Final Results - Part 1

Aviva PLC
09 March 2005


PART 1 OF 4

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NEWS RELEASE

9 March 2005

PRELIMINARY RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2004 AND ACQUISITION OF RAC PLC

•   Worldwide operating profit up 25% to £2,344 million from clear focus on managing business for value

•   Life operating profit up 9% to £1,611 million reflecting steady return of customer confidence

•   Accelerating long-term savings sales growth up 12% to £20,687 million with outperformance in many markets in 
    Europe and investment sales up 44% to £1,629 million

•   Continued excellent general insurance performance with profits up 47% to £1,326 million; worldwide combined 
    operating ratio ahead of target at 96.7%

•   Aviva to bring together Norwich Union Insurance and RAC to create a powerful new combination in insurance and 
    motoring services and delivering substantial shareholder value potential to Aviva's shareholders (see separate 
    announcement)

•   Total dividend increased by 5%, strongly covered by post tax statutory profits

•   Improved transparency and disclosure from early adoption of European Embedded Value

Richard Harvey, group chief executive, commented:

'Aviva is thriving. This is a strong set of results, delivered by managing our business for value for customers and
shareholders. Our diversified business model brings the complementary qualities of long-term savings and general
insurance. Our aim is profitable growth in all of our businesses.

'We have one of the strongest platforms for long-term savings growth across Continental Europe and this now accounts
for over 50% of our life and pensions new business. We've also gained good ground in the long-term growth markets of
Asia. The outlook is brighter for long-term savings across our main markets as savers' confidence continues to return.

'Our general insurance business continues to deliver very strong and resilient earnings through scale benefits and 
innovation. Today we've also announced the acquisition of RAC plc which builds on our success in the UK general 
insurance market and creates a powerful new combination in insurance and motoring services while delivering substantial
shareholder value potential to Aviva's shareholders.

'Our shareholders are seeing healthy dividend growth underpinned by strong statutory profits.'

Highlights                                                                  FY 04      FY 03     Growth in constant
                                                                                                           currency
                                                                    
Operating profit before tax - EEV basis*                                  £2,344m    £1,906m                     25%
Operating profit before tax - modified statutory basis**                  £1,861m    £1,490m                     27%

Life EEV operating return                                                 £1,611m    £1,496m                      9%
General insurance operating profit                                        £1,326m      £911m                     47%

Present value of new business premiums (PVNBP)#                          £20,687m   £18,809m                     12%
Investment sales                                                          £1,629m    £1,141m                     44%
New business contribution                                                   £706m      £646m                     11%

Total dividend per share                                                   25.36p     24.15p                      5%

Total shareholders' funds***                                             £12,937m   £10,752m                     20%
Return on capital employed                                                  14.4%      13.1%                      -

Net asset value per share                                                    532p       484p                     10%

    All operating profit is from continuing operations.
*   Including life European Embedded Value (EEV) operating return, before amortisation of goodwill and exceptional 
    items.
**  Before amortisation of goodwill, amortisation of acquired additional value of in-force long-term business and
    exceptional items.
*** Measured on an EEV basis, excluding minority interests.
#   From continuing operations, including share of associates' premiums and new single premium mortgage completion 
    sales through Norwich Union Equity Release.
    All growth rates quoted are at constant rates of exchange.

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NEWS RELEASE

Segmental analysis of Group operating profit*

                                                                                                 2003
                                                                                              at 2004
                                                                                             exchange
                                                                                                rates    Restated**
                                                                                    2004   Restated**          2003
Continuing operations                                                                 £m           £m            £m

Life EEV operating return
United Kingdom                                                                       551          597           597
France                                                                               286          224           228
Ireland                                                                               40           56            57
Italy                                                                                 79           69            70
Netherlands (including Belgium and Luxembourg)                                       277          194           198
Poland                                                                                93           94            99
Spain                                                                                180          162           165
Other Europe                                                                          22           17            18
International                                                                         83           60            64
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                                                                                   1,611        1,473         1,496
===================================================================================================================
Health
United Kingdom                                                                        12           13            13
France                                                                                 8            9             9
Netherlands                                                                           38           38            39
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                                                                                      58           60            61
===================================================================================================================
Fund Management(1)
United Kingdom                                                                         1          (11)          (11)
France                                                                                 7            5             5
Other Europe                                                                           6            1             2
International                                                                          9            1             -
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                                                                                      23           (4)           (4)
====================================================================================================================
General insurance
United Kingdom                                                                       832          676           676
France                                                                                32           34            35
Ireland                                                                              153           89            91
Netherlands                                                                           71           34            35
Other Europe                                                                          39           32            32
Canada                                                                               152           12            12
Other                                                                                 47           28            30
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                                                                                   1,326          905           911
===================================================================================================================
Non-insurance operations(2)                                                          (31)           6             8

Corporate costs                 - global finance transformation programme            (85)         (60)          (60)
                                - central costs and sharesave schemes                (93)        (100)         (100)
Unallocated interest charges    - external                                          (246)        (209)         (210)
                                - intra-group                                       (219)        (196)         (196)
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Group operating profit before tax*                                                 2,344        1,875          1,906
====================================================================================================================

*   Group operating profit before tax, before amortisation of goodwill and exceptional items. All operating profit is
    from continuing operations.
**  Restated for the effect of implementing European Embedded Value principles.

(1) Excludes the proportion of the results of Morley's fund management businesses and of our French asset management
    operation Aviva Gestion d'Actifs (AGA) that arise from the provision of fund management services to our life 
    businesses. These results are included within the life EEV operating return. 
(2) Excludes the results of Norwich Union Equity Release. Also excludes the proportion of the results of Norwich Union
    Life Services relating to the services provided to the UK life business. These results are included within the 
    life EEV operating return.

The total modified statutory operating profits for the year to 31 December 2004 were £1,861 million (2003: £1,490
million; £1,471 million restated at constant exchange rates).

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NEWS RELEASE

GROUP CHIEF EXECUTIVE'S STATEMENT

Our powerful combination of life and general insurance businesses has delivered a 25% increase in group operating 
profit on the European Embedded Value (EEV) basis of £2,344 million and a return on capital employed of 14.4% for 
the year. This is a strong set of results, achieved by managing our business for value on behalf of both our customers
and shareholders. 

The excellent growth in life new business volumes has been matched by a growth in profits with new business 
contribution up 11% to £706 million. The internal rate of return (IRR) on life new business written was broadly 
maintained at 12.3% (2003: 12.4%). The combined operating ratio (COR) in our general insurance business was 96% in the
second half of 2004, improving on the excellent performance we saw in the first six months and well ahead of our 
stated target of 100%.

The Board has proposed a final dividend of 16.00 pence net per share (2003: 15.15 pence) payable on 17 May 2005 to 
shareholders on the register on 18 March 2005. This brings the total dividend for 2004 to 25.36 pence net per share, 
a healthy increase of 5% on 2003. The dividend was covered 2.25 times by modified statutory earnings. Our dividend 
policy remains unchanged: to grow the dividend by approximately 5% per annum, whilst looking to retain cover in a 
range of 1.5 to 2 times operating earnings after tax on a modified statutory basis.

Long-term savings

During 2004 there was a gradual return of customer confidence and this, combined with the all-round strength of our 
life businesses, saw us increase long-term savings new business by 17%, to £17,224 million. Many of our businesses 
grew ahead of their local markets.

Worldwide life and pensions new business was up 12% to £20,687 million (PVNBP basis). New business contribution 
increased by 11% to £706 million. Total life operating profit was £1,611 million (2003: £1,496 million). In the UK, 
operating profit was £551 million (2003: £597 million), reflecting the impact of increased new business contribution
notwithstanding increased lapse experience.

In the UK, Norwich Union Life saw a return to growth in 2004 with total sales up 12% to £7,877 million as the 
long-term savings market showed some recovery from the lower volumes seen in 2003. The IRR for the full year 
improved to 11.4% from 11.0% in the first half of 2004, due to product mix and pricing actions, notwithstanding 
lapse assumption changes. The IRR has decreased from 12.1% in 2003 as a result of reduced with-profit business. We
remain committed to improving the IRR by 1% each year, targeting an IRR of 15% in the UK life business.

During 2005 the new depolarised distribution landscape will start to emerge in the UK. Norwich Union is well-placed
to benefit from these changes and has already announced arrangements with a number of major distribution partners
including Bankhall, Millfield, the Portman Building Society, Sesame, and more recently, Barclays and Fidelity. We 
continue to hold discussions with a number of other distribution groups and these represent further opportunity for 
Norwich Union to strengthen its distribution capability.

In Continental Europe we have one of strongest platforms for long-term savings and sales here accelerated strongly in
2004, up 23% to £8,339 million. For the first time, sales from Continental Europe accounted for more than 50% of 
the Group's life and pensions business. We delivered particularly strong growth in both France and the Netherlands 
while our operations in Italy and Spain outperformed their local markets.

In France, sales grew by 29% over 2003 with record growth from our relationship with the AFER savings association. 
Our new bancassurance agreement with Credit du Nord came on stream in the final quarter of the year. Overall sales 
saw the benefit of steadily improving equity markets with a return to unit-linked investments and Aviva France's 
unit-linked sales doubled to almost £700 million in the year.

Delta Lloyd in the Netherlands saw excellent growth across its full product range. Sales of group pension products,
a specific area of focus for Delta Lloyd, increased by 30% and life product sales were up 37% with strong growth in
both the Netherlands and Belgium. Our joint venture with ABN AMRO goes from strength to strength with sales up 
strongly in 2004 following on from the excellent start in 2003.

During 2004 we also gained good ground in Asia, building on the firm foundations we have set down in both China and 
India to ensure Aviva is positioned to participate in these high growth markets. These investments complement our
established businesses in Singapore and Hong Kong where we are in partnership with DBS. In China we now have three 
city licences as in September we began business in Beijing and Chengdu, the provincial capital in Sichuan, adding to
our operation in Guangzhou which was launched in January 2003.

General Insurance

In 2004 we delivered another tremendous general insurance result with operating profits up 47% to £1,326 million 
which corresponds to a return on capital employed of 20.1%. The worldwide COR was 96.7% for the year, with results
from all markets showing an improvement on 2003.

In a relatively flat rating environment in UK personal lines we have maintained profitability. This has been assisted
by claims cost savings in our supply chain that amounted to an increase of £55 million across our UK portfolio. We
continued to push ahead on expense efficiency and the expense ratio in the UK reduced to 10.0% (2003: 10.5%). 
Following the closure of Hill House Hammond, our UK high street broker, we are on target to convert around 500,000
policies onto our low-cost NU Direct platform.

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NEWS RELEASE

Profits in both Ireland and Canada showed significant growth year on year due to lower claims frequency in both 
markets. In Ireland our COR was 87% although current premium rates are adjusting to reflect lower claims costs. 
In Canada underlying performance was strong as 2003 profits had been depressed by the impact of prior year claims 
reserving of £70 million in our Canadian subsidiary, Pilot.

In the Netherlands profitability increased due to an improved COR from the ABN AMRO business of 90% (2003: 93%) and 
cost savings from the implementation of a shared service centre.

The general outlook is for stable premium rates across both personal and commercial lines, although we anticipate 
decreases in Ireland. We confirm our COR target of 100% for 2005 and 2006 based on our continued focus on 
underwriting discipline, claims costs and expense efficiency.

Cost Savings

Reducing costs and improving our operational efficiency continued to be one of our key objectives for 2004. We have 
successfully achieved our targets announced in 2003, delivering earned savings of £225 million in 2004 and 
accordingly, we expect to achieve annualised savings of £250 million in 2005. Activity has focused mainly on the 
larger UK businesses.

In addition, in 2004 Aviva France absorbed the Credit du Nord business into its existing cost base and Delta Lloyd 
held costs stable against a growing life and general insurance business. Improving levels of efficiency remains firmly
on our agenda and our UK life business has previously announced further annualised cost savings of £130 million from 
2007 after incurring around £150 million of one-off costs. Having successfully achieved cost savings, our strategy is
to grow the business while maintaining our cost base.

Balance Sheet

In the final quarter of 2004 we strengthened our balance sheet with the issue of a direct capital instrument, raising
£990 million. The proceeds will be used to pay down senior debt and over £300 million had been paid down by the end 
of the year. This restructuring of the balance sheet has helped improve the Group's already strong Insurance Groups
Directive (IGD) surplus capital position to £3.6 billion (2003: £2.4 billion) at the end of 2004.

Net asset value per share rose to 532 pence (2003: 484 pence) supported by strong operating profits, higher than
assumed investment returns and foreign exchange profits. Total assets under management grew to £273 billion 
(2003: £240 billion) driven by the benefit of new business flows in the period and the improvement in worldwide 
investment markets. 

Outlook

In 2004 we made good progress in delivering value to our customers through cost efficiency and improved customer 
service. All of our businesses have been tasked with improving in these key customer areas. 

With our early adoption of EEV and IFRS disclosures, we are well prepared for the introduction of new financial 
reporting and regulatory rules.

We have come through a period of difficult markets in recent years in excellent shape. Aviva has a strong platform
in long-term savings for organic growth and we start 2005 with greater expectations, than a year ago, of steady market
growth. In general insurance, Aviva has clear competitive scale advantages, generating high returns for shareholders,
on which we will look to leverage. We will continue to augment our growth ambitions from time to time with
value-driven acquisitions.


Richard Harvey
Group chief executive

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NEWS RELEASE

Enquiries:

Richard Harvey                       Group chief executive                        Telephone [phone]
Andrew Moss                          Group finance director                       Telephone [phone]

Analysts:
Steve Riley                          Investor relations director                  Telephone [phone]

Media:
Hayley Stimpson                      Director of external affairs                 Telephone [phone]
Sue Winston                          Head of group media relations                Telephone [phone]
Rob Bailhache                        Financial Dynamics                           Telephone [phone]
Transaction press office                                                          Telephone [phone]

NEWSWIRES: There will be a conference call today for wire services at 8:15am (GMT) on [phone] Quote: 
Aviva, Richard Harvey.

PRESS: There will be a press conference today at 12.30pm (GMT) at Aviva, St Helen's, 1 Undershaft, London, EC3P 3DQ. 
Journalists wishing to attend should ring Anna Marsh, Financial Dynamics in advance on [phone].

ANALYSTS: A presentation to investors and analysts will take place at 9:30am (GMT) at St Helen's, 1 Undershaft, London,
EC3P 3DQ. The investors and analysts presentation is being filmed for live webcast and can be viewed on the Group's 
website www.aviva.com or on www.cantos.com. In addition a replay will be available on these websites later today. 
There will also be a live teleconference link to the investor and analyst meeting on [phone]. A replay 
facility will be available for two weeks on [phone]. The pass code is 7125647# for the whole presentation 
including Question & Answer session or 3831407# for Question & Answer session only.

A results only Q&A teleconference will be hosted by Nic Nicandrou, Group Financial Control Director at 1.45pm (GMT)
for additional detailed questions. The dial-in number will be [phone]. A replay facility will be available
up to 13 March 2005 and can be accessed by dialing [phone] and entering pin number 8618446#.

The presentation slides will be available on the Group's website, www.aviva.com/investors/presentations.cfm from 
9am (GMT).

The Aviva media centre at www.aviva.com/media includes images, company information and a news release archive. High
resolution images are also available for the media to view and download free of charge from www.vismedia.co.uk

Photographs are available from the Aviva media centre at www.aviva.com/media.


Notes to editors

• Aviva is one of the leading providers of life and pensions to Europe with substantial positions in other markets 
  around the world, making it the world's fifth largest insurance group based on gross worldwide premiums at 31 
  December 2003.

• Aviva's principal business activities are long-term savings, fund management and general insurance, with worldwide 
  premium income (before reinsurance) and retail investment sales from continuing operations of £33 billion and assets
  under management of £273 billion.

• Overseas currency results are translated at average exchange rates.

• The present value of new business premiums (PVNBP) is equal to total single premium sales received in the year plus
  the discounted value of annual premiums expected to be received over the term of the new contracts, and is
  expressed at the point of sale.

• All growth rates are quoted at constant currency, which excludes the impact of changes in exchange rates between 
  periods.

• This preliminary announcement may contain 'forward-looking statements' with respect to certain of Aviva's plans and
  its current goals and expectations relating to its future financial condition, performance and results. By their
  nature, all forward-looking statements involve risk and uncertainty because they relate to future events and 
  circumstances which are beyond Aviva's control, including amongst other things, UK domestic and global economic
  business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies 
  and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing impact and other
  uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and
  other legislation and other regulations in the jurisdictions in which Aviva and its affiliates operate. As
  a result, Aviva's actual future financial condition, performance and results may differ materially from the plans,
  goals and expectations set forth in Aviva's forward-looking statements. 

  Aviva undertakes no obligation to update the forward-looking statements contained in this presentation or any other 
  forward-looking statements we may make.

This document should be read in conjunction with, and is qualified in its entirety by reference to, the full terms of 
the announcement by Aviva dated 9 March 2005 relating to the recommended offer for RAC (the 'Offer').

This document does not constitute an offer to sell or invitation to purchase any securities in any jurisdiction.

The release, publication or distribution of this document in certain jurisdictions may be restricted by law. The 
availability of the Offer, if made, to persons not resident in the United Kingdom may be affected by the laws of the 
relevant jurisdictions in which they are located. Persons who are not resident in the United Kingdom or who are 
subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

The Offer is not being made, directly or indirectly, in, into or from, or by the use of mails or any means of 
instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce 
of, or any facility of a national, state or other securities exchange of, nor will it be made in, into or from the US, 
Australia, Canada or Japan. Accordingly, copies of this document and formal documentation relating to the Offer are 
not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or 
from the US, Australia, Canada or Japan and the Offer will not be capable of acceptance by any such use, 
instrumentality or facility within the US, Australia, Canada or Japan and persons receiving this document or any 
formal documentation (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or 
send it in, into or from the US, Australia, Canada or Japan. Doing so may render invalid any purported acceptance of 
the Offer. All RAC Shareholders or other persons (including nominees, trustees or custodians) who would or otherwise 
intend to or may have a contractual or legal obligation to forward this document or any formal documentation relating 
to the Offer to any jurisdiction outside the United Kingdom should refrain from doing so and seek appropriate 
professional advice before taking any such actions.

This document is not an offer of securities for sale in the US and the new Aviva shares have not been, and will not 
be, registered under the US Securities Act of 1933 or under the securities laws of any state, district or other 
jurisdiction of the US, Australia, Canada or Japan and no regulatory clearance in respect of the new Aviva shares has 
been, or will be, applied for in any jurisdiction other than the UK.  Accordingly, unless an exemption under the US 
Securities Act of 1933 or other relevant securities laws is applicable, the new Aviva shares are not being, and may 
not be, offered, sold, resold, delivered or distributed, directly or indirectly, in or into the US, Australia, Canada 
or Japan or to, or for the account or benefit of, any US person or any person resident in Australia, Canada or Japan.

This document contains certain forward-looking statements. Such forward-looking statements involve risks and 
uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors 
could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due 
to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, 
which speak only as of the date hereof. Aviva disclaims any obligation to update any forward-looking or other 
statements contained herein, except as required by applicable law.

Expected revenue synergies and cost savings statements in this document have been calculated on the basis of the 
existing costs and operating structures of the companies and by reference to current prices and the current regulatory 
environment.  The statements of estimated revenue synergies and cost savings relate to future actions and 
circumstances which, by their nature, involve risks, uncertainties and other factors.  As a result of this, the 
revenue synergies and cost savings referred to may not be achieved, or those achieved could be materially different 
from those estimated.  

A statement in this document that the Offer will be earnings accretive from 2006 does not constitute a profit forecast 
and should not be interpreted to mean that earnings for 2006 or any subsequent financial period would necessarily be 
greater than those for any preceding financial period.

Financial calendar 2005

Final 2004 dividend ex-dividend date (ordinary shares)                                                     16 March
Scrip price setting period for final 2004 dividend                                                      16-22 March
Final 2004 dividend record date (ordinary shares)                                                          18 March
Announcement of scrip dividend price for final dividend                                                    23 March
Last date for receipt of scrip elections for final dividend                            25 April (close of business)
Annual General Meeting                                                                                     26 April
Announcement of long-term savings new business for 3 months to 31 March 2005                               28 April
Final 2004 dividend payment date (ordinary shares)                                                           17 May
Announcement of unaudited six months' interim results                                                     11 August
Interim 2005 dividend ex-dividend date (ordinary shares)                                                  17 August
Scrip price setting period for interim 2005 dividend                                                   17-23 August
Interim 2005 dividend record date (ordinary shares)                                                       19 August
Announcement of scrip dividend price for interim dividend                                                 24 August
Last date for receipt of scrip elections for interim dividend                        20 October (close of business)
Announcement of long-term savings new business for 9 months to 30 September 2005                         27 October
Interim dividend payment date (ordinary shares)                                                         17 November


END PART 1 OF 4





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