SOURCE: Aviva PLC

November 07, 2013 02:15 ET

Aviva plc Announces 3Q 2013 IMS

LONDON--(Marketwired - Nov 7, 2013) -




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News Release

Aviva plc

Interim management statement for the nine months to 30 September 2013

07 November 2013

                   Aviva plc Third Quarter 2013
                   Interim Management Statement

Mark Wilson, Group Chief Executive Officer, said:"Progress is in line with our expectations and we remain focused on
delivering cash flow plus growth. In the first nine months of 2013 our
key measure of growth, value of new business, increased by 14%. We had
strong performances from France and our growth markets of Turkey,
Poland and Asia. Conversely, value of new business remains depressed in
our turnaround businesses of Italy and Spain, and this is being
addressed."Capital generation in the period was stable at GBP1.3 billion and our
economic capital surplus now stands at GBP8 billion. We continue to 
make satisfactory progress on cost reduction, with operating expenses
10% below the 2011 baseline."Aviva remains in the early stages of turnaround. Whilst we have
resolved a key issue in the disposal of our US business and have made
progress in a number of areas, there remains much work to be done."

Cash flow      - Operating capital generation stable at GBP1.3 billion1
                 (9M12: GBP1.3 billion)
               - Continued focus on improving remittance ratios
               - Full update on cash remittances to be provided at the
                 year end

Expenses       - Operating expenses of GBP2,277 million, 10% lower than
                 our 2011 baseline

Value of new   - Value of new business up 14% to GBP571 million2 (9M12:
business         GBP503 million)
               - Increase driven by France (+33%) and our growth
                 markets of Turkey (+40%), Poland (+48%) and 
                 Asia (+43%)
               - Growth markets contributed 22% of value of new
                 business (9M12: 18%)

Combined       - Combined operating ratio stable at 96.9% (9M12: 96.7%)
operating
ratio

Balance sheet  - Pro forma3 economic capital4 surplus at GBP8.0 billion
                 (HY13: GBP7.6 billion)
               - IFRS net asset value per share 273p (HY13: 281p)
               - MCEV5 net asset value per share 437p (HY13: 441p)
               - Completed sale of US business for US$2.6 billion6
                 (GBP1.6 billion) in October

1 On a continuing basis. All numbers are continuing unless otherwise
stated.

2 On a continuing basis excluding Malaysia and Sri Lanka.

3 The pro forma economic capital surplus includes the impact of the US
Life transaction and an increase in the risk allowance for staff
pension schemes from five to ten years of stressed contributions.

4 The economic capital surplus represents an estimated position. The
capital requirement is based on Aviva's own internal assessment and
capital management policies. The term 'economic capital' does not imply
capital as required by regulators or other third parties.

5 In preparing the MCEV information, the directors have done so in
accordance with the European Insurance CFO Forum MCEV Principles with
the exception of stating held for sale operations at their expected
fair value, as represented by expected sale proceeds, less cost to
sell.

6 Transactional proceeds include repayment of an external loan of
US$290 million.

Page 2

Key financial metrics

Operating Capital Generation



                                                    9 months 9 months
                                                        2013     2012
Continuing Operations                                  GBPbn    GBPbn
United Kingdom & Ireland life                            0.4      0.5
United Kingdom & Ireland general insurance & health      0.3      0.3
Europe                                                   0.5      0.4
Canada                                                   0.1      0.1
Asia & Other                                               -        -
Total                                                    1.3      1.3

Expenses

                                 9 months 2013 9 months 2012 Sterling%
Continuing operations                     GBPm          GBPm    change
Operating expenses                       2,277         2,449     (7)%
Integration & restructuring costs          198           252    (21)%
Total expenses                           2,475         2,701     (8)%

Value of new business

                                        9 months    9 months
                                            2013        2012 Sterling%
Continuing operations                       GBPm        GBPm    change
United Kingdom                               302         288        5%
Ireland                                        2        (11)         -
France                                       112          84       33%
Poland                                        34          23       48%
Italy                                          7          19     (63)%
Spain                                         19          32     (41)%
Turkey                                        28          20       40%
Other                                          1           2     (50)%
Asia1                                         66          46       43%
Value of new business - ongoing basis        571         503       14%
Effect of disposals (Malaysia & Sri Lanka)     1           8     (88)%
Value of new business                        572         511       12%

General insurance combined operating ratio

                                        9 months    9 months
Continuing operations                       2013        2012    Change
United Kingdom                             95.5%       97.0%   (1.5)pp
Ireland                                    98.3%      105.3%   (7.0)pp
France                                     97.4%       94.9%     2.5pp
Italy                                      95.9%      100.9%   (5.0)pp
Other Europe                              109.2%      119.8%  (10.6)pp
Europe                                     98.3%       99.5%   (1.2)pp
Canada                                     95.2%       92.6%     2.6pp
General insurance combined operating ratio 96.9%       96.7%     0.2pp

Capital position
                            Pro forma3 Pro forma3
                          30 September    30 June 30 September 30 June
                                  2013       2013         2013    2013
                                 GBPbn      GBPbn        GBPbn   GBPbn

Estimated economic capital surplus2                   8.0        7.6          7.4     7.1
Estimated IGD 
solvency surplus                   3.7        3.7          4.0     4.2
IFRS net asset value 
per share                                                 273p    281p
MCEV4 net asset value 
per share                                                 437p    441p

1 Excluding Malaysia and Sri Lanka.

2 The economic capital surplus represents an estimated position. The
capital requirement is based on Aviva's own internal assessment and
capital management policies. The term 'economic capital' does not imply
capital as required by regulators or other third parties.

3 The pro forma economic capital and IGD surpluses include the
impact of the US Life transaction and, for economic capital only, an
increase in pension scheme risk allowance from five to ten years of
stressed contributions.

4 In preparing the MCEV information, the directors have done so in
accordance with the European Insurance CFO Forum MCEV Principles with
the exception of stating held for sale operations at their expected
fair value, as represented by expected sale proceeds, less cost to
sell.


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