Cesare Brugola - Aviva Italy presentation 2004 · Aviva Italy Bancassurance Model Life Subsidiary...
Transcript of Cesare Brugola - Aviva Italy presentation 2004 · Aviva Italy Bancassurance Model Life Subsidiary...
© Aviva plc
Aviva ItalyItaly’s pre-eminent bancassurer
Cesare Brugola
© Aviva plcSlide 77
Agenda
• Growth market and Aviva’s positioning• Bancassurance partnerships• Products• Shareholder value• Future opportunities
© Aviva plcSlide 78
High Growth of almost 20% Per Annum Over Last 6 Years – twice as fast as any other European market
€m
Source: ANIA - * estimates – 02.2004
Premium Income 1998 - 2004 *
*
The Italian Life Market
7000062780
55298
4632839784
35597
26483
01000020000300004000050000600007000080000
1998 1999 2000 2001 2002 2003 2004
*
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Generali Group
Allianz Group
Unipol Group
Cattolica Group
Aviva Group
Monte Dei Paschi DiSiena Group
2,000,000
13,916,720
8,945,350
5,061,150
Poste Vita
2,469,878
4,000,000 6,000,000 8,000,000 10,000,000 12,000,000
4,489,480
2,819,920
2,389,900
Aviva top five by end 2005
Source: ANIA, Total Premium Income 2003
San Paolo -Fideuram Group 7,181,340
?
14,000,000
The Italian Life Market
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• Italian market and Aviva’s positioning• Bancassurance partnerships• Products• Shareholder value• Future opportunities
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Broadening and Building Partnerships
0
50
100
150
200
250
300
2000 2001 2002 2003
A.P
.E. E
UR
O M
illio
ns
Extended distribution through former ING Bank distributors
2004
2002
New bancassurance partnership with Banca Popolare Commercio e
Industria (now Banche PopolariUnite)
2001
Newbancassurancepartnership with
Banca Popolare diLodi
2000
Newbancassurancepartnership with
UniCredito
95.1m
202.9m
243.5m
279.5m
Annual Growth Rate: 43%
2000
New bancassurance partnership with Banca delle Marche
2004
BPU agreement extended to include
BPB branches
Source: Aviva plc
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A Network of Networks…AVIVA Italia Holding SpA
100%
Commercial UnionAssicurazioni SpA
50%(Banca delle Marche 50%)
Commercial UnionLife SpA
50%(Banca delle Marche 50%)
Commercial UnionInsurance SpA
100%
Commercial UnionVita SpA
50%(UniCredit Banca 49%)
FINOA Srl50%
(Bipielle Investimenti SpA50%)
Commercial UnionItalia SpA
100%
AVIVA Vita Spa50%
(BPU S.c.r.l. 50%)
Commercial UnionPrevidenza SpA
100%
Commercial UnionVita SpA
1%
Eurovita Spa80.96%
(other Banks 19.04%)
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Bancassurance through Joint Ventures…
UNICREDITO Valle d’AostaUNICREDITO PiemonteUNICREDITO Liguria
UniCredit Banca RetailUniCredit Private BankUniCredit Banca d’Impresa
CU Vita
BPL GROUP Banca Popolare di LodiBipielle AdriaticoBanco di ChiavariCassa di Risparmio di TrentoBanca Popolare di Mantova
Cassa di Risparmio di AstiCassa di Risparmio di BolzanoBanca del FucinoBanco di RomagnaBanca Popolare di Puglia e BasilicataCassa di Risparmio di CarpiCassa di Risparmio di CentoCassa di Risparmio di CesenaCassa di Risparmio di RiminiTercasBanca di Ciociaria
CU Previdenza
BPU GROUP Banca Popolare Commercio e IndustriaBanca Popolare di BergamoCARIME
Aviva Vita
Banca Delle Marche GROUP Banca Delle MarcheCARILO
CU Life
Eurovita
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Banca Popolare del Cassinate CU Vita
Credito Valtellinese CU Vita
BCC di Bene Vagienna – CNBCC di Pianfei e Rocca De Baldi – CNBCC del Chianti Fiorentino – FIBanca del Mugello Fiorenzuola – FIBCC di Casalgrasso e Sant’Albano Stura – CNBCC di Caraglio e della Riviera dei Fiori – CNCassa Rurale di Folgaria –TNBCC dell’Alto Garda – TNBCC di Manzano – UDBCC di Civitanova Marche –MCBanca della Ciociaria – FRBCC di San Marzano di San Giuseppe – TABCC Don Rizzo Alcamo – TPCassa Rurale di Tenno - Val di Non – Cles – TN
* BCC = Banca di Credito Cooperativo
CU Vita
… and also Distribution Agreements
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National Network over 3,400 branches and 2,500 financial advisors
UCI
BPL
BPL Eurovita
BDM
BPU
522
538
657
253
BPCICARIME
BranchesShare of APE in 2003
53%
17%
11%
7%
BCC (*)
Other12%
100%
Financial Advisors
1,750
717
167
TOTAL
Further opportunities with less developed bank networks...
N/A
2,467
336
BPB
241326380
3,420 2,467
(*) former Nad.Ned. distributors
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BANK RETAIL CUSTOMERS
CU VITAUNICREDITO
23%EUR 2.25M
AVIVA VITABPCI/CARIME
2%EUR 0.4m
CU PREVIDENZAEUROVITA
BPL4,4%
EUR 0.3mCU LIFE
B.D. MARCHE2%
* EUR 0.3m
PE
NE
TRA
TIO
N
30%
20%
1,000,000 2,000,000500,000 1,500,0002003 NB PREMIUM PER BRANCH
**
*
*
*
Source : AVIVA
Opportunity to Increase Customer Penetration
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0
0.5
1
1.5
2
2.5
SanPaolo IMI Unicredit MPS BancaLombarda
Intesa CRF MarketAverage
AvivaCompanies
CU Vita
Source : Estimates based on bank annual reports 2003
€ m
. –N
ew B
usin
ess
2003 New Business per Branch
Outperforming Bank Owned Distribution
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0%
5%
10%
15%
20%
25%
30%
35%
40%
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
MPS
Intesa
SanPaolo IMIUnicredit
Banca Lombarda
CR Firenze
Source : Estimates based on bank annual reports 2003
1,836
3,1683,359
3,087
438
770
Insurance Reserves vs Total Assets Under Management%
Insu
ranc
e R
eser
ves
/ Tot
al A
UM
€ m. Insurance Reserves per branch
Numberof
branches
Aviva strongly positioned for the future
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Aviva Italy BancassuranceModel
Life Subsidiary
Bank Branches
50%
Bank Group
100%
Dividends
Dividends
Dividends
Investment X%
Inve
stm
e nt 5
0%
Investment
Return on capital employed for Italy Life in 2003: 12% (post tax)
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Investments in Italian Bank Partners
• Aviva usually takes an equity stake in the partner bank, in return for access to distribution
• The total shareholder’s strategic investment in partner banks is €694m as at 31 March 2004 The amount in listed securities is €352m
• Future agreed shareholder investments in partner banks but not yet arranged amount to €179m
• Investments purchased at market value (independent review of value for non-listed investments)
• For non-listed strategic investments, we include a protection clause in the partnership agreement relating to the realisation value of our investment in the bank
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Why Bank Partners Choose Aviva…Benefits for our partnersWhat Aviva offers
Reputation for local bancassuranceexpertise; coupled with Aviva’s world-wide experience
Developed administration platform, web enabled for fast, cost effective processing at bank branch
Short time to market for new products; reputation for innovation
Strong, stable management team with an entrepreneurial approach
Strategic investment in Bank and share of JV company
No learning curve, high sales productivity potential
Proven, efficient platform, no implementation risks, low expense base
Highly responsive to market opportunities. Full range of competitive products offered
Experienced team with high motivation to ensure success
Long term shareholder in bank and growing share of profits in JV companyProven corporate governance model
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• Italian market and Aviva’s positioning• Bancassurance partnerships• Products• Shareholder value• Future opportunities
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Higher proportion of Unit Linked and Index Linked products, without in-house guarantees and lower capital (solvency margin) requirement.
The Market in 2003 Aviva in 2003
Source: ANIA - Individual Life total sales 2003AVIVA - New Business in 2003
Italian Life Market/Favourable AvivaProduct Mix
Unit-Index Linked 53%
Traditional 47%
Unit-Index Linked 62%
Traditional 38%
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Overview of Aviva product mix/characteristics
Minimum underlying returns on SP policies purchased from Investment Banks, with counterparties rated Aa3/AA- or above. No guarantees on RP policies. (Aviva market leader with UCI)
Unit Linked
50%
Index Linked
12%
Structures purchased from counterparties rated Aa3/AA-
or above, exactly matching product benefits
Capitalisation
27%
Traditional, including Term Assurance
11%
Minimum returns between 0% and 2.5% (2.5% on single premium policies only). Normally a fixed profit margin toAviva, rather than a percentage of investment return which is variable
Similar to capitalisation policies but with a higher level of death benefit. Growing term assurance portfolio of annual premium policies covering mortgages and bank loans
Source: AVIVA 2003 New Business
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Product Innovation: First insurer to launch Unit Linked products on the market
Anticipation of market needs and resistant design:
Experienced development team, with acknowledged product leadership in market place. Close working with partner throughout development process ensures success
Short speed to market:
Automated systems and processes – able to deliver product from specification to launch in 2 weeks. In 2003, a total of 25 new products were introduced through the various distribution channels
Operational Excellence: Products supplied by innovative workflow and service delivery
Worldwide product experience: World class expertise available from Aviva Group
Market Leading Product Development Success…
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• Italian market and Aviva’s positioning• Bancassurance partnerships• Products• Shareholder value• Future opportunities
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Strong New Business Growth
0
50
100
150
200
250
2001 2002 20030
10
20
30
40
50
2001 2002 2003
New Business Premium - APE New Business Contribution (1)
£m £m
(1) Pre tax, pre cost of capital
126m153m
194m
28m
38m
45m
49m
2004 – 1st quarter
12m
2004 – 1st quarter
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Consistent New Business Margin - %
• Diversification of bank partners• Economies of scale (e.g. one system platform)• Low expense base• Product pricing disciplines• Management of product mix• Mutual benefit through the JV Life Company
20041st quarter
22.224.9
23.2 24.3
200320022001
Source : Aviva, New Business Contribution/APE on a pre tax, pre cost of capital basis
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Strong Profit Record
0
5
10
15
20
25
30
35
2000 2001 2002 20030
10
20
30
40
50
60
70
2000 2001 2002 2003
Modified Statutory Profit (1) Life Achieved Operating Profit(2)
£m £m
(1) UK GAAP Basis, Gross of Tax (2) Gross of Tax
21m
26m24m
30m
29m
55m52m
70m
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Source: ANIA
Leading Cost Base
Consolidated Aviva LifeCompanies
Top 15 Life Companies Aviva Companies Premium perStaff
Italian Market
2002 Expense Ratios (Life)
Expense as Proportion of
premium income
0.97%
2.16% € 5.2 m
€ 2.3 m
Total Premium per Employee (Life & Non Life)
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• Italian market and Aviva’s positioning• Bancassurance partnerships• Products• Shareholder value• Future opportunities
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Ageing ratio/pensions
State pension costs as a % of GDP
Traditional retirement promise as a % of final salary
Privately funded pension assets as % of GDP
By 2050, overall population reduced from 58 m to 51 m
Over 65s will increase from 22% today to 31% in 2021 and 49% in 2050
15.4% in 2002 the highest in Europe (EU average 12.2%)
Total reserves in 2003 € 37.4 bn of which € 1.3 bn Individualpolicies
2.1m PF members and 0.5m individual policies at end 2003
67.3% one of the highest in Europe
0%
25%
50%
75%
100%
2004 2021 2050
<65>65
Source: ISTAT – COVIP - ANIA
8
10
12
14
Italy France UK Europe
67%
Strong medium-term growth drivers
2,80
20
40
60
80
100
% of GDP
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Replacement ratio (% final salary)(Employee, age 60, 35 years contribution)
64.865.264.165.471.867.3TOTAL
16.716.714.59.44.70.0Private pension
48.148.549.656.067.167.3State pension
205020402030202020102000Forecasted importance of private pension
Source: COVIP / Rapporto di strategia nazionale sulle pensioni
Strong medium-term growth drivers
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Pensions OpportunityGovernment Pension Reforms – currently in Parliament
• Gradual postponement of retirement age towards 40 years working service
• Reduce the possibility of early retirement on a full pension and introduce incentives in order to convince employees to postpone retirement
• TFR: new rules allowing transfer to the Private sector• Reduction in pension contributions for new employees• Enhanced fiscal incentives (reduction of capital gain tax
during the accumulation period)• Increase in contribution ceiling for tax relief
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Pensions OpportunityLife Assurers role
• € 13 bn contribution from employers each year to TFR
• TFR re-evaluation rate: 3.4% actual performance in 2003 versus 5.7% average for Pension Funds
• Insurers of “open” pension funds• Providers of annuities to members retiring from
service with pension fund benefits• Insurers of risk benefits• And naturally distribution of own individual products
(PIP) through bank branches• Distribution of own individual product (PIP) through
financial advisors
Aviva is Strongly Positioned for Pension Developments
Opportunities
Our plans
Source: COVIP
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Aviva Italia Summary
• Italy’s pre-eminent bancassurer• Expanding its distribution network• With a cost competitive advantage• Innovative• With a fast & proven development capability• In one of the most exciting growth markets
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European Bank Groups Capitalization (in € billion)
1 HSBC 143.12 RBS 76.73 UBS 70.04 Barclays 48.15 BNP Paribas 45.86 BSCH 44.17 HBOS 42.58 DB 41.19 BBVA 37.6
10 LTSB 37.411 Credit Suisse 34.612 SocGen 31.013 ABN AMRO 39.914 CA-CL 29.815 UCI 26.6
16 Dexia 17.617 Intesa 17.518 Nordea Bank 16.619 Std. Chartered 16.520 S. Paolo IMI 14.921 Danske Bank 13.622 Banco Popular 11.023 AIB 10.424 Bank of Ireland 10.325 Abbey National 10.326 Svenska 9.827 Commerzbank 9.328 HVB 9.229 SEB 8.130 Banesto 7.0
31 BCP 6.632 MPS 6.333 BPVN 5.234 Capitalia 5.235 Northern Rock 4.936 BNL 4.637 BPU 4.638 BES 4.339 Banca Lombarda 3.440 Bankinter 2.541 BPM 2.0
BPL 2.2BPL Investimenti 1.6Reti Bancarie 1.4
Source: Thomson Datastream and The Boston Consulting Group 2004
Appendix 1
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% of Single Premium
Initial Charge (after commission to bank) : 2.0% Nil
Annual Charge (after commission to bank) : 0.5% 0.5%
Life Company Expenses : 0.9% 0.3%
Life Company Profit : 1.6% 0.2%
Margin (Discounted Profit Flow over 6 years) = 2.5% of single premium 25% of APE
Year 1 Years 2 - 6
Note: All figures gross of tax
The Italian Financial Model: Illustration of a Six Year Single Premium Investment Bond
Appendix 2
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