Aviva Briefs Investors on Bal

RNS Number : 7928Z

Aviva PLC

20 January 2011

 

20 January 2011

AVIVA BRIEFS INVESTORS ON THE QUALITY OF ITS BALANCE SHEET

·     High quality and well managed balance sheet supporting strong capital generation, profits and dividend

·     Plan to reduce hybrid debt by at least £700 million over the next three years*

·     Pension deficit reduced to £0.4 billion (30.11.10) from £1.7 billion (31.12.09)

·     Economic capital surplus of £4.8 billion (31.12.09), within the range of an AA calibrated risk appetite, based on Aviva's capital model**

·     Proforma net asset value on a European Embedded Value equivalent basis is 617p

       (Q3 2010)***

Aviva plc ("Aviva") is holding a presentation for investors and analysts this morning on the strength of its balance sheet management and how this supports its resilient profits and capital generation.

Pat Regan, Aviva's chief financial officer, will highlight Aviva's effective management of credit and insurance risk and its disciplined asset/liability management. Aviva has high quality, well managed and diverse fixed income portfolios, and has delivered a consistently strong performance across these assets over a number of years.   

In line with the prudent management of its balance sheet in the current economic environment and its strong capital generation Aviva plans to reduce its hybrid debt by at least £700 million over the next three years.

Aviva will also provide further embedded value disclosure today. This will give additional clarity on the value of Aviva's future cash flows and allow greater comparability with other UK insurers. On a European Embedded Value equivalent basis Aviva's proforma net asset value per share is 617p (Q3 2010)***.

Andrew Moss, group chief executive, said:

"I am confident that Aviva is in a very strong position to deliver value for our customers and shareholders. Pat will demonstrate today that Aviva's high quality, well managed balance sheet is a major strength, underpinning our powerful capital generation. We have a clear strategy to grow our dividend and profits through increasing our geographic focus and in light of the changed economic environment and our strong capital generation we're planning to reduce our hybrid debt over the next three years."

Pat Regan, chief financial officer, said:

"The strength of Aviva's balance sheet rests on our successful track record of managing credit and insurance risk and the financial and risk actions we have taken, such as the material reduction of our pension deficit. We have also delivered consistent outperformance in our asset portfolios and we're disclosing today a net asset value of 617p on an EEV equivalent basis."

*The planned reduction in hybrid debt assumes no material change in circumstances

**This reflects Aviva's own assessment of economic capital and is separate from capital required by regulators

*** Proforma NAV includes an additional 10p benefit from the agreed closure of the pension scheme (reported at Q3 2010) and a 35p benefit from an additional reduction of the pension scheme deficit at 30.11.10

Media and analysts

·     The presentation and a video interview of Pat Regan and the other presenters is available for download from the company's website www.aviva.com from 9.30am

·     The event will be webcast and can be viewed from the company's website www.aviva.com

Enquiries:

Analysts

Charles Barrows                    [phone]

Jonathan Price                       [phone]

Jane Gillis                               [phone]

Media

Nigel Prideaux                        [phone]

Andrew Reid                           [phone]

Sue Winston                           [phone]

Conor McClafferty, Finsbury   [phone]

Notes to editors:

·     Aviva is the world's sixth largest**** insurance group, serving 53 million customers across Europe, North America and Asia Pacific

·     Aviva's main business activities are long-term savings, fund management and general insurance, with worldwide total sales of £45.1 billion and funds under management of £379 billion at 31 December 2009 

We are the largest insurance services provider in the UK and one of the leading providers of life and pensions products in Europe  

·    The Aviva media centre at www.aviva.com/mediaincludes images, company and product information and a news release archive

·     Follow us on twitter: www.twitter.com/avivaplc

·     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", "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 these factors 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 in our bond, mortgage and structured credit portfolios; the impact of volatility in the equity, capital and credit markets on our profitability and ability to access capital and credit; changes in general economic conditions, including foreign currency exchange rates, interest rates and other factors that could affect our profitability; 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 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 on 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 announcement are current only as of the date on which such statements are made.

****based on gross worldwide premiums at 31 December 2009

 

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