Aviva Full R&A
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Annual report + accounts 2002 A Aviva plc + accounts 2002 viva plc Annual report St Helen’s, 1 Undershaft London EC3P 3DQ Telephone +44 (0)20 7283 2000 www.aviva.com Registered in England Number 2468686 A brand new company, 300 years strong 01 Highlights of the year 43 Statement of directors’ responsibilities 51 Consolidated statement of total 02 Chairman’s statement 43 Independent auditors’ report recognised gains and losses 04 Group at a glance 44 Accounting policies 51 Reconciliation of movements in 06 Group Chief Executive’s review 47 Consolidated profit and loss account consolidated shareholders’ funds 08 Operating review Technical account – long-term business 52 Consolidated Group balance sheet 20 Corporate social responsibility 48 Consolidated profit and loss account 54 Consolidated cash flow statement 22 Financial review Technical account – general business 55 Company balance sheet Group financial calendar for 2003 28 Board of directors 49 Consolidated profit and loss account 56 Notes to the accounts 31 Directors’ report Non-technical account 91 Five year review Ex-dividend date (ordinary shares) 26 March 33 Corporate governance 50 Reconciliation of Group operating 92 Alternative method of reporting Record date (ordinary shares) 28 March 35 Directors’ remuneration report profit to profit on ordinary activities long-term business 3 before tax 99 Aviva Group of companies First dividend payment for 8 ⁄8% cumulative irredeemable preference shares 1 April 100 Shareholder information Announcement of first quarter long-term savings new business figures 24 April Dividend Reinvestment Plan election date 25 April Annual General Meeting 7 May Dividend payment date (ordinary shares) 16 May 3 First dividend payment for 8 ⁄4% cumulative irredeemable preference shares 1 July Announcement of unaudited six months’ interim results 31 July 3 Our position Second dividend payment for 8 ⁄8% cumulative irredeemable preference shares 30 September Announcement of third quarter long-term savings new business figures 23 October 3 Second dividend payment for 8 ⁄4% cumulative irredeemable preference shares 31 December Useful contact details We are the world’s seventh- Detailed below are various addresses that may prove useful in the event that you have a query in respect of your shareholding. largest insurer, the biggest in Please quote Aviva plc, as well as the name and address in which your shares are held, in all correspondence. General shareholding Lloyds TSB Registrars The Causeway 0870 600 3952 the UK and the leading provider administration queries Worthing 7th of life and pension products to and Aviva share account queries West Sussex BN99 6DA largest insurer worldwide Europe. Now we are taking the Corporate and single company Peps Barclays Stockbrokers Tay House 0870 514 3263 Limited 300 Bath Street opportunity to build a distinctive Glasgow G2 4LH international brand to reflect Individual Savings Accounts (“Isas”) Lloyds TSB Registrars The Causeway 0870 242 4244 (Isa Manager) Worthing No1 that strength. West Sussex BN99 6DA insurer in the UK and life and Internet sites Aviva owns various internet sites, most of which interlink with each other. For a list of all our websites, please go to: pensions provider to Europe http://www.aviva.com/customers/global.cfm Aviva group www.aviva.com UK long-term savings and general insurance www.norwichunion.com Fund management www.morleyfm.com 25m Buying a home www.your-move.co.uk customers worldwide £28bn premium income and investment sales from continuing operations* £208bn assets under management , ® 59 000 Designed and produced by Radley Yeldar using RingMaster . Cover and windmill employees worldwide photography by George Brooks, Board photography by Craig Easton. Printed by CTD Capita Limited. All registered trademarks acknowledged. This document is printed on Mega Matt, using a chlorine free process, produced from 50% pre and post consumer 101 Aviva plc *Including share of associates' premiums. All growth rates are quoted at constant rates of exchange. waste. Nordic Swan certified. Annual report + accounts 2002 Our brand: why is it important? In a world where many have plenty of choice, but not enough time, brands are increasingly useful as signposts, helping people make choices with confidence. Aviva is determined to build a distinctive brand. Research worldwide revealed that consumers associate the name Aviva with making the most out of life. Building a brand that stands out Focusing our brand activity We reviewed our trading brands market by market and retained the strongest. Now we are rolling out Aviva as a new international brand to reinforce the best and replace the rest. The Aviva brand is already live in many of our operations in Europe and Asia. It will be introduced in Australia, Canada, the US and other markets in 2003. It takes time, commitment and consistent delivery to build a strong brand. Norwich Union (UK), Hibernian (Ireland), Delta Lloyd (Netherlands) and Commercial Union (Poland) are valuable assets that we have retained. Protecting the value in our strongest brands Making our marketing activity work harder We are concentrating our efforts on promoting fewer brands to help achieve greater consistency and value for money from our marketing and advertising activity worldwide. With 59,000 people working for Aviva around the world, a strong group brand – with shared values of integrity, performance, progressiveness and teamwork – helps unite us as a single team. Creating a stronger sense of belonging Aviva – making the most out of life Highlights of the year £1,798m operating profit before tax** £14.6bn worldwide long-term savings new business sales 23p full year dividend 1 Worldwide business mix* £9.7bn by sector shareholders’ funds 1 – General insurance 28% 2 – Long-term savings# 72% 2 £959m operating profit before tax from general insurance† 1 Worldwide business mix* by geography 2 1 – Rest of world 10% 2 – Europe 90% **From continuing and discontinued operations, including life achieved operating profit and stated before amortisation of goodwill and *With reference to premium income exceptional items. from continuing operations. †From continuing and discontinued 01 Aviva plc #Including health premium income. operations. Annual report + accounts 2002 Group strategy 1 To grow our long-term savings business aggressively and profitably. 2 To build a world-class fund management business. 3 To take a focused approach to general insurance, with disciplined underwriting and efficient claims handling. 4 To build top-five positions in key markets. 5 To withdraw from lines of business or markets which do not offer the potential for market-leading positions or superior returns. Chairman’s statement The year 2002 was a difficult one for investors. Returns were mostly negative, and often dramatically so. Aviva shareholders have also seen our share price decline. Our policyholders have experienced both a shrinking investment and reduced bonuses. There is nothing we can do about world equity markets. What we can do, however, is try to be better than the market and perform above the level of our competitors. It seems to me that we have succeeded in that ambition. In life and pensions, we have grown to be the number one provider to Europe, having been a medium-sized company only four years ago. In general insurance, we have outperformed the market and few of our competitors in the world have been more profitable. We have further streamlined and focused our business during In life and pensions, the year. The biggest sale was of our Australian and New Zealand general insurance operations, following an unsolicited offer at a price the board felt compelled to accept. We also exited markets we have grown to where we were sub-scale. In contrast, we are expanding where we see opportunities to be be the number one leaders. We signed a further bancassurance partnership agreement in Spain and are now the third-biggest life and savings operation in that country. We have come from virtually nowhere a few years provider to Europe, back. In France we signed a bancassurance agreement with Crédit du Nord to further consolidate our position. In the Netherlands we agreed to be the exclusive life and general insurer for ABN AMRO, having been a one of the country’s three leading banks, and in Italy we agreed our fourth major bancassurance partnership with Banca Popolare medium-sized Commercia e Industria. Our capital position has suffered as a result of the decline in equity company only four markets. However, we remain strong and our rating is healthy. years ago. 02 Aviva plc Annual report + accounts 2002 Aviva relative to FTSE Eurotop 300 Life Assurance and FTSE Eurotop 300 Aviva rebased 100 FTSE Eurotop 300 Life rebased to 100 FTSE Eurotop 300 rebased to 100 80 60 40 20 0 Jul Jan Jun Feb Oct Apr Sep Dec Nov Mar Aug May We are looking forward to an open, transparent and competitive European Market becoming a reality. The European Financial Services Round Table (EFR) – a group of top people from Europe’s largest banks and insurance companies – is working to achieve that goal. I am the EFR’s chairman and we are proposing ways to build the missing links in the creation of such a market, ahead of the enlargement of the European Union in 2004 when 10 new members will join. A level playing field will benefit competition and the consumer. We obviously upset many of our shareholders and the market when we announced our proposal last year to reduce our dividend. The decision was the correct course of action necessary to retain The world of business has been plagued by many scandals and capital to take advantage of profitable growth opportunities. unacceptable behaviour during the year. We operate to high The subsequent fall in the equity markets has created a strain on standards of ethics and corporate governance and also have a our capital position and increased the importance of striking the demanding programme of corporate social responsibility, for which right balance between retention of funds to grow our long-term we have attracted flattering attention.