, good progress, I think. 2011 was really encouraging in that respect. And let’s just remember what the strategy is about. First and foremost, it’s growing, in our key markets, and so the UK is a fantastic example of that. We’re growing market share in the Life business, we’ve been growing market share again in the general insurance business, premiums are up something like 8% in 2011. We had something like 400,000 new motor policies in the UK in 2011.
So, that’s the first really important part, I think, of the strategic debate. Now, the other side of that is that, whilst we’re allocating capital to our big key markets, we have made decisions to exit some of the markets, and we’ve made good progress on that in 2011.
So, we sold down another slug of Delta Lloyd, so we’ve deconsolidated Delta Lloyd in the Netherlands. We sold the RAC, which is a non-core business here in the UK, at, I think, a good price, representing something like 17 times earnings, we did that in June of last year.
And, just recently, early this year, we’ve announced the sale of our activities in the Czech Republic, in Romania, Hungary and Slovakia. So, all of that, I think, augers well for the future in terms of making sure that we’re allocating capital to the businesses that we want to, and making progress on getting out of the businesses that we don’t want to be in for the long term.
Focus on our customers
Interviewer: You’ve spoken very passionately in the past about putting customers at the heart of everything Aviva does, so how is that working, how is that progressing?
Andrew: Well, the Customer Agenda, I think, has made fantastic progress in the course of the last two or three years. We’ve measured ever more rigorously, I think, what customers are saying about us, thinking about us. And the results of that have been, I think, there for all to see.
Our Net Promoter Scores have been going up, so that’s pleasing to see. We’ve still got work to do on that front. And this is about providing good service to customers and good value to customers, in terms of the products that we provide. So, certainly in the UK, I think we’ve made good progress on that, and that’s true on a number of other markets, in Canada, in the US, and in some of the European markets, as well.
But it’s something – you mentioned I’m passionate about it – I think that my real priority there is to keep pushing that agenda. Because I think, whilst we’ve made good progress, I think it can be a source of real competitive advantage to us as we push forward. So, pleased with where we’ve got to but demanding more from our people in terms of getting further.
Outlook for Aviva
Interviewer: So, Andrew, looking ahead, and in your view, what is the outlook for Aviva in 2012?
Andrew: Well, look, the world’s still a reasonably uncertain place, I mean, you know, the second half of 2011 proved that, I think. But I think, at the end of the day, the strength of the businesses we have, and you see, you know, our operating performance, stronger again in 2011, over a strong 2010, proves that, essentially our strategy is working. And the choices we’re making about where to allocate capital are coming through now in terms of our key markets.
So, the 12 key markets that we’re focusing on, profits were up something like 9% in 2011. We’ve got to push on, on an operational front, from there. And to help us do that, we’ve set some new targets for 2012, which actually push up the internal ratio return requirements in the business above 13%. We’re keeping the combined operating ratio requirements. And the operating capital generation targets, we’re upping guidance on that, as well.
So, I think that signals confidence in the things that we can control to make sure that we continue to make progress that comes through to the bottom line. Over and above that, of course, there are a lot of things going on in the outside world, and managing the risk associated with that is an equally important task, and I think we’ve got a good track record of doing that over the course of the last few years, but we will continue to devote energy and resource to that side of things, as well.
Interviewer: It’s always good to hear your views, thanks for your time.
Andrew: Thank you, Simon.
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3954aviva_tv/investor/Pat_regan_pr/aviva_pr_youtube224,480,816
Pat Regan 2011 preliminary results interview
Pat Regan, chief financial officer, talks about Aviva's 2011 full year results, including what's driving the group's performance, increased operating targets and the priorities for 2012.
Transcript:
Interviewer: So, Pat, let’s begin by looking at what you’ve announced today. Talk us through the headline numbers.
Pat: Sure, thank you. So, the headline numbers, operating profit at over £2.5 billion, again, up some 6% on an underlying basis. Operating capital generation, which I think is a stand-out feature in our results today, at £2.1 billion, up some 25%. Life new business profitability at over 14%, which is a record high for us, I think. And our combined ratio at 96.8% and another improvement in the general insurance profitability.
Interviewer: Now, clearly significant is the increased net operating capital generation, what’s behind that?
Pat: Yeah, thanks for that. A few things, I think. One is the profitability and cash flow we make off our in-force customers on the life business. We have almost 30 million customers, we do a good job in serving our customers well and keeping our customers, they give us a very predictable and growing stream of profits from our in-force life business.
Second is the increased profitability we make in general insurance, which adds, as well. And the third is, investing less capital, investing capital more efficiently in life new business profitability, which we’ve done, I think, really well over the last couple of years, almost halving the amount of capital we invest in life new business, whilst maintaining almost the same level of sales.
So, the combination of those three things, in-force life profits, growing general insurance profits, and more capital efficiency on the life investments.
Interviewer: Given that the dividend is clearly an important topic for your shareholders, what is driving Aviva’s dividend payment for 2011?
Pat: Yes, we’ve increased the overall full year dividend by some 2%, to 26p. We have a strong dividend yield, that’s one of the strong features of the Aviva story. And our profit cover, those £2.5 billion of operating profits, turn into a profit cover of over two times, and on our operating capital generation, that also translates to a very strong free cash flow yield supporting that dividend, as well.
Interviewer: The life insurance appears to be performing well, so give us some insight into the life result?
Pat: Yes, our life profits are up by some 7% in the year. And a couple of things that are going on there. One is the in-force amount of business that we’re managing has gone up, our in-force reserves have gone up, so we’re keeping more customers, and we’re adding to that stock of customers.
The second thing, as we write new business, we’re writing it at increasingly profitable levels, so that adds to the profitability, as well. And then we continue to get a strong flow of underwriting margin, so when we price business, on expenses, etcetera, we do even better, and we’re getting an increasing profitability stream from that.
Interviewer: Let’s talk about the general insurance business, how is that performing?
Pat: The general insurance business is both increasing profitability and growing at the same time. That’s clearly true in the UK, but true in our other big businesses around the world. Very strong results in Canada, some 95% combined ratio, very strong results in France, a 90% combined ratio, and a 96% combined ratio in the UK business. What’s a strong feature for all of them, we’re growing personal lines well, particularly personal motor.
Our brand’s working really well, we’re getting new customers in the door. We’re also really efficient in terms of how we’re managing that. Our expense ratios are down across the piece, so as we’re adding new customers, we’re doing that as essentially a flat expense base, and all the while sticking to our guns of having really good disciplines around things like underwriting and claims management.
Interviewer: To what extent would you say the 2011 performance was affected by market and economic conditions?
Pat: I think in terms of operating metrics, as you’ve seen, our operating metrics are very resilient. As you would expect, we saw some unrealised movements, our mark to market movements on our investments. And that impacted our bottom line profit before tax, at £87 million for the year, that was both in Delta Lloyd and in the rest of the Aviva business. Now, because they were unrealised, they’ve actually largely reversed, post-year end to the period now.
Interviewer: How have you been managing Aviva’s capital position?
Pat: We’ve done a lot of work over an extended period of time to build Aviva’s capital surpluses. Really, over the last two or three years, that strong net operating capital generation is a big feature of that, plus other kind of bigger things, like the sale of the RAC, the sell-down of Delta Lloyd, now down to a 40% holding from 100% a couple of years ago. Continued to work on our pension scheme and move that into a much better financial position.
So, some big picture stuff. We also worked on smaller things, like product pricing, product guarantee levels. All of that stood, as well, to build up our capital buffers to withstand what’s clearly been a very volatile period, particularly in Europe and the latter half of last year.
Interviewer: And you have a significant presence in Europe, to what extent has Aviva been affected by eurozone issues?
Pat: Well, as I say, clearly, the European financial markets were in a much more uncertain and volatile period, particularly in the second half of 2011. What you saw was corporate spreads move out and government spreads, indeed, move out, as well. In terms of our core operations, though, we increased operating profits in Europe, up some 4% or so, very strong results in places like France, Poland, Spain. And in a number of those areas, our new business sales, as well, were remarkably resilient.
So, I think what we tried to do was focus, again, on keeping our customers, managing them well, doing some good product pricing and managing our capital particularly efficiently in what was a volatile market.
Interviewer: Why have you confirmed your plans to increase Aviva’s targets for 2012?
Pat: Well, I think we feel good about the progress we’re making kind of more broadly. We set the financial targets originally just over a year ago, we beat each in our performance in 2011, so I talked about the operating performance, it’s been really resilient. Life new business profits, general insurance profits, and that operating capital number. So, I think, on the back of what we done in 2011, we felt confident enough to slightly increase those targets for 2012.
Interviewer: Finally, looking at year ahead, what are your thoughts about 2012?
Pat: Well, I think, operationally, again, we’re going to try and carry on doing the things we did in 2011, so, keep our customers happy, manage our expenses well, allocate our capital in a really kind of efficient and disciplined manner, and do all those things so we continue to generate strong profits and continue to generate strong operating capital generation.
Interviewer: Very interesting indeed, Pat, thanks for your insight.
Pat: A pleasure, thank you.
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3956aviva_tv/customers/systems_thinking_hd/aviva_systems_thinking_hd224,480,816
Systems thinking
Over the last three years, we've been changing the way we look after our customers in the UK. We've been creating a culture that puts the customer at the heart of everything we do, simplifying processes to ensure we're providing the best possible service. It's made a difference to our employees and our customers; employee engagement and customer satisfaction have both increased.
Much of the cultural change has been led by the people who know our customers best - those at the front-line of the organisation. We call this new approach "systems thinking." Hear more about it from the people who are making it happen.
Transcript
Caption: At Aviva, we’ve been changing the way we look after our customers
Caption: We’ve been putting them at the heart of everything we do, to ensure we provide what they really want from us
Caption: Here’s how we are doing it…
Aviva employees speaking
Employee 1: Welcome to Aviva you’re through to Kylie Read how can I help?
Employee 2: Hello my name is Samantha I’m calling from Aviva.
Employee 3: Good morning speaking.
Speaker 1: Hi Kylie it’s Amanda from Age Partnership.
Employee 4: Oh hello Amanda.
Employee 5: It gives me great job satisfaction.
Employee 6: In my mind it’s like a commonsense approach.
Employee 7: A fantastic piece of brilliance.
Employee 8: To me it’s just great leadership.
Employee 9: It’s Aviva trust in us to do the right thing by the customer.
Employee 10: It’s actually giving the customers what they want not what we think they want.
Employee 11: I couldn’t believe that we hadn’t done it sooner really.
Employee 12: I think Systems Thinking has been a phenomenal transformation for Aviva ’cause it’s about putting the power into the front end of the business so the people that deal with customers, the people that sell customers day to day those are the people that can really, really work out the best way of running our processes, the best way of structuring our business.
Employee 13: A customer can’t understand you’ve got to take so many calls in an hour, they want to be treated correctly.
Employee 14: Well Systems Thinking is an everyday thing, it’s all a matter of finding out exactly why the customer’s calling us and making sure that we do everything to meet their requirements.
Employee 15: What steps we’re doing that we don’t actually need to be doing and what is value within that work by removing the waste you’re then improving the capability to do even more work.
Employee 16: We put all post-it notes over the walls of the system and we looked at how much non value and waste there was and started picking bits out and eventually we came up with a much more user friendly process which suited our customers.
Employee 17: I’ve gone from taking 100 calls a day to maybe 10, 15 calls a day. I know the customers are going away with what they want and I know they won’t have to call back.
Employee 18: We’ve trained all of our staff so they’re multi skilled so what that’s meant is actually we’ve seen huge efficiency savings.
Employee 19: We've improved the time it takes to pay customers their money on equity release and now we can release that when they are on the phone and it’s in their account in a matter of days. We can also now pay them their money they're borrowing against their property in half the time we use to when there was repairs that needed to be fixed.
Employee 20: When you focus on targets you lose focus on the customer themselves.
Employee 21: The fact that Mr and Mrs Smith have phoned up and you can hear in their voice how pleased they are in what we can do for them, what me as a person, what Aviva as a company can do for them.
Employee 22: We learnt this version of Systems Thinking from Vanguard who have worked with us over the last three years. The most mature areas that are using Systems Thinking now have customer satisfaction somewhere between 80 and 90%.
Employee 23: People can recognise they’re calling Aviva now where before it was just another company. People kind of feel the difference in the experience they have.
Employee 24: You hear it all the time that the customer now will say you did such a good job on my motor insurance can I have a quote for my home insurance?
Employee 25: We’ve been hundreds of years putting a business together that’s a significant business and we’ve got lots of customers. This is about continually changing the way that we think about those customers to give them something better.
Employee 26: The things that make me love working for Aviva now is the fact that we really are starting to demonstrate that we do care, and not just for our customers, but for our people as well.
Caption: In the words of our customers
Customer 1: The service and amount we’ve had has been very, very good, we couldn’t fault anything. Very, very pleased.
Customer 2: The really encouraging thing for us is that, you know, you’re willing for change.
Caption: Systems Thinking initiatives have supported an increase in customer satisfaction and employee engagement
Caption: We have seen, in our existing annuity business, a 26 point improvement in our Transactional Net Promoter ScoreTM
Caption: And a reduction in our call volumes by around 20%
Caption: We have a culture that we are proud of
Employee 29: I would never go back to the old way of working. It’s a world away from where we are going.
Caption: www.aviva.com and #aviva
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3952aviva_tv/thought_leadership/the_economist/aviva_the_economist224,480,816
Andrew Moss keynote speech at The Economist's Insurance Summit
On Wednesday 1 March, Andrew Moss, group chief executive, Aviva Group, opened The Economist's Insurance Summit in London. The prestigious event, which was attended by over 100 senior insurance executives, regulators and policy makers, looked at what role the insurance industry should play in society today.
In his key note address Andrew Moss talked about the sustainability of the insurance industry and the need to continue innovating in an ever changing society, ensuring we are in the best position to provide our customers with the products and services they need.Transcript:
Introduction
Andrew Moss: Good morning, everybody, and a big thank you to The Economist for inviting me, last August, I think it was, to come and talk to this group, it looks like a fantastic turnout. I’m not actually going to spend a lot of time talking about things like Solvency II in my speech, because, actually, I’m going to try and focus on some of the other challenges that the industry has, and exactly how we can cope with those.
So, things like, for example, the development of the digital world, and what that means for the industry. So, I’m pretty confident that when we get to the Q&A, things like the Eurozone and Solvency II might be questions that you want to ask me about. So, very happy to talk about those things then.
But, actually, what I’m going to do in my speech is be, actually, resolutely upbeat about the industry. And I hope that will set a tone for the day, because, in my view, I honestly don’t think there’s been a better time to be in insurance, and the reason for that is very simple. Because, I think what we provide for consumers has never been so sought after or so necessary in the society that we now live in.
Some of the macro issues which are facing that society, whether it be energy consumption, climate change, obesity, consumer debt, all of those things have some impact on our industry but, actually, we’re working in an industry that provides peace of mind for human beings, by being experts in managing risk. And that’s really what our industry is all about, and we’ve been doing it for a very long time.
So, Redefining Insurance, which is the title of today’s sort of theme, is actually something that the industry has been doing for something like 400 years, and the industry, of course, has been evolving as society has changed. And, as society redefines itself, so insurance has to follow and become an even greater part of it.
So, a hundred years ago, we didn’t have mobile phone insurance. We could have had pet insurance, but we didn’t, at that time, it’s now quite a popular product here in the UK. But, on the contrary, the first defined benefit pensions were created more than 150 years ago.
So, what I want to do is try and celebrate a little bit of what we are, think a little bit about what we can do better, because, of course, there are things that we don’t always get right; and then celebrate what could be the potential for the long-term of the industry. Because we have, by definition, to be a built-to-last industry. We’re making promises to our customers, sometimes, for 40 or 50 years. So, sustainability is a vital component of everything that we do.The insurance industry’s contribution to society
So, let’s start with what we are, and let’s just be a little UK-centric in that discussion to start with, so, let’s take pride that we here, in the UK, work in Europe’s largest insurance industry and, in fact, the third largest in the world, and we are a major contributor to economic growth and to the economy.
There are some big numbers here, 2½% of GDP, about £10 billion in taxes contributed to the Treasury. Five million small businesses who we take risk away from, so that they can get on running their business. Aviva alone, last year, paid out £33 billion in claims. And by the time I’ve finished speaking here, in about 15 minutes, that’ll be about another million pounds paid out. So, our role in society, intrinsically, is one of responsibility. We invest in infrastructure projects, for health, for education, and for housing, and we employ a lot of people here in this country, about 350,000.
And what do those people do, well, if you go to my call centres and listen to them, actually, what they’re doing is taking calls from people who are in trouble. Recently bereaved relatives, people who have just had a traumatic accident at the roadside, or just been burgled, or just been told that they’re terminally ill.
And, at very raw moments in people’s lives, we have to help them and provide a service and provide them with security that they need at that time. And behind every claim, of course, there’s a more technical side to the industry. There’s a highly trained actuary whose calculations have carefully assessed the risk and determined premiums paid. So, we’re not right at the front line, we’re not nurses, we’re not doctors, but what we do does affect people for the rest of their lives. And I say that leading people in this industry, therefore, is an immense privilege.
And over and above that, of course, we’re a major investor. The UK industry invests around £1.7 trillion across the UK economy. And, of course, we have to work with governments of the day on issues, like now, from flooding to pension reform, and on many other things as things progress.
So, as I said before, society changes, insurance has to change with it. Let’s think about society. I don’t know if any of you in this room have become parents in the last year. Well, if you had a son, he has a one-in-four chance of living to be a hundred. If you’ve a daughter, it’s a one-in-three chance.
At the same time – and it’s not the same one third, it’s not just the female side of the gender, but one third will be obese in their life. And it’s estimated that, on average, they will have 20 different employers by the time they reach retirement.
So, one of the big first order effects of that is that final salary schemes are a thing of the past. And the retirement landscape has undergone a seismic change at a time when state finances are hugely constrained.
There’s no question, therefore, that the partnership between business and government has to be there to deal with one of the most significant challenges facing government and society at large. And on issues like open market options for annuities, we’ve been arguing for some time that there’s a real opportunity to champion the needs of the consumer and bring greater simplicity and transparency and competition to the annuity market here in the UK. And I’m delighted that the ABI are moving in that direction, and we’ll very soon be issuing guidance around those issues.
We were very pleased to see support in the recent European White Paper on Pensions for the concept of annual pension statements for all EU citizens, allowing people to compare projected retirement income against their own expectations and take action in a timely manner as a result. And, of course, it’s not just about pensions, it’s much bigger than that.
Long-term care is one of the things that people worry about more than anything else. And over and above that, the renewal of the country’s infrastructure is another massive financial task that the industry and government need to work together on.
So, all of that, I think is positive, and demonstrates the potential of the industry and what it can do for society. But, also, I have to say, we have to acknowledge that sometimes, in the past, and probably still today, it hasn’t got everything right. So, a little bit of audience participation here, how many of you in this audience have a pension?
Okay. How many of you know, today, what it’s worth? That’s impressive, actually, that’s very impressive. Sometimes when colleagues do that, nobody puts their hand on the second part of the question. But I think there is a real question, do we do enough to help on that? So, you know, pension statements are, I think, generally thought of as virtually incomprehensible.
I was up in York in my Life operation, two or three weeks ago, listening to people who are ringing in three months before their pension matures. And the general status of those people is that they simply do not know what is going to happen, how much their pension is worth, and what their choices are.
And we, for example, in the course of the last year, have changed our policy on that, rather than sending out a letter and a thick pack, which, again, people regard largely as incomprehensible, we ring them up and we talk to them about it. And it’s amazing what that small and simple change can do in terms of helping people to make the right choices.What needs to change?
What about motor insurance? It’s a topical issue at the moment. There was an insurance summit at 10 Downing Street just a few weeks ago, talking about those issues. And there are real issues in that area.
Last summer, my car was sitting quietly in an underground car park, and my neighbour, who regularly parks their car next to me, scratched the side of my car and was kind enough to drop me a note into my flat saying that they’d done that. The process worked very well, their insurance company paid the claim, it was fine. But within just a few days, I was getting texts asking me to claim for my whiplash injury.
It’s a fact, we see it all the time. In Aviva, we often use videotapes of accidents. A recent one that I saw, a car just scraped the side of a bus, absolutely no physical injury to anybody, either in the car or the bus. Four people on the bus made whiplash claims, including the driver.
When you look at the tape, the driver is driving, the impact occurs, there is no perception of movement whatsoever. This is the nature of what is happening in the UK in terms of compensation culture at the moment. So, I think we’ve got to make sure that we don’t lose sight of our business model. We should not be making money from whiplash claims and referral fees, of fraud, or legal expenses. We should be making money from managing risk. And we probably haven’t yet served young people well, managing to find a way to deliver affordable motor insurance for them.
And technology might be on the verge of making this a possibility. And, again, we at Aviva have had a go at this already, we had, back in 2004, 2005, a product which meant we put a black box in the boot of your car, and we were able to monitor speed and time of driving on all of those things and charge on a pay-as-you-go basis.
It did not take off. And it didn’t take off for two reasons. First of all, it was actually uneconomic to put the boxes in the back of the car, and people didn’t like the inconvenience that was necessary in terms of that installation. And, secondly, people didn’t like the sort of Big Brother watching you element of that. But the reality is, this device, even in just five years, has changed the nature of that.
I’ve got an app on here which is something called a cycle meter, and so when you go cycling, it tells you how fast you’ve gone, what altitude you’re at – it’s not very fast in my case, I’ll just hasten to add, except downhill, where the weight starts to tell, I have to say – but the reality is that that sort of technology is going to make that much, much easier, and I think it will become the reality of the way people pay for insurance in the future.
Now, while the industry gets things wrong from time to time, I think the other thing we’ve got to make sure is that regulation does not compound this. Nobody argues that insurance needs to be regulated. If you’re making 30 or 40 year promises to customers and taking their money, actually, it’s hard to think of a definition of an industry that should not be regulated more.
So, it plays a key role in protecting customers, in promoting financial stability, and ensuring that responsible companies operate on a level-playing field. So, it should encourage the sustainability of the industry and fairness for consumers. I think we have to ask ourselves some questions today, particularly in terms of the reaction to the financial crisis, as to whether that was happening. Solvency II is at an enormously delicate stage in its negotiations. So, regulation should be ensuring that we do everything we can to provide peace of mind and not get in the way of it.
And I just want to say that Aviva, because more than half of our business is here in the UK still – we are very, very committed to the UK and to Europe, which remains the heartland of our business. And we believe that it’s actually vital that a British point of view is heard. And, in that, protecting the consumer here in the UK is of paramount importance.Sustainability and future trends
Now, let’s just talk about sustainability for a moment because, as I said, I think our businesses have to be built-to-last, and our customers have to believe that that’s the case, given the length of time that they’re investing with us. We’ve got an interesting example at Aviva. One of my colleagues, a man called John Lister, who’s been the chief actuary in our Life business here in the UK. His father before him was Norwich Union’s Chief Actuary. So, today, John literally lives with the impact and the decisions that his father made.
And it’s not actually a bad way to think about our business in the responsible way in which you should be taking decisions that will withstand all of the tribulations of what might happen in the world in the intervening time. So, sustainability is important but it’s not a new concept to us, it’s actually in the DNA of insurers.
If you ask who has Aviva insured over the years? Isaac Newton, the Titanic, Winston Churchill, John Kennedy, all of those people, or objects, have been insured by Aviva. And running a sustainable business is about how we treat our people, our customers, and our contribution to the communities in which we work. And, of course, the economic growth of the company itself is vitally important. And there’s a tremendous amount of power inherent in the investment choices that we make, because we can influence and create sustainability in other companies if we use that influence correctly.
And that alone, I think, makes an extremely powerful contribution going forward. So, there is a huge amount of potential inherent in the industry. Two years ago, I co-chaired with Alastair Darling, then then Chancellor, an insurance industry working group here in the UK, that was looking at a vision for the insurance industry in 2020.
And one of the key outputs of that, in terms of statistics, was the fact is that, in terms of pension payments, motor insurance payments, accident and health, things like that, about two-thirds of the burden of that falls on government, and about one third falls on the private insurance industry. If you move the dial by just 5%, that is £17 billion which is taken out from the burden of the public purse. That is a vast sum of money, and certainly any government, of course, is interested in that, when the budget deficit and changes in society are so pressing.
And what else is happening in terms of the development of the industry? Well, let’s just think back to insurance products that didn’t exist even 20 years ago, and let’s imagine what might emerge in the next couple of decades. Long-term care. I mentioned it earlier, inextricably linked with pensions, will be radically overhauled, it has to be. People will be saving all of their working lives to fund all of their retired ones.
Oyster Card insurance, it’s definitely on the way. Swipe in, swipe out, you’re charged by the hour or the trip or the event. And given the volume and sophistication of data about people available on their phones, your phone becomes a risk map, which means instant cover can’t be far away.
And insurance for the mobile wallet, again, the phone is fast becoming the hub of all your financial information and a means of payment. And as more and more is done on a digitally smart phone, the notion of how you protect and insure yourself inevitably extends. For business products, for cyber security, to deal with fraud and hacker threats. And community-based insurance, certainly being talked about now, groups of friends buying insurance policies together and pooling risk. Driverless cars.
The technology already exists, it will come, it’s a risk we will have to take on board. And intelligent houses. So, what does all of that mean? Because all of that change is coming and it’s coming fast.
So, it means that while we should be proud of the industry, its ability to endure, and all it means for the UK, it means that we do permanently have to be evolving in a changing society for the customer of the day, never losing sight of the core purpose, to manage risk excellently, to create peace of mind for our customers. And that is a vital pillar of our economic system and of our society itself.
It means also that we have to look honestly at ourselves and improve. And it also means that we need regulation that enables us to do our job for individuals. We should use our investment strength to help government, society, and promote sustainability. And we should innovate probably as never before.
Technology doesn’t change the fundamentals of our industry but fundamentally is changing consumer behaviour around us. I have to say that, as far as I’m concerned, all of that presents an extremely exciting set of challenges. And, in that sense, therefore, I think there has never been a better time to be in insurance.
This feels like a very, very good turnout. I think it’s going to be a good day. And I really do want everybody in the room to feel proud to be part of what is, I think, a very unique and very special industry, thank you. -
3870december/andrew_moss_cnbceu_07_10_11224,480,816
7 October 2011: Andrew Moss interview on CNBC
Andrew Moss was a guest host on CNBC's Squawk Box programme on the morning. Watch extracts from Andrew's interview.
Transcript:
Rebecca Meehan: Today's Stock in 60 is Aviva. Pay very close attention to this because we will have the CEO of the business on a little bit later. You'll be tested on all of these numbers. Looking at the stock analysis to start with and the shares of Aviva yesterday getting a big bump up when we saw stocks around Europe getting a boost.
But some of the more specific figures relating to this company, the market cap almost at £8.5 billion, the dividend deals of nearly 8.5 %, price earnings ratio 6.349 to be specific.
Now let's take a check on what the analysts believe is the case for this stock. The vast majority of analysts that have recommendations out on the shares are in favour of it. Of the 31 analysts who rate the company, 20 of them have a buy or a strong buy, 11 have a hold, no sell ratings on this stock. The shares though have been suffering recently underperforming the FTSE 100 and the stocks and insurance sector.
Andrew Moss: I think it's been a fantastic you know three years when really you've been getting the company through the financial crisis. You're a bit volatile again at the moment, but during that point, you know, during that process company's much leaner, much more efficient, the profits are rising, costs are down from £6 billion to £4 billion.
You know we get through this next leg of crisis, which I'm very confident about, and I think you're going to see the brand working brilliantly in the UK and Trevor is going to make a fantastic difference to that as well. I'm really looking forward to him coming on board.
Geoff Cutmore: Let's go back to Andrew Moss then. Andrew's with us from Aviva. Andrew I was just having a look back at some of the newspaper headlines, you know, knowing that you were coming up and what this one in the Telegraph sort of stuck out for me, 2011 the year Aviva must deliver. Of course you announced a whole slew of targets at the close of last year, not least this reduction of hybrid debt. How's that all going? How are you doing on these targets?
Andrew Moss: Well we're hitting them all frankly, Geoff. I think you know even in what are clearly very difficult markets in the last three months, we're able to announce profits up at 5% in the first half. 21% up in Europe, which is quite interesting given what's going on in the eurozone.
So it just shows I think the strength of the business, the underlying business and you know the eurozone I think is obviously right in the spotlight at the moment but you can't get away from the fact that, ok it's 7% of the world's population but still 35% of world GDP.
So it's incredibly important to the world economy. People have money, they save money and they certainly need to save more because I don't think any of us thinks that governments are going to be able to fund people in retirement the way they have over the last few decades. That's pretty evident in today's world.
And so, you know, we have eight markets in Europe where we have large businesses, that's working very well for us at the moment. That isn't to say that, you know, clearly as we earlier talked about, the asset side of the balance sheet's under a bit of focus at the moment.
But you know we think we've managed down our exposures there and we're in good shape. So we're hitting our targets, we are I think realistic about the external environment at the moment but quietly confident frankly.
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3881november/mobile_learning_center_launch03224,480,816
13 September 2011: Street to School - Mobile Learning Centre Launch
As a result of our You Are the Big Picture campaign, Aviva raised enough money to fund two new Mobile Learning Centres, run by Save the Children in Delhi India. The buses, which hit the road in April 2012, provide a bright, engaging learning environment for children. They will head out across Delhi to markets, railway stations and other places where street children often spend their time.
The two existing centres funded by last year’s campaign have already reached hundreds of children in Kolkata. These centres help Save the Children bring street children closer to education by providing a place where they can work directly with them, their employers, families and communities.Transcript:
Manabendra Nath Ray, State Manager, Save the Children ,WBO
It’s a very proud moment for Save the Children to launch the mobile learning centre supported by Aviva and Street to School. We have worked with Aviva since 2009 and we are reaching out to underprivileged children who are on the street or on the pavement and try to ensure their right to education.
Despite that effort there is still a group of children who are being deprived of their basic right to education and this initiative is actually trying to make education available on their doorstep. There are children that are still not working; there are children that are not allowed to have access to any education services or facilities.
Two such vehicles will be moving through the city in different areas where there are a high number of children on the street and out of school.
This van will have the facilities, like you can see, of interesting materials that we will be using in this vehicle and it will be catering to the need of children 6-14 years of age. So, we have started with these and then we will assess the learning needs of the children and increase the stock of books which will be used by the children.
It will also have audio visual facilities which we can use for interesting games and different types of learning materials.
This van will also have two trained educators and a councillor and a community mobiliser who will actually be travelling in the bus to different locations. They will actually interact with the children, interact with the communities, with the employers and other stakeholders and to mobilise the process of the children who are out of school and cannot access school, they are participating and engaging with this type of process. Prepare them through these types of services and then integrate them with the mainstream schools.
We have a plan to reach out to 10,000 children over two years out of which we will be providing direct services to 3000 children, prepare them to school standard and then integrate them with government sponsored schemes and schools. That is the idea of the mobile learning centre.
This year Aviva has a plan to continue with the Big Picture campaign and part of the donations that will be received from the Big Picture campaign will ultimately be impacting this particular initiative and another programme called Street to School which we are implementing through Aviva support in India.
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3823august/clivebolton_fpp224,480,816
24 August 2011: Clive Bolton – Future Prosperity Panel
Clive Bolton, at retirement director, Aviva Life UK, discusses Aviva’s the research findings from the Future Prosperity Panel.
To find out more about Aviva's Future Prosperity Panel visit http://www.aviva.com/fpp
Transcript:
Hello, I’m Clive Bolton and I’m the at retirement director at Aviva Life UK.
What is the Future Prosperity Panel all about?
Well, as Andrew Moss said, we bought together the Future Prosperity Panel to tackle one of the really big global financial issues of today and therefore the panel consists of nine experts accomplished in their fields to kick-start the debate.
What could people do to prepare for retirement?
Well there are a couple of examples that really stood out for me; firstly was Carl Honore. He talked about how we could use gaming, particularly with younger generations of people in their 20’s, who use online games to learn and to stimulate engagement. He asked whether we could use that in the context of planning your future finances.
And another one is Alain de Botton, who talked about the slightly negative attitude that we have towards saving. It can sound very bloodless or misally and in actual fact saving is a precursor to giving and really we should attach it to the human spirit of generosity.
Have a plan. There are some people who do save well for their retirement and actually know what they want to do, but a lot of people put it to the back of their mind. For instance, they say they’re going to sell up and move to a cottage in Dorset without actually working out if cottages in Dorset are any cheaper than the house they are currently living in. Therefore even at the most basic level we urge people to look at what they’ve got, what pension arrangements they have and match them against their plans.
Health is a really important issue and in fact in some ways health is your biggest financial asset as you reach that later life stage. It’s all very well saying you’re going to work into your 60’s but the thing that will actually keep you doing the job that you may actually even enjoy will be the fact that your heath is sufficiently good to allow you to do that.
How can people get involved with the Future Prosperity Panel?
Well I think it’s important to separate what individual companies like Aviva are doing with the bigger debate that we need to have in society - this is not only in the insurance industry but with regulators, government and also with society as a whole. Therefore what we’re doing at Aviva through things like the Future Prosperity initiative is adding to that debate so we can move to some sort of consensus.
Well we’d really welcome people to join and share their views and so therefore if they want to do that and want to share or talk about what they think, they can go to our website on the subject at aviva.com/fpp and let us know.