Life New Business Q3 2006

Aviva PLC 26 October 2006 26 October 2006 Aviva plc Worldwide long-term savings new business 9 months to 30 September 2006 â€¢Strong worldwide performance: Total sales* up 22%** to Â£22,718 million â€¢Record UK performance: Total sales up 39% to Â£10,464 million, with a strong market outlook â€¢Robust international new business growth: Total sales up 11% to Â£12,254 million â€¢Excellent investment product sales, up 54% to Â£3,590 million â€¢Strong growth in bancassurance sales, up 25% to Â£5,756 million, representing a quarter of total sales â€¢New business profit growth of 16%, with group new business margin remaining strong at 3.5% â€¢AmerUs acquisition on track to complete by the end of 2006 Richard Harvey, group chief executive, commented: 'We've achieved strong growth in new business while sustaining the profitability of these sales. This result proves the competitive advantage we're building through our worldwide business model and demonstrates Aviva's strengths of scale, balance and diversified product offerings. 'In the UK, our business is growing fast, our margin is stable and we are the market leader. We've sold more long-term savings new business in the nine months to September than in the whole of 2005. Meanwhile, Aviva International is increasing net new business profits at almost twice the rate of sales, which continue to grow strongly. 'Aviva is well-positioned to capture growth in the world's largest long-term savings markets where we expect demand for products to continue to rise as private saving increases.' Financial highlights 9 months to 9 months to Local 30 September 30 September currency 2006 2005 growth** Aviva UK Life and pensions new business sales Â£8,791m Â£6,686m 31% Investment sales Â£1,673m Â£855m 96% ---------------------------------------------------------- Total long-term savings new business sales Â£10,464m Â£7,541m 39% ---------------------------------------------------------- New business contribution before required capital Â£254m Â£201m 26% New business margin before required capital 2.9% 3.0% Aviva International Life and pensions new business sales Â£10,337m Â£9,574m 8% Investment sales Â£1,917m Â£1,486m 30% ---------------------------------------------------------- Total long-term savings new business sales Â£12,254m Â£11,060m 11% ---------------------------------------------------------- New business contribution before required capital Â£412m Â£374m 10% New business margin before required capital 4.0% 3.9% Aviva Group Life and pensions new business sales Â£19,128m Â£16,260m 18% Investment sales Â£3,590m Â£2,341m 54% ---------------------------------------------------------- Total long-term savings new business sales Â£22,718m Â£18,601m 22% ---------------------------------------------------------- New business contribution before required capital Â£666m Â£575m 16% New business margin before required capital 3.5% 3.5% * All references to sales in this announcement refer to the present value of new business premiums (PVNBP) unless otherwise stated. PVNBP is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution. ** All growth rates quoted are at constant rates of exchange. ----------------------------------------------------------------------------------------------------------------------- Page 2 UK Life analyst and investor briefing In a presentation to investors and analysts today, the Norwich Union Life management team will provide an update on its strategy for the UK life business. Norwich Union is confident about the future prospects for the business given: â€¢ Exceptionally strong Q3 new business results, with total sales up 39% and margins stable at 2.9% â€¢ A leading market position with an increased market share of 12.1% â€¢ A positive outlook for the UK savings market and strong business model focused on profitable and sustainable growth â€¢ Significant and ongoing progress on service standards The company is confident there will be continued growth in the UK life and pensions market with customers saving more for their future financial wellbeing as the savings ratio continues to rise. Norwich Union will set out its plans to attract a growing proportion of these savings based on its strong business model that combines a trusted brand, a broad product range and a multi-distribution capability. Norwich Union will provide an update on its plans to realise the long-term potential of the UK life business. The company will focus on developing the business to exploit new market opportunities, continuing to improve service, rationalising its cost base, simplifying legacy systems and managing retention. This builds on the announcement made on 14 September 2006 where Norwich Union outlined its plans to deliver Â£250m of cost savings per annum across its UK life and general insurance businesses in 2008. Patrick Snowball, executive chairman of Norwich Union, commented: 'I am very excited about the tremendous opportunity to build on the excellent franchise of our UK life business. Through a combination of strengthening the management team and leveraging the existing expertise, we aim to achieve operational excellence across our business. This, in turn, will enable us to grow market share in the medium term as well as increase the profitability of our business.' Mark Hodges, chief executive, Norwich Union Life, commented: 'We lead the UK market in terms of our distribution platform, our product range and our new business sales. We also have an in-force life and pensions book that is the largest and most valuable in the country. Through implementing a series of targeted measures we will improve our market leading position in all these areas, with the aim of improving returns both to our customers and our shareholders.' Enquiries: Analysts/Investors: Philip Scott, group executive director, Aviva +44 (0)20 7662 2264 Patrick Snowball, group executive director, Aviva +44 (0)20 7662 7574 Charles Barrows, investor relations director, Aviva +44 (0)20 7662 8115 Jessie Burrows, head of investor relations, Aviva +44 (0)20 7662 2111 Media: Hayley Stimpson, director of external affairs +44 (0)20 7662 7544 Sue Winston, head of group media relations +44 (0)20 7662 8221 Vanessa Booth, group media relations manager +44 (0)20 7662 2482 Rob Bailhache, Financial Dynamics +44 (0)20 7269 7200 There will be a conference call today for wire services at 7:45am (BST) on +44(0)20 7162 0125. This conference call will be hosted by Philip Scott, group executive director, Aviva International and attended by Andrew Moss, group finance director and Patrick Snowball, group executive director, Aviva UK. There will be a conference call today for analysts and investors at 9:00am (BST) on +44 (0)20 7162 0126. This conference call will be hosted by Philip Scott, group executive director, Aviva International and attended by Andrew Moss, group finance director and Patrick Snowball, group executive director, Aviva UK. Replay will be available for two weeks until 10 November 2006. The dial in number for replays is +44 (0)20 7031 4064 and the pass code is 718722. A presentation for investors and analysts will be held today at 11.00am(BST) at the offices of Aviva plc, St. Helens, 1 Undershaft, London EC3P 3DQ. There will be a conference call for analysts and investors on +44 (0) 20 7365 1833. A replay will be available for two weeks until 10 November 2006. The dial in number for replays is +44 (0) 20 7806 1970 and the pass code is 7872804# for the presention and questions and answers, and 4414726# for questions and answers only. The presentation slides will be available on the group's website, www.aviva.com, from 11.00am (BST). The presentation is also being filmed for webcast and can be viewed live on the group's website at www.aviva.com/seminars. Photographs are available on the Aviva media centre at www.aviva.com ----------------------------------------------------------------------------------------------------------------------- Page 3 Present value of new business premiums* New business contribution*** New business margin^ --------------------------------------- ----------------------------- -------------------- 9 months 9 months Local 9 months 9 months Local 9 months 9 months 2006 2005 currency 2006 2005 currency 2006 2005 Â£m Â£m growth** Â£m Â£m growth** Life and pensions business United Kingdom 8,791 6,686 31% 254 201 26% 2.9% 3.0% France 2,717 2,593 5% 111 98 13% 4.1% 3.8% Ireland 902 504 79% 19 13 46% 2.1% 2.6% Italy 2,059 1,816 13% 51 46 11% 2.5% 2.5% Netherlands(including Germany, Belgium and Luxembourg) 1,689 2,008 (16)% 45 56 (20)% 2.7% 2.8% Poland 385 222 68% 20 11 78% 5.2% 5.0% Spain 1,294 1,353 (4)% 128 116 10% 9.9% 8.6% Other Europe^^ 215 182 17% (4) 1 (426)% (1.9)% 0.5% Continental Europe 9,261 8,678 7% 370 341 8% 4.0% 3.9% Asia 455 250 76% 23 13 70% 5.1% 5.2% Australia 213 253 (15)% 10 11 (8)% 4.7% 4.3% United States 408 393 3% 9 9 (1)% 2.2% 2.3% Rest of the World 1,076 896 19% 42 33 25% 3.9% 3.7% International 10,337 9,574 8% 412 374 10% 4.0% 3.9% ----------------------------------------------------------------------------------------------------------------------- Total life and pensions 19,128 16,260 18% 666 575 16% 3.5% 3.5% ======================================================================================================================= Investment sales^^^ United Kingdom 1,673 855 96% Netherlands 238 281 (15)% Poland 87 36 134% Other Europe 382 325 18% Continental Europe 707 642 10% Australia 1,030 787 33% Singapore 180 57 201% Rest of the World 1,210 844 45% International 1,917 1,486 30% ---------------------------------------------------------- Total investment sales 3,590 2,341 54% ---------------------------------------------------------- Total long-term savings 22,718 18,601 22% ========================================================== Navigator sales 1,040 668 55% (included above) * All references to sales in this announcement refer to the present value of new business premiums (PVNBP) unless otherwise stated. PVNBP is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution. ** Growth rates are calculated based on constant rates of exchange. *** Stated before the effect of required capital. ^ New business margin represents the ratio of new business contribution before the effect of required capital to present value of new business premiums, expressed as a percentage. ^^ 2005 figures include new business sales of Â£45 million and new business contribution of Â£3 million from the Portuguese business, which was disposed of in October 2005. Excluding Portugal, Other Europe sales growth would have been 56%. ^^^ Investment sales are calculated as new single premium plus annualised value of new regular premiums. ----------------------------------------------------------------------------------------------------------------------- Page 4 Overview Aviva continued to grow strongly in the nine months to 30 September 2006, with total long-term savings new business sales up 22% to Â£22,718 million (2005:Â£18,601 million). The overall increase reflects growth in life and pension sales of 18% to Â£19,128 million (2005: Â£16,260 million), and exceptional growth in investment sales of 54% to Â£3,590 million (2005: Â£2,341 million). Aviva UK's total long-term savings sales grew by 39% to Â£10,464 million (2005: Â£7,541 million) and have already exceeded the figure for the whole of 2005 (full year 2005: Â£10,345 million). The growth reflects strong sales through both the intermediary channel and our successful bancassurance joint venture with the Royal Bank of Scotland Group (RBSG). This growth has been achieved while maintaining the UK margin before the cost of capital at 2.9%, in line with the full year 2005 figure. Aviva UK continues to focus on actively managing margin, volume and business mix. Aviva International's total long-term savings new business sales continued to experience strong growth of 11% to Â£12,254 million (2005: Â£11,060 million) reflecting expansion in most of its key markets. Growth in Asia was particularly strong at 100% and the region now accounts for over 5% of total international sales. Life and pensions new business sales were 8% higher at Â£10,337 million (2005: Â£9,574 million) while investment sales grew by 30% to Â£1,917 million (2005:Â£1,486 million), primarily reflecting increased sales through the Navigator platform. New business contribution before the effect of required capital increased by 10% to Â£412 million (2005: Â£374 million) and is broadly in line with sales growth. After the effect of required capital, new business contribution increased faster than sales, up 16% to Â£308 million (2005: Â£264 million), reflecting improved product mix and the continued focus on profitable growth and capital efficiency. The acquisition of AmerUs in the US is on track. Last week, AmerUs shareholders voted in favour of our recommended offer and we continue to progress the required regulatory approvals. We remain confident that the transaction will complete by the end of 2006. Aviva UK A record nine months for Norwich Union with total sales, including investments, up 39% to Â£10,464 million (2005: Â£7,541 million). Sales of collective investments were particularly strong at Â£1,673 million, almost double those achieved in the same period last year (2005: Â£855 million). Sales momentum continued in the third quarter, with discrete total sales 31% to Â£3,565 million (2005:Â£2,716 million). Total Sales in the first nine months 2006 already ahead of the Â£10,345 million achieved in the whole of 2005. Norwich Union maintained the new business margin at 2.9%, in line with the full year 2005 figure of 2.9%. This reflects the company's disciplined focus on managing margin and volumes across the product range. Norwich Union's overall market share at the half year was 12.1%, 1.5 percentage points higher than the corresponding 2005 figure (2005: 10.6%). The company has also improved its market share position within the year, moving from 12% in the first quarter of 2006 to 12.2% in the second quarter of 2006. Individual pension sales, which include group personal pensions, were exceptional, up 71% to Â£3,200 million (2005: Â£1,867 million). Group pension sales were also strong at Â£840 million, 16% ahead of last year (2005: Â£727 million). High levels of activity have continued following A-Day as advisers continue to look for ways to enhance their clients' pension arrangements under new tax rules. Self-invested personal pension (SIPP) sales, through Norwich Union's Lifetime wrap platform totalled Â£101 million*. Norwich Union anticipates the A-Day effect will continue, albeit at a slower rate for the remainder of 2006 and into 2007, particularly as the charging structure changes take effect. Rising equity markets benefited sales of bonds and collective investments with investor confidence remaining robust. Bond sales for the nine months increased substantially by 36% to Â£2,532 million (2005: Â£1,860 million). Norwich Union's RPI guaranteed bond continued to prove popular, resulting in a 54% growth in with-profit bond sales to Â£552 million. Unit-linked bond sales performed strongly, increasing by 29% to Â£1,808 million. Norwich Union's collective investment performance remained exceptional, with sales year to date increasing by 96% to Â£1,673 million (2005: Â£855 million). Our property offering from Morley Fund Management continued to be popular with investors. The growth in sales underlines the success of Norwich Union's strategy of widening its collective investment range and strengthening its consumer offerings. Protection sales year to date totalled Â£823 million, an increase of 15% on 2005 (2005: Â£714 million). In September, the company launched a new simplified life product aimed at growing the direct to consumer market. Norwich Union believes that simplified protection products are essential to increasing consumer understanding and accessibility. Total annuity sales of Â£1,161 million were lower by 6% (2005: Â£1,240 million) as the company continued to price for profit rather than volume. While Norwich Union is now actively quoting in the bulk purchase annuity market, entry into this market is focused on generating an increase in levels of value and the company will not participate in areas where it is unable to achieve adequate levels of return. Sales of equity release products were 16% lower at Â£235 million (2005: Â£278 million) as the market remained subdued. Norwich Union continues to be a leading player and is confident that the market for equity release products will grow as the benefits as a retirement funding opportunity are realised. * Included in collective investment sales ----------------------------------------------------------------------------------------------------------------------- Page 5 Norwich Union's bancassurance partnership with RBSG delivered significant growth in the nine months with total sales of Â£1,236 million, 62% ahead of 2005 (2005: Â£763 million). Norwich Union's share was Â£879 million, up 69% (2005: Â£521 million). This continuing strong performance reflects the ongoing investment and commitment to the bancassurance operation by both RBSG and Norwich Union. Both partners are confident that the increase in sales advisers from the current levels of around 700 to 850 by the end of 2007 will continue to underpin further good growth. Norwich Union continued to perform very strongly in the Independent Financial Adviser (IFA) market with a market share at the half year of 13.5% - significantly ahead of the half-year 2005 figure of 12.3%. Norwich Union is also the leading provider to the top four networks and service providers in the UK. The company believes that its improvements in service levels for advisers in 2006 are a major contributor to this performance. Norwich Union continues to achieve its service level targets on all standard new business applications for protection, investment bond, annuity and individual pension products, and is committed to delivering further service improvements in 2006 and into 2007. Economic growth in the UK has continued to revive and has become more broadly based as consumer spending remains robust, supported by employment growth and renewed strength in the housing market. Norwich Union expects double-digit growth for the market in 2006 and anticipates more modest growth in 2007. Aviva International Continental Europe France: Aviva France's sales increased by 5% to Â£2,717 million (2005: Â£2,593 million), including sales of Â£657 million (2005: Â£560 million) through Aviva's bancassurance partner, Credit du Nord. Aviva's strategy continues to focus on the sale of higher margin, capital efficient unit-linked products and on profitable growth, resulting in a 13% increase in new business contribution to Â£111 million (2005: Â£98 million) with an increased margin of 4.1% (2005: 3.8%). Total unit-linked sales were 19% higher at Â£1,232 million (2005: Â£1,034 million), representing 47% (2005: 42%) of savings sales (excluding protection sales). Overall market growth for the eight months to August slowed to 21%**, including the large but reducing effect of the reinvestment of 'Plan d'Epargne Logement'(PEL) banking product withdrawals. PEL has mostly benefited pure bancassurers with growth amongst traditional insurers declining to 11%. Aviva continues to focus on encouraging Fourgous*** transfers, an area in which it has been very successful. In total, Aviva has achieved over 62,000 policy conversions amounting to Â£3.4 billion of transferred funds, of which Â£1.2 billion have been transferred to unit-linked funds. In the first half of 2006, Aviva generated more than 40%^ of all Fourgous transfers in the market and these transfers are excluded from Aviva's life new business figures. These transfers, combined with ensuring that policyholders continue to receive best advice, enables a greater proportion of future new business from existing customers to be invested in unit-linked funds. AFER, the largest retirement savings association in France, continues to grow and now has 650,000 members with sales of Â£1,252 million (2005: Â£1,230 million). Unit-linked sales through this important channel have grown strongly increasing by 42% to Â£392 million (2005: Â£276 million) and representing 31% of total AFER sales (2005: 22%). New business sales through channels other than Aviva France's partnerships with AFER and Credit du Nord were Â£808 million (2005: Â£803 million), accounting for 30% of total sales (2005: 31%). Within this, higher margin unit-linked business, grew to 76% (2005: 69%)as a proportion of savings sales. Aviva France's multi-distribution approach and first-class investment track record^^ mean that the business is well-placed to continue to grow sales and new business contribution. Ireland: Including sales through the bancassurance partnership with Allied Irish Banks(AIB), Ireland's largest retail bank, Hibernian's new business sales increased by 79% to Â£902 million (2005: Â£504 million). New business contribution was Â£19 million (2005: Â£13 million) with a margin of 2.1% (2005: 2.6%). The reduction in the margin reflects continuing competitive pressures and changes in assumptions. Sales through AIB, which commenced at the end of January, amounted to Â£424 million, representing a substantial improvement on 2005. These sales comprised Â£314 million of life sales, consisting primarily of single premium bonds, and Â£110 million of pension sales. Life sales benefited from the reopening of the Hibernian property fund in July with sales through the bank channel of Â£49 million. The integration with Ark Life is proceeding according to plan and there have been a number of new product developments specifically designed for the bank channel. ** Based on gross written premium *** The Fourgous amendment of 2005 enabled the tax-efficient transfer of existing 100% Euro funds into more balanced Euro and unit-linked portfolios ^ Based on the value of funds converted ^^ In September 2006, 'Mieux Vivre Votre Argent' (a weekly magazine) ranked Aviva Gestion d'Actifs the best fund manager over the last 5 years ----------------------------------------------------------------------------------------------------------------------- Page 6 Life sales through the Hibernian broker channel were 14% higher at Â£190 million (2005: Â£167 million), with strong sales of single premium unit-linked business reflecting the continued success of the limited-offer guaranteed fund prior to its closure in June. Pension sales through the Hibernian broker channel were Â£288 million (2005: Â£337 million), with the decrease reflecting an exceptional level of investment-only group pension contracts sold in 2005. Sales tend to fluctuate from quarter to quarter due to the timing and size of these group contracts and the concentration of individual pensions sales in the final quarter. Further growth is expected in 2006 and 2007 through the continued development of new products, including a re-launched pension product, expansion of the fund offering through the bank and broker networks, as well as the Special Savings Incentive Accounts maturity peak in April 2007. Italy: Aviva Italy reported an excellent performance with total sales up 13% to Â£2,059 million (2005: Â£1,816 million, including one-off single premium direct sales of Â£73 million). This growth contrasted favourably with the Italian market, which showed a decline in total sales of 9%^^^. New business contribution increased by 11% to Â£51 million (2005: Â£46 million),reflecting the growth in sales at a stable margin of 2.5% (2005: 2.5%). UniCredit Group continues to be one of the most successful bancassurers in Italy and Aviva's total sales have increased by 70% to Â£1,103 million (2005: Â£647 million), benefiting from access to additional branches in the UniCredit Group network since January 2006. Sales through Banche Popolari Unite were Â£483 million (2005: Â£505 million). A new protection product was launched in the third quarter of the year to broaden the product range. Sales through the Banca Popolare Italiana Group network were Â£401 million (2005: Â£423 million) as demand for structured bonds was lower than last year. Marketing campaigns were carried out in the first half of 2005, while in 2006 they are expected to take place in the last quarter. Sales through Banca delle Marche were lower at Â£32 million (2005: Â£139 million, including one-off single premium direct sales of Â£29 million), resulting from the timing of marketing campaigns and a significant change in sales mix from regular premium products to single premium. A marketing campaign is planned for the fourth quarter focused on a new unit-linked product. The long-term growth potential remains strong in the Italian market and Aviva Italy continues to develop its bancassurance relationships. However, the timing of marketing campaigns and new product launches is variable and results in some volatility in sales volumes each quarter. Netherlands (including Germany, Belgium and Luxembourg): Delta Lloyd's total sales, including investment sales, were Â£1,927 million (2005: Â£2,289 million). The markets in which Delta Lloyd operates have been challenging in 2006, affected by competitive pricing, and by regulatory and fiscal changes. In addition, Delta Lloyd's sales in Germany were Â£114 million (2005: Â£266 million) as a consequence of higher short-term interest rates. In this environment, Delta Lloyd continues to focus on achieving a balance between profitability and business volumes while seeking out new sales opportunities. New business contribution was Â£45 million (2005: Â£56 million) with margins of 2.7% (2005: 2.8%). The 2006 margin incorporates the adverse impact of the 40 basis point decrease in the bond yield within the European Embedded Value assumptions at the start of 2006. Life and savings sales were Â£697 million (2005: Â£976 million), with the reduction mainly due to lower sales in Germany and Belgium. In the Netherlands, savings sales have been affected by competition from alternative banking products. In Germany, investment bond volumes have been affected by the flattening yield curve. In Belgium, sales were lower following the introduction of a 1.1% insurance tax levy on life insurance premiums from 1 January 2006 and reduced margins available in the market. Pension and annuity sales were Â£992 million (2005: Â£1,032 million). Volumes of annuity sales were lower at Â£249 million (2005: Â£328 million), reflecting high volumes in the first half of 2005 driven by limited period special offers in ABN AMRO and the direct channel. Delta Lloyd's pension sales tend to fluctuate from quarter to quarter due to the timing and size of group contracts. A Â£27 million premium was received from the Delta Lloyd pension scheme in the current quarter in addition to the Â£125 million premium received earlier in the year. Investment sales were Â£238 million (2005: Â£281 million) mainly comprising equity and bond fund sales through the Rabobank network. ^^^ Based on new business single premium plus regular premiums at July 2006 compared with July 2005. ----------------------------------------------------------------------------------------------------------------------- Page 7 Poland (including Lithuania): Aviva's life and pension operations in Poland and Lithuania are leading businesses in their respective markets. Total sales, including investment sales, were Â£472 million (2005: Â£258 million). Total new business contribution from life and pension sales was up 78% to Â£20 million (2005: Â£11 million), driven by the strong growth in sales, with a new business margin of 5.2% (2005: 5.0%). Life sales in Poland increased substantially to Â£182 million (2005: Â£96 million), including Â£17 million from a large group scheme. This performance reflects strong sales of single premium unit-linked business, driven by a favourable equity market, positive results from continued development of the direct sales force and an improving focus on bancassurance. Pension sales increased significantly to Â£172 million (2005: Â£100 million) mainly as a result of higher receipts of contributions from the State pension agency and higher amounts of assets obtained from the secondary market. Life and savings sales in Lithuania were Â£31 million (2005: Â£26 million),confirming Aviva's strong position in this market. Investment sales in Poland were Â£87 million (2005: Â£36 million) reflecting a buoyant equity market, the benefit of a new distribution agreement with a leading broker and the increased productivity of the direct sales force. The Polish insurance and investment markets continue to offer strong long-term growth potential, supported by a favourable economic outlook. Equity markets slowed in the third quarter and Aviva does not expect the current level of sales growth to be maintained in the final quarter. Spain: Aviva is the leading bancassurer in the Spanish life market and ranks second in the overall life market#. Aviva Spain's sales were Â£1,294 million (2005: Â£1,353 million, including one-offs of Â£25 million), reflecting the decline in the Spanish market of 5% in the first half of 2006. Sales of savings products were adversely affected by uncertainty surrounding the details of tax changes announced for 2007 and this uncertainty is likely to continue to affect sales of savings products for the remainder of the year. New products will be launched in early 2007 to take advantage of the proposed tax changes. The new business contribution grew by 10% to Â£128 million (2005: Â£116 million) and the margin to 9.9% (2005: 8.6%), reflecting a greater proportion of sales of higher-margin protection products. Sales through Aviva's bancassurance partnerships in the first nine months were focused on higher-margin protection and pension business. Total sales were Â£1,165 million (2005: Â£1,217 million). This performance was supported by marketing campaigns carried out by the bank partners in the first half of the year. Sales through Aviva Vida y Pensiones, which distributes through its direct sales force and intermediaries, were Â£129 million (2005: Â£136 million, including one-off sales of Â£25 million). Favourable equity market conditions in the first half of the year helped to achieve increased sales of unit-linked business. Sales in the fourth quarter will benefit from the launch of new life and pension products. The reduction in pension tax relief from 1 January 2007 will be a feature of the marketing campaigns planned for the last quarter. Other Europe: Life and pension sales in Aviva's other Continental European businesses in the Czech Republic, Hungary, Romania, Russia and Turkey amounted to Â£215 million (2005: Â£182 million, including Â£45 million of sales in the Portuguese business which was sold in 2005). Growth of 56% was achieved from continuing businesses, principally from an increase in sales through the broker channel in Hungary, reflecting the benefit from a surge in sales prior to changes in the tax regime. In Turkey, where Aviva is a top-five life and pensions provider, total sales were Â£112 million (2005: Â£106 million) reflecting recent increased activity in transfers from existing life to pension policies ahead of the regulatory deadline##. Investment sales in Luxembourg have risen by 18% to Â£382 million (2005: Â£325 million), benefiting from strong equity markets. Aviva Russia was granted its licence in March 2006 and it has subsequently commenced trading in corporate sales on a limited scale. Aviva's strategy is to position the business to take advantage of the rapid growth expected to occur as the life insurance industry develops with the expectation of achieving a top-five market position and a 10% share in the life insurance market in the next five years. # Based on gross written premium in the first half of 2006. ## Turkish legislation for pension business, which came into effect from August 2004, allows for transfers from existing life policies to new pension policies with the same life company until October 2006. Pensions business has advantages in terms of the range of investment funds and a lower tax charge on benefits at maturity/retirement. ---------------------------------------------------------------------------------------------------------------------- Page 8 Rest of the World Asian businesses: In line with its long-term strategic ambitions for the region, Aviva continues to achieve a strong rate of growth in new business sales. Total sales from operations in Asia were up 100% to Â£635 million (2005: Â£307 million). New business contribution from life and pension sales increased by 70% to Â£23 million (2005: Â£13 million) with a new business margin of 5.1% (2005: 5.2%). Singapore: Total sales increased by 81% to Â£387 million (2005: Â£204 million). Life and pension sales were Â£207 million (2005: Â£147 million), reflecting limited period single premium sales through Aviva's partnership with DBS. Aviva remains second in the bancassurance market and the leader in the developing broker market as well as the employee benefits and healthcare segment. Sales through Navigator, the investment fund administration business, increased significantly to Â£180 million (2005: Â£57 million), reflecting good relationships with key brokers, the comprehensive range of funds offered and a buoyant equity market. Hong Kong: Sales increased significantly to Â£141 million (2005: Â£59 million), due to strong IFA sales, that now account for 50% of the total, together with continued good performance from the partnership with DBS in Hong Kong. China: Sales through the joint venture life business, Aviva-COFCO increased to Â£68 million (2005: Â£45 million) reflecting expansion in China where Aviva is now licensed in six major cities, with sales offices in a further seven cities. Aviva's 50% share of sales was Â£34 million (2005: Â£22 million). India: Aviva's joint venture with the Dabur Group reported an excellent performance increasing total new business sales to Â£246 million (2005: Â£86 million), with Aviva's 26% share of new business sales amounting to Â£64 million (2005: Â£22 million). Aviva is the leader in the bancassurance market and the seventh largest private insurer in India###. Aviva India has continued to increase its distribution relationship with banks, which now number 29 (2005:17). The most recent agreement is with Doha Bank in Qatar, where Aviva's products will be distributed to Qatar's non-resident Indian community. Aviva's direct sales force now numbers more than 12,800 agents, with an additional 5,000 in training. Sri Lanka: On 1 February 2006, Aviva acquired a 51% stake in Eagle Insurance Company Limited (Eagle), the third-largest insurer in Sri Lanka. At the same time, Eagle entered into a bancassurance agreement with National Development Bank Limited, Sri Lanka's biggest development bank and Eagle's other major shareholder. Eagle has now entered its second bancassurance deal with Standard Chartered Bank, and has launched a set of innovative new products. Total sales since acquisition amount to Â£9 million. Australia: Total sales increased by 21% to Â£1,243 million (2005: Â£1,040 million), driven primarily by significantly higher investment sales through Navigator, the master trust fund administration business. Life and pension sales were Â£213 million (2005: Â£253 million) with strong growth from protection products continuing following product enhancements. However, changes in legislation in July 2005+ have resulted in a shift of corporate pension sales for Aviva towards Navigator retirement funds and this trend is expected to continue. Recently announced changes to pension laws and changes in tax legislation are expected to have a beneficial impact on the long-term savings industry. Sales through Navigator increased by 43% to Â£860 million (2005: Â£611 million) as a result of ongoing improvements in product offerings, an increase in retirement fund business, sustained strong customer service levels and Aviva Australia's strategic investments in key distributors. Recent budget changes and cuts in personal income tax should encourage consumer investment in retirement funds. Other investment sales were Â£170 million (2005: Â£176 million). New business contribution from life and pension sales was Â£10 million (2005: Â£11 million). The new business margin increased to 4.7% (2005: 4.3%), reflecting increased contribution from higher margin protection business. United States: Life and pension sales increased by 3% to Â£408 million (2005: Â£393 million). Sales of deferred annuities have been adversely affected by difficult market conditions associated with a flat yield curve and this is expected to continue. Structured settlement products continue to show strong growth following the A.M. Best rating upgrade to A+ in November 2005. Fixed index annuity sales increased by 200% to Â£48 million (2005: Â£16 million, sales commenced in the second quarter) due to competitive rates and the success of recent marketing campaigns. New business contribution remained at a level of Â£9 million (2005: Â£9 million). The margin of 2.2% (2005: 2.3%) remains broadly in line with the prior year. ### Measured in terms of first year weighted premium income in the fiscal year to date (April 2006 - August 2006) + From 1 July 2005, for the first time, individuals were entitled to choose where superannuation contributions made on their behalf by their employer were directed. Previously the employer would choose the plan. ----------------------------------------------------------------------------------------------------------------------- Page 9 Notes to Editors 1. 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 2005. Aviva's principal business activities are long-term savings, fund management and general insurance, with worldwide total sales* of Â£36 billion and assets under management of Â£322 billion at 31 December 2005. * Based on life and pensions PVNBP, total investment sales and general insurance and health net written premiums including share of associates' premiums. The Aviva media centre at www.aviva.com/media includes images, company and product information and a news release archive. 2. All figures have been translated at average exchange rates applying for the period. The average rates employed in this announcement are 1 euro = Â£0.68 (9 months to 30 September 2005: 1 euro = Â£0.68). 3. All growth rates are quoted in local currency. 4. Definition: Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution. 5. Cautionary statements: 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. Aviva plc is a company registered in England No. 2468686. Registered office St Helen's 1 Undershaft London EC3P 3DQ. ----------------------------------------------------------------------------------------------------------------------- Statistical Supplement CONTENTS Analyses 1. Present value of life new business premiums 2. Analysis of sales via principal bancassurance channels 3. Detailed analysis of new business contribution 4. Detailed worldwide long-term savings new business analysis 5. Analysis of UK long-term savings by distribution channel and Analysis of France long-term savings by fund 6. Principal economic assumptions ----------------------------------------------------------------------------------------------------------------------- Page 11 Supplement 1 Present value of life new business premiums The present value of new business premiums (PVNBP) is derived from the single and regular premiums of the products sold during the financial period and is expressed at the point of sale. The PVNBP calculation is equal to total single premium sales received in the year plus the discounted value of regular premiums expected to be received over the term of the new contracts. The premium volumes and projection assumptions used to calculate the present value of regular premiums for each product are the same as those used to calculate new business contribution, so the components of the new business margin are on a consistent basis. The discounted value of regular premiums is also expressed as annualised regular premiums multiplied by a Weighted Average Capitalisation Factor (WACF). The WACF will vary over time depending on the mix of new products sold, the average outstanding term of the new contracts and the projection assumptions. The table below sets out the factors required to derive the present value of regular premiums by business units, and combined with single premium sales derives the present value of future new business premiums. 9 months 9 months 2006 2005 -------------------------------------------------------------------- ------------- Weighted Present value Present value average Present value of new of new Regular capitalisation of regular Single business business premiums factor premiums premiums premiums premiums Â£m Â£m Â£m Â£m Â£m United Kingdom Individual pensions 295 5.3 1,550 1,650 3,200 1,867 Group pensions 69 5.7 393 447 840 727 Annuities - - - 1,161 1,161 1,240 Bonds - - - 2,532 2,532 1,860 Protection 126 5.0 627 196 823 714 Equity release - - - 235 235 278 --------------------------------------------------------------------------------------------------------------------- Total life and pensions 490 5.2 2,570 6,221 8,791 6,686 France Euro funds* 7 5.3 37 1,338 1,375 1,450 Unit-linked funds 34 6.3 213 1,019 1,232 1,034 Protection business 16 6.8 108 2 110 109 --------------------------------------------------------------------------------------------------------------------- Total life and pensions 57 6.3 358 2,359 2,717 2,593 Ireland Life and savings 26 4.8 125 379 504 167 Pensions 47 4.5 212 186 398 337 --------------------------------------------------------------------------------------------------------------------- Total life and pensions 73 4.6 337 565 902 504 Italy Life and savings 65 6.2 405 1,654 2,059 1,816 --------------------------------------------------------------------------------------------------------------------- Total life and pensions 65 6.2 405 1,654 2,059 1,816 Netherlands (including Belgium, Germany and Luxembourg) Life 62 6.9 429 268 697 976 Pensions 51 8.6 438 554 992 1,032 --------------------------------------------------------------------------------------------------------------------- Total life and pensions 113 7.7 867 822 1,689 2,008 Poland Life and savings 21 5.1 108 105 213 122 Pensions 15 7.5 112 60 172 100 --------------------------------------------------------------------------------------------------------------------- Total life and pensions 36 6.1 220 165 385 222 Spain Life and savings 50 6.2 310 698 1,008 1,098 Pensions 22 5.6 124 162 286 255 --------------------------------------------------------------------------------------------------------------------- Total life and pensions 72 6.0 434 860 1,294 1,353 Other Europe Life and pensions 42 3.7 156 59 215 182 --------------------------------------------------------------------------------------------------------------------- Total life and pensions 42 3.7 156 59 215 182 Rest of the World Asia 55 4.6 251 204 455 250 Australia 27 3.3 89 124 213 253 United States 5 4.6 23 385 408 393 --------------------------------------------------------------------------------------------------------------------- Total Life and pensions 87 4.2 363 713 1,076 896 ===================================================================================================================== International total life and pensions 545 5.8 3,140 7,197 10,337 9,574 --------------------------------------------------------------------------------------------------------------------- Total 1,035 5.5 5,710 13,418 19,128 16,260 ===================================================================================================================== * Euro funds are savings that receive an annual bonus declaration, based on the investment performance of the underlying funds. --------------------------------------------------------------------------------------------------------------------- Page 12 Supplement 2 Analysis of sales via principal bancassurance channels Present value of new business premiums** ---------------------------------------- Local 9 months 9 months currency 2006 2005 growth* Â£m Â£m Life and pensions United Kingdom Royal Bank of Scotland Group 745 442 69% --------------------------------------------------------------------------------------------------------------------- 745 442 69% France Credit du Nord 657 560 17% --------------------------------------------------------------------------------------------------------------------- 657 560 17% Ireland Allied Irish Banks 424 - - --------------------------------------------------------------------------------------------------------------------- 424 - - Italy UniCredit Group 1,103 647 70% Banca Popolare Italiana Group 401 423 (5)% Banca delle Marche 32 139 (77)% Banche Popolari Unite 483 505 (4)% --------------------------------------------------------------------------------------------------------------------- 2,019 1,714 18% Netherlands ABN AMRO 371 450 (18)% --------------------------------------------------------------------------------------------------------------------- 371 450 (18)% Spain Bancaja 516 588 (12)% Caixa Galicia 227 225 1% Unicaja 219 196 12% Caja Espana 116 119 (3)% Caja de Granada 87 89 (2)% --------------------------------------------------------------------------------------------------------------------- 1,165 1,217 (4)% Asia DBS 241 148 58% --------------------------------------------------------------------------------------------------------------------- 241 148 58% --------------------------------------------------------------------------------------------------------------------- Total life and pensions 5,622 4,531 24% Investment sales*** United Kingdom Royal Bank of Scotland Group 134 79 70% --------------------------------------------------------------------------------------------------------------------- 134 79 70% --------------------------------------------------------------------------------------------------------------------- Total bancassurance sales 5,756 4,610 25% ===================================================================================================================== * Growth rates are calculated based on constant rates of exchange. ** Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution. *** Investment sales are calculated as new single premium plus annualised value of new regular premiums. ---------------------------------------------------------------------------------------------------------------------- Page 13 Supplement 3 Detailed analysis of new business contribution (a) Before the effect of required capital - PVNBP basis Present value of New business new business premiums* contribution**,*** New business margin^ ------------------------ ------------------ ----------------------------- 9 months 9 months 9 months 9 months 9 months 9 months Full year 2006 2005 2006 2005 2006 2005 2005 Â£m Â£m Â£m Â£m Life and pensions United Kingdom 8,791 6,686 254 201 2.9% 3.0% 2.9% France 2,717 2,593 111 98 4.1% 3.8% 3.8% Ireland 902 504 19 13 2.1% 2.6% 2.4% Italy 2,059 1,816 51 46 2.5% 2.5% 2.6% Netherlands (including Germany, Belgium and Luxembourg) 1,689 2,008 45 56 2.7% 2.8% 3.3% Poland 385 222 20 11 5.2% 5.0% 5.0% Spain 1,294 1,353 128 116 9.9% 8.6% 8.7% Other Europe 215 182 (4) 1 (1.9)% 0.5% (0.4)% --------------------------------------------------------------------------------------------------------------------- Continental Europe 9,261 8,678 370 341 4.0% 3.9% 4.2% Asia 455 250 23 13 5.1% 5.2% 5.1% Australia 213 253 10 11 4.7% 4.3% 4.7% United States 408 393 9 9 2.2% 2.3% 2.5% --------------------------------------------------------------------------------------------------------------------- Rest of the World 1,076 896 42 33 3.9% 3.7% 3.9% --------------------------------------------------------------------------------------------------------------------- International 10,337 9,574 412 374 4.0% 3.9% 4.1% --------------------------------------------------------------------------------------------------------------------- Total life and pensions 19,128 16,260 666 575 3.5% 3.5% 3.6% ===================================================================================================================== Analysed between: Bancassurance channels 5,622 4,531 274 219 4.8% 4.8% 5.1% Other distribution channels 13,506 11,729 392 356 2.9% 3.0% 3.1% --------------------------------------------------------------------------------------------------------------------- 19,128 16,260 666 575 3.5% 3.5% 3.6% ===================================================================================================================== * Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution. ** Before the effect of required capital. *** New business contribution before the effect of required capital includes minority interests in 2006 of Â£134 million (9 months 2005: Â£110 million). This comprises minority interests in France of Â£18 million (9 months 2005: Â£15 million), Ireland Â£4 million (9 months 2005: nil), Italy Â£30 million (9 months 2005: Â£27 million), Spain Â£71 million (9 months 2005: Â£59 million), Poland Â£3 million (9 months 2005: Â£2 million), Netherlands Â£7 million (9 months 2005: Â£7 million) and Sri Lanka Â£1 million (2005: nil). ^ New business margin represents the ratio of new business contribution to PVNBP, expressed as a percentage. ---------------------------------------------------------------------------------------------------------------------- Page 14 Supplement 3 (b) After the effect of required capital Present value of New business new business premiums* contribution**,*** New business margin^ ------------------------ ------------------ ----------------------------- 9 months 9 months 9 months 9 months 9 months 9 months Full year 2006 2005 2006 2005 2006 2005 2005 Â£m Â£m Â£m Â£m Life and pensions business United Kingdom 8,791 6,686 205 165 2.3% 2.5% 2.4% France 2,717 2,593 80 66 2.9% 2.5% 2.6% Ireland 902 504 13 11 1.4% 2.2% 2.0% Italy 2,059 1,816 35 28 1.7% 1.5% 1.6% Netherlands (including Germany, Belgium and Luxembourg) 1,689 2,008 23 29 1.4% 1.4% 2.1% Poland 385 222 18 10 4.7% 4.5% 4.7% Spain 1,294 1,353 117 102 9.0% 7.5% 7.7% Other Europe 215 182 (5) (2) (2.3)% (1.1)% (2.1)% ---------------------------------------------------------------------------------------------------------------------- Continental Europe 9,261 8,678 281 244 3.0% 2.8% 3.1% Asia 455 250 19 11 4.2% 4.4% 4.1% Australia 213 253 4 5 1.9% 2.0% 2.7% United States 408 393 4 4 1.0% 1.0% 1.3% --------------------------------------------------------------------------------------------------------------------- Rest of the World 1,076 896 27 20 2.5% 2.2% 2.5% --------------------------------------------------------------------------------------------------------------------- International 10,337 9,574 308 264 3.0% 2.8% 3.0% --------------------------------------------------------------------------------------------------------------------- Total life and Pensions 19,128 16,260 513 429 2.7% 2.6% 2.8% ===================================================================================================================== * Present value of new business premiums (PVNBP) is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution. ** New business contribution is after the effect of required capital. The effect of required capital represents the impact of holding the required capital (expressed as a % of minimum European Union (EU) solvency margin or equivalent for non-EU operations) and discounting to present value the projected future releases from the required capital to shareholders. *** New business contribution after the effect of required capital includes minority interests in 2006 of Â£109 million (9 months 2005: Â£83 million). This comprises minority interests in France of Â£11 million (9 months 2005: Â£8 million), Ireland Â£3 million (9 months 2005: nil), Italy Â£20 million (9 months to 30 September 2005: Â£17 million), Spain Â£66 million (9 months 2005: Â£52 million), Poland Â£3 million (9 months 2005: Â£1 million) and Netherlands Â£6 million (9 months 2005: Â£5 million). ^ New business margin represents the ratio of new business contribution after the effect of required capital to PVNBP, expressed as a percentage. (c) After the effect of required capital, minority interest, and tax Present value of New business new business premiums* contribution** New business margin*** ------------------------ ------------------ ----------------------------- 9 months 9 months 9 months 9 months 9 months 9 months Full year 2006 2005 2006 2005 2006 2005 2005 Â£m Â£m Â£m Â£m United Kingdon 8,791 6,686 144 117 1.6% 1.7% 1.7% Continental Europe 6,525 6,261 118 106 1.8% 1.7% 1.9% Rest of the World 1,072 896 21 15 2.0% 1.7% 2.0% --------------------------------------------------------------------------------------------------------------------- International 7,597 7,157 139 121 1.8% 1.7% 1.9% --------------------------------------------------------------------------------------------------------------------- Attributable to equity shareholders 16,388 13,843 283 238 1.7% 1.7% 1.8% ===================================================================================================================== Analysed between: Bancassurance channels 3,246 2,382 88 64 2.7% 2.7% 2.9% Other distribution channels 13,142 11,461 195 174 1.5% 1.5% 1.6% --------------------------------------------------------------------------------------------------------------------- 16,388 13,843 283 238 1.7% 1.7% 1.8% ===================================================================================================================== * PVNBP is stated after deducting minority interest. ** Contribution stated after deducting cost of required capital, tax and minority interest. *** New business margin represents the ratio of new business contribution after deducting cost of required capital, tax and minority interest to PVNBP after deducting the minority share, expressed as a percentage. ---------------------------------------------------------------------------------------------------------------------- Page 15 Supplement 4 Detailed worldwide long-term savings new business analysis Single Regular PVNBP ---------------------------------- ---------------------------------- ------------ 9 months 9 months Local 9 months 9 months Local Local 2006 2005 currency 2006 2005 currency currency Â£m Â£m growth* Â£m Â£m growth* growth* United Kingdom Individual pensions 1,650 924 79% 295 183 61% 71% Group pensions 447 388 15% 69 62 11% 16% Annuities 1,161 1,240 (6)% - - - (6)% Bonds 2,532 1,860 36% - - - 36% Protection 196 189 (4)% 126 103 22% 15% Equity release 235 278 (16)% - - - (16)% --------------------------------------------------------------------------------------------------------------------- Total life and pensions 6,221 4,879 28% 490 348 41% 31% Peps/Isas/UTs/Oeics 1,645 840 96% 28 15 87% 96% --------------------------------------------------------------------------------------------------------------------- 7,866 5,719 38% 518 363 43% 39% France Euro funds** 1,338 1,392 (4)% 7 10 (30)% (5)% Unit-linked funds 1,019 863 18% 34 29 17% 19% Protection business 2 2 - 16 16 - 1% ---------------------------------------------------------------------------------------------------------------------- 2,359 2,257 5% 57 55 4% 5% Ireland Life and savings 379 105 261% 26 12 117% 201% Pensions 186 175 6% 47 33 42% 18% ---------------------------------------------------------------------------------------------------------------------- 565 280 102% 73 45 62% 79% Italy Life and savings 1,654 1,538 8% 65 45 44% 13% ---------------------------------------------------------------------------------------------------------------------- 1,654 1,538 8% 65 45 44% 13% Netherlands (including Germany, Belgium & Luxembourg) Life 268 442 (39)% 62 81 (24)% (29)% Pensions 554 598 (7)% 51 52 (2)% (4)% ---------------------------------------------------------------------------------------------------------------------- Total life and pensions 822 1,040 (21)% 113 133 (15)% (16)% Unit trusts 238 281 (15)% - - - (15)% ---------------------------------------------------------------------------------------------------------------------- 1,060 1,321 (20)% 113 133 (15)% (16)% Poland Life and savings 105 40 150% 21 16 28% 70% Pensions 60 27 115% 15 10 50% 66% ---------------------------------------------------------------------------------------------------------------------- Total life and pensions 165 67 136% 36 26 36% 68% Mutual funds 84 34 139% 3 2 45% 134% ---------------------------------------------------------------------------------------------------------------------- 249 101 137% 39 28 37% 77% Spain Life and savings 698 797 (12)% 50 46 9% (8)% Pensions 162 129 26% 22 21 5% 12% ---------------------------------------------------------------------------------------------------------------------- 860 926 (7)% 72 67 8% (4)% Other Europe Life and pensions 59 65 (10)% 42 31 35% 17% UCITS 382 325 18% - - - 18% ---------------------------------------------------------------------------------------------------------------------- 441 390 13% 42 31 35% 18% Rest of the World Asia 204 80 150% 55 37 48% 76% Australia 124 152 (17)% 27 32 (15)% (15)% United States 385 333 14% 5 15 (67)% 3% ---------------------------------------------------------------------------------------------------------------------- Life and pensions 713 565 25% 87 84 4% 19% Unit trusts 170 176 (2)% - - - (2)% Navigator 1,040 668 55% - - - 55% ---------------------------------------------------------------------------------------------------------------------- 1,923 1,409 37% 87 84 4% 45% Aviva International Life and pensions 7,197 6,738 7% 545 487 12% 8% Total investments 1,914 1,484 30% 3 2 45% 30% ---------------------------------------------------------------------------------------------------------------------- 9,111 8,222 11% 548 489 12% 11% Total long-term savings 16,977 13,941 22% 1,066 852 25% 22% ====================================================================================================================== Analysed between: Life and pensions 13,418 11,617 15% 1,035 835 24% 18% Investment sales 3,559 2,324 54% 31 17 82% 54% ---------------------------------------------------------------------------------------------------------------------- 16,977 13,941 22% 1,066 852 25% 22% ====================================================================================================================== * Growth rates are calculated based on constant rates of exchange. ** Euro funds are savings that receive an annual bonus declaration, based on the investment performance of the underlying funds. ---------------------------------------------------------------------------------------------------------------------- Page 16 Supplement 5 Analysis of UK long-term savings by distribution channel Annual premium Single Regular equivalent** ------------------------------ ------------------------------- ------------------- 9 months 9 months Local 9 months 9 months Local 9 months Local 2006 2005 currency 2006 2005 currency 2006 currency Â£m Â£m growth* Â£m Â£m growth* Â£m growth* IFA - life & pension products 4,541 3,586 27% 384 275 40% 838 34% - investment products 1,205 449 168% - - - 121 169% --------------------------------------------------------------------------------------------------------------------- 5,746 4,035 42% 384 275 40% 959 41% Bancassurance partnership with RBSG - life & pension products 501 365 37% 46 17 171% 96 80% - investment products 106 65 63% 28 14 100% 39 88% --------------------------------------------------------------------------------------------------------------------- 607 430 41% 74 31 139% 135 82% Other partnerships and Direct - life & pension products 1,179 927 27% 60 56 7% 178 20% - investment products 334 327 2% - 1 - 33 (1)% --------------------------------------------------------------------------------------------------------------------- 1,513 1,254 21% 60 57 5% 211 16% --------------------------------------------------------------------------------------------------------------------- Total UK long-term savings 7,866 5,719 38% 518 363 43% 1,305 40% ===================================================================================================================== * Growth rates are calculated based on constant rates of exchange. ** Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums plus 10% of single premiums. Analysis of France long-term savings by fund Single Regular PVNBP ------------------------------ ------------------------------- ----------- 9 months 9 months Local 9 months 9 months Local Local 2006 2005 currency 2006 2005 currency currency Â£m Â£m growth* Â£m Â£m growth* growth* AFER - Euro funds** 860 954 (10)% - - - (10)% - Unit-linked funds 392 276 42% - - - 42% --------------------------------------------------------------------------------------------------------------------- 1,252 1,230 2% - - - 2% Bancassurance partnership with Credit du Nord - Euro funds 325 266 22% 3 3 - 21% - Unit-linked funds 230 194 19% 13 13 - 13% - Protection 1 1 - 1 1 - 50% --------------------------------------------------------------------------------------------------------------------- 556 461 21% 17 17 - 17% Other - Euro funds 153 172 (11)% 4 7 (43)% (19)% - Unit-linked funds 397 393 1% 21 16 31% 10% - Protection 1 1 - 15 15 - (2)% --------------------------------------------------------------------------------------------------------------------- 551 566 (3)% 40 38 5% 1% --------------------------------------------------------------------------------------------------------------------- Total France long-term savings 2,359 2,257 5% 57 55 4% 5% ===================================================================================================================== * Growth rates are calculated based on constant rates of exchange. ** Euro funds are savings that receive an annual bonus declaration, based on the investment performance of the underlying funds. ---------------------------------------------------------------------------------------------------------------------- Page 17 Supplement 6 Principal economic assumptions - deterministic calculations Economic assumptions are derived actively, based on market yields on risk-free fixed interest assets at the end of each reporting period. The same margins are applied on a consistent basis across the Group to gross risk-free yields to obtain investment return assumptions for ordinary shares and property and to produce risk discount rates. Expense inflation is derived as a fixed margin above a local measure of long-term price inflation. Risk-free rates and price inflation have been harmonised across territories within the Euro currency zone, except for expense inflation in Ireland where significant differences remain. Required capital is shown as a multiple of the EU statutory minimum solvency margin. Investment return assumptions are generally derived by major product class, based on hypothecating the assets at the valuation date. Assumptions about future investment mix are consistent with long-term plans. In most cases, the investment mix is assumed to continue unchanged throughout the projection period. The changes in assumptions between reporting dates reflect the actual movements in risk-free yields in the United Kingdom, the Eurozone and other territories. The principal economic assumptions used are as follows: United Kingdom France ------------------- ------------------ 2005 2004 2005 2004 Risk discount rate 6.8% 7.3% 6.0% 6.4% Pre-tax investment returns: Base government fixed interest 4.1% 4.6% 3.3% 3.7% Ordinary shares 7.1% 7.6% 6.3% 6.7% Property 6.1% 6.6% 5.3% 5.7% Future expense inflation 3.2% 3.3% 2.5% 2.5% Tax rate 30.0% 30.0% 34.4% 34.9% Required capital (% EU minimum) 150%/100% 200%/100% 115%/100% 115%/100% Ireland Italy ------------------- ------------------ 2005 2004 2005 2004 Risk discount rate 6.0% 6.4% 6.0% 6.4% Pre-tax investment returns: Base government fixed interest 3.3% 3.7% 3.3% 3.7% Ordinary shares 6.3% 6.7% 6.3% 6.7% Property 5.3% 5.7% 5.3% 5.7% Future expense inflation 4.0% 4.0% 2.5% 2.5% Tax rate 12.5% 12.5% 38.3% 38.3% Required capital (% EU minimum) 150% 150% 115% 115% Netherlands Poland ------------------- ------------------ 2005 2004 2005 2004 Risk discount rate 6.0% 6.4% 8.6% 9.7% Pre-tax investment returns: Base government fixed interest 3.3% 3.7% 4.9% 6.0% Ordinary shares 6.3% 6.7% 7.9% 9.0% Property 5.3% 5.7% n/a n/a Future expense inflation 2.5% 2.5% 3.3% 3.4% Tax rate 29.1% 31.5% 19.0% 19.0% Required capital (% EU minimum) 150% 150% 150% 150% Spain ------------------ 2005 2004 Risk discount rate 6.0% 6.4% Pre-tax investment returns: Base government fixed interest 3.3% 3.7% Ordinary shares 6.3% 6.7% Property 5.3% 5.7% Future expense inflation 2.5% 2.5% Tax rate 35.0% 35.0% Required capital (% EU minimum) 125%/110% 125%/110% For service companies, expense inflation relates to the underlying expenses rather than the fees charged to the life company. Future returns on corporate fixed interest investments are calculated from prospective yields less an adjustment for credit risk. Required capital in the United Kingdom is 150% EU minimum for Norwich Union Annuity Limited and 100% for other companies. Required capital in Spain is 125% EU minimum for Aviva Vida y Pensiones and 110% for bancassurance companies. Aviva plc is a company registered in England No. 2468686. Registered office St Helen's 1 Undershaft London EC3P 3DQ END OF ANNOUNCEMENT A pdf version of this announcement can be found on www.aviva.com This information is provided by RNS The company news service from the London Stock Exchange

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