Half-year Report - Part 1 of 4 - Press Release

RNS Number : 3233I

Aviva PLC

08 August 2019

 

Start part 1 of 4

News Release

8 August 2019

AVIVA PLC 2019 INTERIM RESULTS ANNOUNCEMENT*

Maurice Tulloch, Chief Executive Officer, said:

Aviva has strong foundations to build upon but there is much to do to improve our performance.

Our performance is mixed, with operating earnings per share up 2%. We have delivered strong general insurance results with a combined ratio of 95.9%. In life insurance and asset management, operating profits declined due to challenging market conditions and the absence of a longevity reserve release.

In June we announced a plan to improve Aviva's performance and deliver an excellent experience for our customers. We have made a quick start; separating management of our life and general insurance businesses in the UK and bringing together UK Digital and UK General Insurance.

Our financial position remains strong with a capital surplus of £11.8 billion and £2.3 billion of cash at group. Maintaining such a healthy capital surplus is important as we continue to reduce our debt levels and safely navigate uncertain market conditions. Aviva is ready and resilient.

In line with our progressive dividend policy, the Board of Directors has increased the interim dividend by 3% to 9.50 pence per share.

I am working with the Board to refresh Aviva's strategy and we have decided to review the strategic options for our Asian businesses. Aviva's businesses in Asia have excellent growth and earnings potential and we are considering a range of options to help these businesses reach their potential.

I am confident that our combination of excellent insurance skills, a strong balance sheet and world class distribution and partners provide a strong foundation for Aviva's future success.

Profit	·      Operating EPS1,‡# up 2% to 27.3 pence (HY18: 26.8 pence) ·      Operating profit2,‡# up 1% to £1,448 million (HY18: £1,438 million) ·      IFRS profit after tax £1,180 million (HY18: £376 million) ·      Basic EPS 28.2 pence (HY18: 7.9 pence)
Dividend	·      Interim dividend per share up 3% to 9.50 pence (HY18: 9.25 pence)
Capital	·      Solvency II cover ratio3,‡ 194% (2018: 204%) ·      Solvency II capital surplus3 £11.8 billion (2018: £12.0 billion) ·      Operating capital generation# £0.8 billion (HY18: £0.9 billion) ·      IFRS net asset value per share 432 pence (2018: 424 pence)
Cash	·      Cash remittances‡# £1,582 million (HY18: £1,493 million) ·      Holding company liquidity £2.3 billion4 (February 2019: £1.6 billion)

‡    Denotes Alternative Performance Measures (APMs) which are key performance indicators of the Group used to measure our performance and financial strength. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

#    Denotes key performance indicators which are used by the Group to determine or modify remuneration. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

1    This measure is derived from the Group adjusted operating profit APM. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

2    Group adjusted operating profit is a non-GAAP Alternative Performance Measure (APM) which is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

3    The estimated Solvency II position represents the shareholder view as defined in section 8.i of the Analyst Pack.

4    Stated as at end July 2019 .

* This announcement contains inside information. The person responsible for making this announcement on behalf of the Group is Kirstine Cooper (Group Company Secretary).

Key Financial Metrics

Operating profit^1,‡#

	6 months 2019 £m	6 months 2018 £m	Sterling % change	Full year 2018 £m
Life business	1,282	1,392	(8)%	2,999
General insurance and health	391	302	29%	704
Fund management	61	74	(18)%	146
Other2	(286)	(330)	13%	(733)
Total	1,448	1,438	1%	3,116

Operating earnings per share‡#

27.3p

26.8p

2%

58.4p

Cash remittances^3,‡#

	6 months 2019 £m	6 months 2018 £m	Sterling % change	Full year 2018 £m
United Kingdom3	983	1,216	(19)%	2,513
Canada	15	13	15%	28
Europe3	503	227	122%	483
Asia, Aviva Investors and Other	81	37	119%	113
Total	1,582	1,493	6%	3,137

Operating capital generation (OCG): Solvency II basis^3,#

	6 months 2019 £bn	6 months 2018 £bn	Sterling % change	Full year 2018 £bn
United Kingdom3	0.5	0.9	(44)%	2.2
Canada	0.1	-	N/A	0.1
Europe3	0.5	0.4	25%	0.9
Asia & Aviva Investors	-	-	N/A	0.1
Other	(0.3)	(0.4)	25%	(0.1)
Total	0.8	0.9	(11)%	3.2

Expenses

	6 months 2019 £m	6 months 2018 £m	Sterling % change	Full year 2018 £m
Operating expenses	1,964	1,929	2%	4,026

Operating expense ratio

55.5%

54.9%

0.6pp

54.2%

Value of new business: Adjusted Solvency II basis (VNB)^‡

	6 months 2019 £m	6 months 2018 £m	Sterling % change	Full year 2018 £m
United Kingdom	196	198	(1)%	481
Europe	237	307	(23)%	517
Asia & Aviva Investors	102	98	4%	204
Total	535	603	(11)%	1,202

General insurance combined operating ratio (COR)^‡

	6 months 2019	6 months 2018	Change	Full year 2018
United Kingdom	95.7%	94.3%	1.4pp	93.8%
Canada	97.5%	104.6%	(7.1)pp	102.4%
Europe	92.9%	93.5%	(0.6)pp	93.4%
Asia & Other	111.2%	125.0%	(13.8)pp	122.1%
Total	95.9%	97.4%	(1.5)pp	96.6%

Profit after tax

	6 months 2019 £m	6 months 2018 £m	Sterling % change	Full year 2018 £m
IFRS profit after tax	1,180	376	214%	1,687
Basic earnings per share	28.2p	7.9p	257%	38.2p

Interim dividend

	6 months 2019	6 months 2018	Sterling % change
Interim dividend per share	9.50p	9.25p	3%

Capital position

	30 June 2019	31 December 2018	Sterling % change	30 June 2018
Estimated shareholder Solvency II cover ratio4,‡	194%	204%	(10)pp	187%
Estimated Solvency II surplus4	£11.8bn	£12.0bn	(2)%	£11.0bn
Net asset value per share	432p	424p	2%	411p

‡    denotes APMs which are key performance indicators. There have been no changes to the APMs used by the Group during the period under review.

#    denotes key financial performance indicators used as a base to determine or modify remuneration.

1    Group adjusted operating profit is a non-GAAP Alternative Performance Measure (APM) which is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

2    Other includes other operations, corporate centre costs and group debt and other interest costs.

3    Following the UK's decision to leave the European Union, the Ireland branches of the UK business have been transferred to Ireland effective March 2019. As a result the Ireland business is now reported within Europe instead of the United Kingdom for all metrics. Comparative balances have been restated accordingly.

4    The estimated Solvency II position represents the shareholder view only. See section 8i for more details.

Chief Executive Officer's report

Overview	In the first half of 2019, Aviva's operating profit1,‡# rose 1% to £1,448 million (HY18: £1,438 million). Operating earnings per share2,‡# increased 2% to 27.3 pence (HY18: 26.8 pence) while basic earnings per share rose 3.6 times to 28.2 pence (HY18: 7.9 pence). The Board of Directors has declared an interim dividend of 9.50 pence per share, an increase of 3%. The interim dividend is consistent with our progressive dividend policy and reflects the underlying performance of the business.
Strong financial foundations	Aviva's priority is to maintain capital strength and balance sheet prudence, while further reducing debt leverage. Our progress on strengthening our balance sheet was recognised last month by Standard & Poor's, which upgraded our financial strength rating to AA-, and it is pleasing to note that all three of the major rating agencies rate Aviva in the AA range. In the first half of 2019, our Solvency II surplus3 remained strong at £11.8 billion (2018: £12.0 billion). The solvency cover ratio3,‡ declined by ten percentage points to 194% (2018: 204%), primarily due to the fall in interest rates, with UK and European 10 year swap rates down 0.39% and 0.64% respectively. Cash remittances‡# increased to £1,582 million (HY18: £1,493 million), benefiting from changes in the timing of dividend payments from a number of business units. This underpinned an increase in centre liquidity to £2.3 billion4 (February 2019: £1.6 billion). Our centre cash position reinforces our strength and resilience and will provide capacity for our plans to reduce debt by at least £1.5 billion by the end of 2022.
Better fundamentals	Aviva's solid fundamentals are reflected in our results in the first half and they are also being recognised externally, with Aviva winning the Best of the Best Insurer at the Insurance Post British Insurance Awards. We are focused on further enhancing these fundamentals and ensuring the group works cohesively so that we can build and capitalise on our collective strength. We have now moved to separate management structures for UK Life and UK General Insurance. We also completed the alignment of our UK Digital business under UK General Insurance, which will help us to capitalise on our leading digital capabilities and become more efficient in our direct to consumer and price comparison businesses. Aviva continues to make progress in relation to its insurance fundamentals. We are extending our technical excellence in underwriting and data science across the group, delivering quantitative and behavioural insights that improve risk selection. Our progress on digital has allowed us to enhance customer experience, increase connectivity with our distribution partners and provide distinctive products and services that have helped to win and retain customers across our business. However, more needs to be done. Our results reinforce Aviva's need to reduce complexity, improve efficiency and apply greater commercial rigour to how we run our business. We are targeting a £300 million per annum net reduction in operating expenses5 by 2022 and we are moving forward with this programme at pace. The transformation team is now fully in place and plans are mapped for savings across business units, functions and group centre. We have made some early progress; during the second quarter, the total number of contractors was reduced by nearly 7% and we also began to rationalise planned project expenditure. Accordingly, while operating expenses increased 2% to £1,964 million (HY18: £1,929 million) as we carried forward unacceptably higher run-rate costs from the second half of 2018 into the current year, we expect full year operating expenses to be lower in 2019 than the prior year.

‡    Denotes Alternative Performance Measures (APMs) which are key performance indicators of the Group used to measure our performance and financial strength. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

#    Denotes key performance indicators which are used by the Group to determine or modify remuneration. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

1    Group adjusted operating profit is a non-GAAP Alternative Performance Measure (APM) which is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

2    This measure is derived from the Group adjusted operating profit APM. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

3    The estimated Solvency II position represents the shareholder view as defined in section 8.i of the Analyst Pack.

4    Stated as at end July 2019.

5    This is an Alternative Performance Measure (APM) which provides useful information to enhance the understanding of financial performance. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

Chief Executive Officer's report continued

Performance	Aviva's half year results reinforced our solid operational foundations, providing evidence of our strengths in pricing and underwriting, distribution, asset management and administration. In life and savings, we continued to see solid levels of customer activity despite the uncertain investment market environment, with Europe and our UK long-term savings businesses each generating £2.4 billion of net fund inflows1. Our UK annuity and equity release transaction pipeline point to another strong year in 2019, however, sales volumes in the first half were slightly below the prior period, which included our largest ever BPA transaction. In general insurance we extended our track record of attractive group-wide underwriting results with a targeted approach to top-line growth and a combined operating ratio (COR)‡ of 95.9% (HY18: 97.4%), despite a 0.8% impact as UK Digital trading costs were recognised in UK General Insurance. Canada is recovering as expected as pricing and claims management initiatives earn through while our results also benefited from benign weather, partially offset by lower prior year development. Despite these bright spots, there were challenges during the first half. We were adversely affected by market headwinds in savings and asset management. We also encountered intense competition in individual protection and personal lines general insurance where we chose to maintain pricing discipline rather than chase volume growth at unattractive margins. I am completely focused on improving our insurance fundamentals and commercial rigour to set Aviva on a path of stronger financial performance. To compete more effectively and increase returns on capital, Aviva needs to be leaner, simpler and more effective. I am more than aware that we've said this before at Aviva and this time I am determined we deliver. In the first half, my focus has been on putting in place the strategy, structure, leadership and focus to run Aviva better, managing our costs strictly and turbo-charging the culture to grow in our key markets.
Strategy	Since my appointment, I have worked closely with the Board on refreshing Aviva's strategy. This work is progressing well and we will summarise our strategy, objectives and operational and financial targets at our capital markets day in November. In conjunction with this process, we have decided to examine strategic options for our Asian businesses. These businesses have made significant progress in recent years, expanding distribution and new business production, increasing their in-force scale and growing operating profit. Our Asian operations are strategically and financially attractive, however, we are evaluating a range of options to enhance the value of the businesses to shareholders.
Conclusion	The first half was characterised by a challenging economic and political backdrop and significant levels of organisational and leadership change. Against this, we delivered steady results while working to further strengthen our fundamentals and improve commercial rigour. I am confident that we will succeed in making Aviva a simpler, stronger, better business that becomes recognised as a leader in its markets and a source of attractive shareholder returns. One of Aviva's great strengths is its people, and I would like to thank all my colleagues for their diligence and support. Over the past nine months, Aviva has undergone a period of leadership change which brings associated uncertainty for our people. To their credit, they maintained their focus on serving customers and making disciplined trading decisions. This commitment is central to our strong foundations and underpins our ambitious plans for the future.

Maurice Tulloch

Chief Executive Officer

‡    Denotes Alternative Performance Measures (APMs) which are key performance indicators of the Group used to measure our performance and financial strength. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

1    This is an Alternative Performance Measure (APM) which provides useful information to enhance the understanding of financial performance. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

Interim Chief Financial Officer's report

IFRS result	In the first half of 2019, Aviva grew operating profit1,‡# 1% to £1,448 million (HY18: £1,438 million) and operating earnings per share2,‡# 2% to 27.3 pence (HY18: 26.8 pence). Profit and basic earnings per share rose materially to £1,180 million and 28.2 pence respectively (HY18: £376 million and 7.9 pence). The increase reflected positive investment variances from both our life and general insurance businesses, which more than offset amortisation of acquired value of in-force and other intangibles. Investment variances primarily arise from our asset-liability position, which protects the Solvency II balance sheet. IFRS net asset value per share (NAV) increased to 432 pence (2018: 424 pence). The movement in NAV reflects the positive impact of basic earnings per share partly offset by payment of the 2018 final dividend and adoption of the IFRS 16 accounting standard relating to operating leases.
Dividend	Aviva's Board of Directors has declared an interim dividend of 9.50 pence per share. This represents an increase of 3% compared with the interim dividend in 2018. Following a five year period in which the dividend per share doubled, the process of normalising the payout ratio is complete. Accordingly, the trajectory of the dividend reflects the underlying performance of the business, taking into consideration the external environment, in line with our progressive dividend policy.
Capital & cash	Aviva's Solvency II capital surplus3 at 30 June was £11.8 billion (2018: £12.0 billion). Solvency II own funds3 rose £0.8 billion whilst the solvency capital requirement3 (SCR) increased by £1.0 billion during the first half. Despite the relative stability of the capital surplus, the expansion of the balance sheet (reflected in a larger SCR) resulted in a ten percentage point reduction in our Solvency cover ratio3,‡ to 194% (2018: 204%). Operating capital generation# totalled £0.8 billion (HY18: £0.9 billion). Underlying operating capital generation was stable at £0.7 billion. The contribution from other capital actions declined to £0.1 billion (HY18: £0.2 billion), primarily owing to the longevity reserve release that benefited the prior period and a £0.1 billion reduction caused by moving our digital operations into the UK general insurance business. Operating own funds generation of £0.9 billion and positive market, foreign exchange and other effects of £0.7 billion were partially offset by dividend payments of £0.8 billion. The Solvency II capital requirement (SCR) increased by £1.0 billion, incorporating £0.1 billion operating impact and £0.9 billion due to market and non-operating effects. The market related increase in SCR primarily arose due to the reduction in bond yields during the first half. Cash remittances‡# to group centre were £1.6 billion in the first half, compared to £1.5 billion in HY18. The first half benefited from accelerated phasing of dividends from UK Life, France, Poland and Aviva Investors. However, the first half did not include special dividends, which contributed £500 million to remittances in the first half of 2018. In light of the strong first half remittances, Aviva's centre liquidity ended July at £2.3 billion. Our strong cash resources provide Aviva with considerable resilience to external shocks and underpin our medium term deleveraging plans.
Debt leverage	In the absence of either debt maturities or new issuance, our debt position remained unchanged in the first half of 2019. As a result, our Solvency II debt leverage ratio, which includes senior debt and commercial paper, remained stable at 33%. In July, Standard & Poor's (S&P) published an updated Insurers Rating Methodology which included a new financial leverage ratio. According to the new calculation, our leverage ratio was calculated to be 35% at the end of 2018. This places Aviva in the "neutral" range, which is defined by S&P as being below 40%. This updated leverage assessment was included in S&P's recent review of Aviva's financial strength rating, which resulted in an upgrade to AA- (from A+). This is a welcome development that recognises the significant progress Aviva has made in recent years in improving its credit profile, earnings resilience and the robustness of the balance sheet to financial risks.

‡    Denotes Alternative Performance Measures (APMs) which are key performance indicators of the Group used to measure our performance and financial strength. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

#    Denotes key performance indicators which are used by the Group to determine or modify remuneration. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

1    Group adjusted operating profit is a non-GAAP Alternative Performance Measure (APM) which is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

2    This measure is derived from the Group adjusted operating profit APM. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

3    The estimated Solvency II position represents the shareholder view as defined in section 8.i of the Analyst Pack.

Interim Chief Financial Officer's report continued

Performance snapshot

In the first half of 2019, Aviva delivered steady results in what was a challenging period in terms of the macroeconomic and political backdrop. Equity markets began the year at two year lows, government 10-year bond yields fell sharply and investor sentiment remained subdued. These challenges were most evident in our life and asset management businesses. In the first half, Aviva's life insurance operating profit1,‡# fell 8% to £1,282 million (HY18: £1,392 million), while Aviva Investors operating profit declined to £62 million (HY18: £76 million). Beyond the challenging investment market backdrop, our life insurance results included lower profitability from our protection portfolios in France, where claims experience deteriorated, and the UK, where we wrote lower new business volumes in an environment of competitive pricing and higher reinsurance costs. We also had fewer non-recurring benefits in the first half of 2019 compared with the prior period; given the absence of a longevity reserve release, the contribution from UK 'other' declined to £37 million (HY18: £107 million). Our review of longevity reserves, incorporating detailed analysis of CMI tables, other industry data and experience of our own portfolio, will be completed later in 2019. UK annuities and equity release achieved small gains in operating profit as higher new business margins more than offset lower new business volumes. Despite subdued sentiment weighing on investor activity levels, Aviva's modern savings businesses continued to generate healthy net fund flows2. Together with higher equity and bond market values, this contributed to increases in assets under management and administration2 during HY19. In UK long-term savings, we have maintained attractive net flows2 into workplace savings and advisor platform as a result of a solid pipeline of corporate pension scheme wins. The £2.4 billion of net flows in HY19 is consistent with the prior period and equated to 4% of opening managed assets on an annualised basis. In Europe, we achieved net flows of £2.4 billion, also an annualised rate of 4% of opening managed assets. Italy continued to make a strong contribution, despite our decision to temper sales volumes temporarily given the market volatility. Elsewhere in Europe, our net flows were supported by higher new business volumes, particularly in France where customer demand shifted from unit linked allocation to participating fund sales. In general insurance, Aviva's operating profit rose 29% to £391 million (HY18: £302 million). Net written premiums grew 1% to £4,725 million with targeted growth in commercial lines in the UK (+8%) and Canada (+4%) offset by a decline in personal lines in Canada (-6%) following our re-pricing of the motor portfolio. The growth in operating profit is reflected in the combined operating ratio, (COR)‡ which improved to 95.9% (HY18: 97.4%). The recovery in Canada is gathering momentum, with the COR improving 7.1 percentage points to 97.5% (HY18: 104.6%). With premium rate increases implemented in the motor portfolio in March 2019 still yet to earn through our results, we remain focused on achieving our objective of a sub-96% COR in Canada in 2020. Across all our general insurance businesses, benign weather has contributed to better results in HY19. Partly offsetting this was a smaller contribution from prior year reserve development and increase in earned expenses in the UK of £34 million which arose from the alignment of our digital operations under UK General Insurance.

Outlook

The challenging macro backdrop, particularly very low government bond yields, is expected to persist in the second half with ongoing uncertainty in the political environment and a softer outlook for economic growth in Europe and the UK. Despite this, our first half results have demonstrated that Aviva is growing its customer franchise in targeted product lines and maintaining discipline on pricing and operating margins. Looking forward we need to take decisive action on strategy, efficiency, and capital allocation as we seek to improve OCG#, meet our cash flow targets, reduce operating expenses2,lower debt leverage and ultimately capture the long-term opportunities in each of our markets.

‡    Denotes Alternative Performance Measures (APMs) which are key performance indicators of the Group used to measure our performance and financial strength. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

#    Denotes key performance indicators which are used by the Group to determine or modify remuneration. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

1    Group adjusted operating profit is a non-GAAP Alternative Performance Measure (APM) which is not bound by the requirements of IFRS. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

2    This is an Alternative Performance Measure (APM) which provides useful information to enhance the understanding of financial performance. Further details of this measure are included in the 'Other information' section of the Analyst Pack.

3    All percentage movements in this section are quoted in constant currency unless otherwise stated

Jason Windsor

Interim Chief Financial Officer

Notes to editors

Notes to editors

All comparators are for the half year 2018 position unless otherwise stated.

Income and expenses of foreign entities are translated at average exchange rates while their assets and liabilities are translated at the closing rates on 30 June 2019. The average rates employed in this announcement are 1 euro = £0.88 (6 months to 30 June 2018: 1 euro = £0.88) and CAD$1 = £0.58 (6 months to 30 June 2018: CAD$1 = £0.57).

Growth rates in the press release have been provided in sterling terms unless stated otherwise. The following supplement presents this information on both a sterling and constant currency basis.

Cautionary statements:

This should be read in conjunction with the documents distributed by Aviva plc (the "Company" or "Aviva") through the Regulatory News Service (RNS). This announcement contains, and we may make other verbal or written "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", "projects", "plans", "will," "seeks", "aims", "may", "could", "outlook", "likely", "target", "goal", "guidance", "trends", "future", "estimates", "potential" 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 factors that could cause actual results to differ materially from those indicated in forward-looking statements in the announcement include, but are not limited to: the impact of ongoing difficult conditions in the global financial markets and the economy generally; the impact of simplifying our operating structure and activities; the impact of various local and international political, regulatory and economic conditions; market developments and government actions (including those arising from the referendum on UK membership of the European Union); the effect of credit spread volatility on the net unrealised value of the investment portfolio; the effect of losses due to defaults by counterparties, including potential sovereign debt defaults or restructurings, on the value of our investments; changes in interest rates that may cause policyholders to surrender their contracts, reduce the value of our portfolio and impact our asset and liability matching; the impact of changes in short or long-term inflation; the impact of changes in equity or property prices on our investment portfolio; fluctuations in currency exchange rates; the effect of market fluctuations on the value of options and guarantees embedded in some of our life insurance products and the value of the assets backing their reserves; the amount of allowances and impairments taken on our investments; the effect of adverse capital and credit market conditions on our ability to meet liquidity needs and our access to capital; changes in, or restrictions on, our ability to initiate capital management initiatives; changes in or inaccuracy of 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; the impact of natural and man-made catastrophic events on our business activities and results of operations; our reliance on information and technology and third-party service providers for our operations and systems; the inability of reinsurers to meet obligations or unavailability of reinsurance coverage; increased competition in the UK and in other countries where we have significant operations; regulatory approval of extension of use of the Group's internal model for calculation of regulatory capital under the European Union's Solvency II rules; the impact of actual experience differing from estimates used in valuing and amortising deferred acquisition costs ("DAC") and acquired value of in-force business ("AVIF"); 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 legal proceedings and regulatory investigations; the impact of operational risks, including inadequate or failed internal and external processes, systems and human error or from external events (including cyber attack); risks associated with arrangements with third parties, including joint ventures; our reliance on third-party distribution channels to deliver our products; funding risks associated with our participation in defined benefit staff pension schemes; the failure to attract or retain the necessary key personnel; the effect of systems errors or regulatory changes on the calculation of unit prices or deduction of charges for our unit-linked products that may require retrospective compensation to our customers; the effect of fluctuations in share price as a result of general market conditions or otherwise; the effect of simplifying our operating structure and activities; the effect of a decline in any of our ratings by rating agencies on our standing among customers, broker-dealers, agents, wholesalers and other distributors of our products and services; changes to our brand and reputation; changes in government regulations or tax laws in jurisdictions where we conduct business, including decreased demand for annuities in the UK due to changes in UK law; the inability to protect our intellectual property; the effect of undisclosed liabilities, integration issues and other risks associated with our acquisitions; and the timing/regulatory approval impact, integration risk and other uncertainties, such as non-realisation of expected benefits or diversion of management attention and other resources, relating to announced acquisitions and pending disposals and relating to future acquisitions, combinations or disposals within relevant industries; the policies, decisions and actions of government or regulatory authorities in the UK, the EU, the US or elsewhere, including the implementation of key legislation and regulation. For a more detailed description of these risks, uncertainties and other factors, please see the 'Risk and risk management' section of the strategic report in Aviva's most recent Annual Report. 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 presentation are current only as of the date on which such statements are made. This report has been prepared for, and only for, the members of the Company, as a body, and no other persons. The Company, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to who this document is shown or into whose hands it may come, and any such responsibility or liability is expressly disclaimed.

Aviva plc is a company registered in England No. 2468686.

Registered office

St Helen's

1 Undershaft

London

EC3P 3DQ

Contacts

Investor contacts	Media contacts	Timings
Chris Esson [phone] Diane Michelberger [phone]	Nigel Prideaux [phone] Andrew Reid [phone] Liz Kennett [phone]	Presentation slides: 07:00 hrs BST www.aviva.com Real time media conference call: 07:30 & 11:15 hrs BST Analyst presentation: 08:30 hrs BST Live webcast: 08:30 hrs BST https://www.aviva.com/

END PART 1 of 4

 

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