Q3 Life New Business Results
Aviva PLC
23 October 2003
23 October 2003
Aviva plc
Worldwide long-term savings new business
Nine months to 30 September 2003
- Worldwide long-term new business sales of £10.8 billion (2002: £10.6 billion)
- Worldwide life and pensions sales of £1,745 million (2002: £1,746 million) on an APE* basis
- Indications of confidence slowly returning to savings markets
- Worldwide total bancassurance sales up 44% at £417 million (2002: £271 million) on an APE* basis
- Continental European life and pensions sales up 10% on an APE* basis representing 48% of total worldwide life and
pensions new business sales
- Worldwide new business contribution at £437 million (2002: £416 million), with new business margin of 25.0%
(full year 2002: 24.4%)
* Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums and 10% of single
premiums.
All growth rates quoted are at constant rates of exchange.
Richard Harvey, Group Chief Executive, commented:
'We are seeing signs of a recovery slowly returning to the UK savings market. In Continental Europe sales have
increased by ten per cent during 2003, mostly driven through bancassurance. These together have resulted in stable
overall group sales. Margins have improved, following the actions that we have taken to reduce costs, improve pricing
and target higher margin business.'
Enquiries:
Analysts/Investors:
Philip Scott, Group Executive Director +44 (0)20 7662 2264
Steve Riley, Investor Relations Director +44 (0)20 7662 8115
James Matthews, Head of Investor Relations +44 (0)20 7662 2137
Media:
Hayley Stimpson, Director of External Affairs +44 (0)20 7662 7544
Sue Winston, Head of Group Media Relations +44 (0)20 7662 8221
Alex Child-Villiers, Financial Dynamics +44 (0)20 7269 7107
NEWSWIRES: There will be a conference call today for wire services at 7:45am (UK time) on +44 (0)1452 569393. This
conference call will be hosted by Philip Scott, Group Executive Director and Gary Withers, Chief Executive Norwich
Union Life.
ANALYSTS: There will be a conference call today for analysts and investors at 9:30am (UK time) on +44 (0)1452 569393.
This conference call will be hosted by Philip Scott, Group Executive Director and Gary Withers, Chief Executive
Norwich Union Life.
Replay will be available for two weeks until 6 November. The dial in number for replay is +44 (0)1452 550000 and
the pass code is 446433.
Total new business Annual premium New business
sales equivalent sales(2) contribution(3)
------------------------ ------------------------ ------------------------
9 months to Local 9 months to Local 9 months to Local
30 September currency 30 September currency 30 September currency
2003 growth(1) 2003 growth(1) 2003 growth(1)
£m £m £m
Life and pensions
United Kingdom 4,429 (16%) 802 (16%) 180 (22%)
France 1,458 (4%) 177 (3%) 51 (12%)
Ireland 167 (45%) 55 (40%) 16 (38%)
Italy 1,092 29% 148 28% 35 38%
Netherlands 681 2% 146 15% 34 125%
(including Belgium and Luxembourg)
Poland 45 (18%) 27 (26%) - (102%)
Spain 1,071 60% 174 63% 92 70%
Other Europe 236 5% 68 5% (3) 29%
Continental Europe 4,750 11% 795 10% 225 24%
International 710 10% 148 26% 32 65%
---------------------------------------------------------------------------------------------------------------------
Total life and pensions 9,889 (3%) 1,745 (3%) 437 1%
=====================================================================================================================
Investment sales
United Kingdom 496 16% 60 9%
Netherlands
(including Belgium and Luxembourg) 199 206% 20 206%
Poland 85 - 9 -
Other Europe 30 (56%) 3 (56%)
Continental Europe 314 133% 32 139%
International 61 (74%) 6 (74%)
-------------------------------------------------------------------------------------------
Total investment sales 871 9% 98 7%
-------------------------------------------------------------------------------------------
Total long-term savings 10,760 (2%) 1,843 (3%)
===========================================================================================
Navigator sales 465 (36%)
(not included above)
(1) Growth rates are calculated based on constant rates of exchange.
(2) Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums and 10% of
single premiums.
(3) Stated before the effect of solvency margin.
United Kingdom:
Norwich Union regained its position as UK market leader in the first half of 2003 with a market share of around 12%.
We have maintained a focus on value and having taken early action to increase prices in a number of product areas,
prices are now beginning to stabilise. Total life and pensions new business sales in the discrete third quarter of
£271 million on an APE basis continued the trend of stable performance over the first three quarters of this year.
Total sales for the nine month period were £862 million (2002: £1,009 million) on an APE basis. We have begun to see
confidence slowly returning to the market and we expect this to continue through the last quarter of 2003 and into 2004.
Total sales for the nine month period from our joint venture with The Royal Bank of Scotland Group were
£652 million (2002: £677 million) and £111 million (2002: £88 million) on an APE basis. Our share of these sales was
£432 million (2002: £547 million) in total. During the third quarter we began a phased roll-out of our new electronic
point of sale system to the joint venture sales consultants which we believe will enhance productivity and improve
cost efficiency.
Overall bond and savings sales were £1,352 million (2002: £2,251 million), reflecting a fall in with-profit bond
sales in line with a contraction in this market over the last 18 months, which has partially been offset by increased
sales of unit-linked products. Although UK investors remain cautious, we are seeing indications that a degree of
investor confidence is slowly building again in the unit-linked market and with-profit bond sales have stabilised
over the last two quarters.
Total UK pension sales were £1,950 million (2002: £2,061 million). Sales of individual pensions of £1,278 million
(2002: £1,582 million), included DWP rebates of £165 million in the third quarter. Group pension scheme sales of £672
million (2002: £479 million) reflected our ongoing focus on larger group schemes. Included within the overall pension
results were stakeholder sales of £453 million (2002: £510 million).
Sales of annuities increased 20% to £880 million (2002: £731 million), but were lower in the discrete third quarter
at £239 million as we continued to price for profit despite strong price competition in the market during the quarter.
Sales of mortgage products, primarily protection business, were maintained at £50 million (2002: £52 million) and
term assurance sales, reported within Other Life, were £55 million (2002: £54 million).
New business contribution amounted to £180 million (2002: £231 million) with a new business margin of 22.4%
(full year 2002: 23.6%). This reflects lower volumes of bond sales and the impact of the change in economic
assumptions at the end of 2002, offset by an increasing proportion of higher margin annuity business. The discrete
third quarter margin was 23.2%.
France:
Aviva France reported total sales of £1,458 million (2002: £1,382 million). The 2002 result includes sales of
£101 million from our group protection business which was sold to Mederic with effect from 1 January 2003. The
underlying growth on the prior period after excluding these 2002 sales was 4%.
Sales of single premium AFER products were higher at £860 million (2002: £741 million), with significant numbers
of customers continuing to prefer fixed interest investments in current market conditions. Unit-linked and other
savings product sales were £554 million (2002: £510 million) despite an overall contraction of 16% in the market
for these products. We continued to benefit from sales of a series of limited offer unit-linked products, launched
periodically throughout the year. The first series of limited offer products reached their one year anniversary
during the third quarter with a majority of investors electing to invest their maturing funds in unit-linked
products as their long-term investment strategy.
New business contribution was £51 million (2002: £52 million), with a margin of 28.8% (full year 2002: 30.9%),
lower as a result of a shift in sales away from traditional unit-linked products.
Progress has continued on the Government's proposed reforms to pension legislation. An announcement on
implementation of this new legislation is expected before the end of 2003 and Aviva France is well placed to take
advantage of the new opportunities which are expected to arise.
Ireland:
Hibernian Life & Pensions, now the third largest Irish life and pensions provider, increased its market share in
the first half of 2003 to around 12% and reported total sales of £167 million (2002: £279 million) in continuing
difficult market conditions. New business sales were lower at £55 million (2002: £85 million) on an APE basis,
although sales in 2002 benefited from regular premium sales of £23 million of the Government's Special Savings
Incentive Account (SSIA) before its closure on 30 April 2002.
We maintained our focus on pensions business, with strong sales of group pension products, offset by lower demand
for individual pension products. New single premium pension sales were £82 million (2002: £78 million) and new
regular premium pension sales were £32 million (2002: £32 million). A major pensions awareness campaign is being
initiated by the Government in the fourth quarter, however we expect this market to remain challenging in the
short term.
In line with the market, sales of the Personal Retirement Savings Account (PRSA) have been initially slow, as
awareness of the available products remains poor amongst both consumers and advisers.
Life single premium sales were lower at £42 million (2002: £138 million), with continuing low demand for
unit-linked and with-profit bond investments in current market conditions. Regular life premium sales were lower
at £11 million (2002: £31 million) including an encouraging increase in sales of protection business offset by the
impact of SSIA sales which ceased in April 2002.
We achieved a margin of 28.9% (full year 2002: 28.2%) on a new business contribution of £16 million (2002:
£23 million).
Italy:
Following exceptional growth in new business sales in the first half of 2003, sales slowed in the discrete third
quarter. Total new business sales in the nine months increased by 29% to £1,092 million (2002: £772 million). Sales
in the discrete third quarter have been impacted by a slow summer period and the non-repetition of £187 million of
direct business which we wrote in the first half of the year.
Sales through UniCredito Italiano (UCI) increased to £607 million (2002: £545 million) with encouraging sales of
unit-linked single premium products offering protected returns. New product launches are expected to increase
momentum in the fourth quarter.
Our most recent agreement with Banca Popolare Commercio e Industria commenced this year and produced encouraging
new business sales. Sales benefited from a limited offer on a structured investment bond which closed during the
third quarter. New products are being introduced to widen the available product range.
Total sales from Banca Popolare di Lodi Group amounted to £189 million (2002: £173 million), and sales through
Banca delle Marche were £29 million (2002: £28 million), following a strong performance in the first half.
New business contribution was higher at £35 million (2002: £23 million), reflecting the increase in volumes. The
new business margin was 23.7% (full year 2002: 24.9%).
Netherlands (including Belgium and Luxembourg):
Delta Lloyd, our top-five life and pensions business in the Netherlands, reported an increase in total sales of 20%
to £880 million (2002: £667 million). Sales from our new bancassurance agreement with ABN AMRO were £182 million
for the nine month period.
Total pension and annuities sales were £386 million (2002: £415 million), continuing Delta Lloyd's focus on group
pension sales, and including regular premium sales which increased to £42 million (2002: £29 million). This was
offset by a fall in sales of single premium annuities in the period, following strong sales in 2002. This fall
reflects a strategic decision to reduce volumes of immediate annuity business and our ongoing management of new
business sales mix.
Single premium life product sales rose 30% to £250 million (2002: £160 million), including strong sales of unit-
linked products where the underlying returns are linked to bond performance.
In addition there was continuing strong demand for investment fund products offering guaranteed returns and sales
increased to £199 million (2002: £59 million). Total new business contribution amounted to £34 million (2002:
£14 million) with margins of 23.2% (full year 2002: 13.3%).
Poland:
CU Polska continues to be the market leader in individual life and private pensions with a 15% share of the life
market measured by total premium income in the first half of 2003 and a 29% share of the private pensions market
measured by total assets under management.
Market conditions continue to be difficult with pension sales lower at £19 million (2002: £24 million) and total
life sales at £26 million (2002: £33 million). In contrast our mutual fund business, launched in the second quarter of
2002, has performed strongly with sales of £85 million (2002: £2 million) helped by the low interest rate
environment and improving stockmarket performance.
Spain:
Aviva is the number one life business in Spain, based on gross written premiums in the first half of the year. New
business sales increased strongly in the period by 60% to £1,071 million (2002: £612 million), reflecting high
growth in our developing bancassurance partnerships and including one-off sales of £149 million in the first half of
the year.
In the third quarter, the focus has been on protection products, with sales of traditional savings products slowing,
as guaranteed minimum returns were adjusted downwards against the background of a competitive savings market. We
expect to launch some new products in the fourth quarter and to see some seasonal upturn in demand above the third
quarter in the run up to the end of the fiscal year.
Total new business sales through Bancaja grew by 28% to £606 million (2002: £433 million), boosted by high demand
for limited offer traditional savings products in the first quarter.
Our more recent partnerships also achieved strong growth, benefiting from the relatively low level of customer
penetration for life and pensions business. New business sales increased to £100 million (2002: £34 million)
through Unicaja, £188 million (2002: £14 million) through Caixa Galicia, and £144 million (2002: £91 million)
through Caja Espana, as further products were introduced. Sales through our most recent bancassurance partnership
with Caja de Granada commenced recently.
New business contribution amounted to £92 million (2002: £49 million) and the margin was higher at 53.0% (full year
2002: 45.9%), resulting from the change in business mix.
Other Europe:
Total sales for our Other Europe businesses were £266 million (2002: £270 million), including total sales in Germany
of £107 million (2002: £105 million).
In Turkey, where we are a top-five provider, total new business premiums were £19 million (2002: £16 million),
reflecting continuing development despite the ongoing difficult economic conditions. The launch of personal pensions
business is expected in the fourth quarter of 2003. In Lithuania we obtained a licence to sell pensions business and
early signs of sales are encouraging.
Sales through our Dublin-based offshore life and savings business were lower at £57 million (2002: £63 million)
and sales of Luxembourg UCITS were also lower at £30 million (2002: £62 million).
International:
Life and pension sales in our International businesses increased 10% to £710 million (2002: £669 million).
United States: Total life and pension sales increased to £469 million (2002: £377 million), although, as expected,
sales have slowed in the third quarter and we expect this trend to continue into the fourth quarter. Single
premium sales were £436 million (2002: £348 million), with regular premium sales of £33 million (2002: £29 million).
Australia: Total life and pension sales were £166 million (2002: £181 million) and sales of unit trusts were
£61 million (2002: £222 million). While not included in the new business figures, sales of Navigator, our top-five
master trust were lower at £460 million (2002: £669 million), although improving sales in the third quarter
indicate signs of confidence beginning to return.
Singapore and Hong Kong: Our bancassurance partnership with DBS Group Holdings Limited (DBS) in Singapore generated
sales of £25 million (2002: £17 million) on an APE basis reflecting our focus on higher margin regular premium
business. Our partnership with DBS in Hong Kong reported regular premiums of £2 million (2002: nil) and is in an
early stage of development following its launch at the end of 2002. Total Navigator sales include sales of
£5 million (2002: nil) through Navigator Asia in Singapore.
India: Our business in India continues to build on a very good start with an increase in sales through our
bancassurance partnerships including Canara Bank, India's second largest bank, and our direct sales force. Total
sales in India were £7 million, with our 26% share included in our new business results of £2 million (2002: nil).
China: We launched our new joint-venture life business, Aviva COFCO, on 1 January 2003 and sales are progressing
encouragingly. Total sales were £2 million, with our 50% share included in our new business results amounting to
£1 million.
Notes to Editors
1. Aviva is the UK's largest insurer and one of the top-five life companies in Europe with substantial positions in
other markets around the world, making it the world's seventh-largest insurance group based on gross worldwide
premiums. In the UK Aviva operates under the Norwich Union brand.
Aviva's principal business activities are long-term savings, fund management and general insurance, with
worldwide premium income and retail investment sales from continuing operations of £28 billion for the year ended
31 December 2002, and assets under management of more than £200 billion at 31 December 2002.
2. All figures have been translated at average exchange rates applying for the period. The average rates employed
in this announcement are 1 euro = £0.69 (nine months to 30 September 2002: 1 euro = £0.63; year to 31 December
2002: 1 euro = £0.63).
3. All growth rates are quoted in local currency.
4. Reclassification of 2002 comparatives in the Netherlands (including Belgium and Luxembourg):
From the first quarter of 2003, pensions and annuities business have been reported as one category. We have
reclassified the third quarter 2002 results to reflect the revised reporting of annuity business previously
reported within life products. This will have a similar impact on the fourth quarter 2002 comparative.
Q3 2002 (Cumulative sales)
------------------------------------------------------------
Single premiums (£million) Regular premiums (£million)
Originally reported £m £m
Pensions 217 25
Life 329 37
-----------------------------------------------------------------------------------------------------------------
546 62
After reclassification
Pensions and annuities 386 29
Life 160 33
-----------------------------------------------------------------------------------------------------------------
546 62
5. Definitions:
Annual premium equivalent (APE) is a UK industry standard for calculating life, pensions and investments new
business levels. It is the total of new regular premiums and 10% of single premiums.
New business contribution is the present value of the projected stream of after-tax distributable earnings from
new life and pensions sales. New business contribution before tax is calculated by grossing up the new business
contribution after-tax at the full corporation tax rate for UK business and at appropriate rates of tax for other
countries.
New business margin is a UK industry standard calculation based on new business contribution (before the effect
of solvency margin) divided by sales measured on an APE basis.
6. 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. Detailed worldwide long-term savings new business analysis
2. Analysis of UK long-term savings by distribution channel - sales and APE
3. Analysis of sales via our principal bancassurance channels
4. Detailed analysis of new business contribution
5. Principal economic assumptions
Supplement 1
Detailed worldwide long-term savings new business analysis
Single Regular Total
------------------------------------- --------------------------------------- --------
9 months to 9 months to Local 9 months to 9 months to
30 September 30 September currency 30 September 30 September Local Local
2003 2002 growth 2003 2002 currency currency
£m £m £m £m growth growth
United Kingdom
Individual pensions 1,092 1,316 (17%) 186 266 (30%) (19%)
Group pensions 591 407 45% 81 72 13% 40%
Mortgage - - - 50 52 (4%) (4%)
Annuities 880 731 20% - - - 20%
Bonds 1,352 2,251 (40%) - - - (40%)
Other life 115 89 29% 82 85 (4%) 13%
---------------------------------------------------------------------------------------------------------------------
Total life and pensions 4,030 4,794 (16%) 399 475 (16%) (16%)
Peps/Isas/Unit Trusts/Oeics 485 416 17% 11 13 (15%) 16%
---------------------------------------------------------------------------------------------------------------------
4,515 5,210 (13%) 410 488 (16%) (14%)
France
AFER (excluding unit-linked) 860 741 5% - - - 5%
Unit-linked & other savings 533 489 - 21 21 (5%) (1%)
Protection business 30 119 (77%) 14 12 7% (69%)
---------------------------------------------------------------------------------------------------------------------
1,423 1,349 (4%) 35 33 - (4%)
Ireland
Life and savings 42 138 (72%) 11 31 (66%) (71%)
Pensions 82 78 (4%) 32 32 (10%) (6%)
---------------------------------------------------------------------------------------------------------------------
124 216 (48%) 43 63 (37%) (45%)
Italy
Life and savings 1,049 740 30% 43 32 25% 29%
---------------------------------------------------------------------------------------------------------------------
1,049 740 30% 43 32 25% 29%
Netherlands (including
Belgium & Luxembourg)
Life 250 160 30% 45 33 25% 30%
Pensions and annuities 344 386 (16%) 42 29 32% (12%)
---------------------------------------------------------------------------------------------------------------------
Total life and pensions 594 546 (1%) 87 62 29% 2%
Unit trusts 199 59 206% - - - 206%
---------------------------------------------------------------------------------------------------------------------
793 605 20% 87 62 29% 20%
Poland
Life and savings 14 14 6% 12 19 (34%) (17%)
Pensions 6 8 (17%) 13 16 (20%) (19%)
---------------------------------------------------------------------------------------------------------------------
Total life and pensions 20 22 (2%) 25 35 (27%) (18%)
Mutual funds 84 2 - 1 - - -
---------------------------------------------------------------------------------------------------------------------
104 24 353% 26 35 (25%) 128%
Spain
Life and savings 819 523 43% 42 24 60% 44%
Pensions 178 49 230% 32 16 82% 194%
---------------------------------------------------------------------------------------------------------------------
997 572 59% 74 40 69% 60%
Other Europe
Life and pensions 187 162 6% 49 46 4% 5%
UCITS and other 30 62 (56%) - - - (56%)
---------------------------------------------------------------------------------------------------------------------
217 224 (11%) 49 46 4% (9%)
International
Life and pensions 625 610 6% 85 59 45% 10%
Unit trusts 61 222 (74%) - - - (74%)
---------------------------------------------------------------------------------------------------------------------
686 832 (17%) 85 59 45% (13%)
Total long-term savings 9,908 9,772 (2%) 852 858 (3%) (2%)
=====================================================================================================================
Analysed:
Life and pensions 9,049 9,011 (3%) 840 845 (3%) (3%)
Investment sales 859 761 9% 12 13 (7%) 9%
---------------------------------------------------------------------------------------------------------------------
Total long-term savings 9,908 9,772 (2%) 852 858 (3%) (2%)
=====================================================================================================================
Navigator sales 465 669 (36%) - - - (36%)
(not included above)
Supplement 2
Analysis of UK long-term savings by distribution channel
Sales
Single Regular Total
-------------------------------------- -------------------------------------- -----------
9 months to 9 months to 9 months to 9 months to
30 September 30 September Local 30 September 30 September Local Local
2003 2002 currency 2003 2002 currency currency
£m £m growth (1) £m £m growth (1) growth (1)
IFA
- life & pensions products 3,045 3,324 (8%) 316 369 (14%) (9%)
- investment products 233 248 (6%) 1 7 (86%) (8%)
---------------------------------------------------------------------------------------------------------------------
3,278 3,572 (8%) 317 376 (16%) (9%)
Bancassurance
partnership with RBSG
- life & pensions products 331 536 (38%) 17 11 55% (36%)
- investment products 75 - - 9 - - -
---------------------------------------------------------------------------------------------------------------------
406 536 (24%) 26 11 136% (21%)
Other partnerships/Direct
- life & pensions products 654 934 (30%) 66 95 (31%) (30%)
- investment products 177 168 5% 1 6 (83%) 2%
---------------------------------------------------------------------------------------------------------------------
831 1,102 (25%) 67 101 (34%) (25%)
----------------------------------------------------------------------------------------------------------------- ---
Total UK long-term
savings 4,515 5,210 (13%) 410 488 (16%) (14%)
=====================================================================================================================
Annual premium equivalent (2)
Life and pensions sales Investment sales Total sales
------------------------- ----------------------- ------------------------
9 months to 9 months to 9 months to
30 September Local 30 September Local 30 September Local
2003 currency 2003 currency 2003 currency
£m growth (1) £m growth (1) £m growth (1)
IFA 621 (12%) 24 (23%) 645 (12%)
Bancassurance partnership
with RBSG 50 (23%) 17 - 67 3%
Other partnerships/Direct 131 (30%) 19 (18%) 150 (29%)
---------------------------------------------------------------------------------------------------------------------
Total UK long-term
savings 802 (16%) 60 9% 862 (15%)
=====================================================================================================================
(1) Growth rates are calculated based on constant rates of exchange.
(2) Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums and 10% of
single premiums.
Supplement 3
Analysis of sales via our principal bancassurance channels
Total new business Annual premium
sales equivalent sales (2)
------------------------ ------------------------
9 months to 9 months to
30 September Local 30 September Local
2003 currency 2003 currency
£m growth (1) £m growth (1)
Life and pensions
United Kingdom
Royal Bank of Scotland Group (3) 348 (36%) 50 (23%)
---------------------------------------------------------------------------------------------------------------------
348 (36%) 50 (23%)
Italy
UniCredito 607 2% 79 8%
Banca Popolare di Lodi Group 189 - 25 (17%)
Banca delle Marche 29 (6%) 16 129%
Banca Popolare Commercio e Industria 68 - 7 -
---------------------------------------------------------------------------------------------------------------------
893 9% 127 15%
Netherlands
ABN AMRO 182 - 32 -
---------------------------------------------------------------------------------------------------------------------
182 - 32 -
Spain
Bancaja 606 28% 81 21%
Caixa Galicia 188 1153% 40 700%
Unicaja 100 170% 19 73%
Caja Espana 144 44% 23 77%
Caja de Granada 1 - 1 -
---------------------------------------------------------------------------------------------------------------------
1,039 66% 164 71%
International
DBS 71 (38%) 27 50%
---------------------------------------------------------------------------------------------------------------------
71 (38%) 27 50%
---------------------------------------------------------------------------------------------------------------------
Total life and pensions 2,533 20% 400 38%
Investment sales
United Kingdom
Royal Bank of Scotland Group (3) 84 - 17 -
---------------------------------------------------------------------------------------------------------------------
84 - 17 -
---------------------------------------------------------------------------------------------------------------------
Total bancassurance sales 2,617 24% 417 44%
=====================================================================================================================
(1) Growth rates are calculated based on constant rates of exchange.
(2) Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums and 10% of
single premiums.
(3) Total sales through our joint venture with the Royal Bank of Scotland Group (RBSG) comprised £485 million of
life and pensions sales and £167 million of investment sales. In reporting our life and pensions result for
RBSG we have included our 50% share of sales written through the joint venture life company, amounting to
£138 million (2002: £131 million), and £210 million (2002: £416 million) representing 100% of single premium
with-profit bond sales written through a Norwich Union fund. Investment sales of £84 million (2002: nil)
represent our 50% share of the collective investment sales.
Supplement 4
Detailed analysis of new business contribution
(a) Before the effect of solvency margin
New business
Annual premium equivalent (1) contribution (2, 3) New business margin (4)
------------------------------ ----------------------- --------------------------------
9 months 9 months 9 months 9 months
2003 2002 2003 2002 9 months 9 months Full year
£m £m £m £m 2003 2002 2002
Life and pensions business
United Kingdom 802 954 180 231 22.4% 24.2% 23.6%
France 177 168 51 52 28.8% 31.0% 30.9%
Ireland 55 85 16 23 28.9% 27.2% 28.2%
Italy 148 106 35 23 23.7% 21.7% 24.9%
Netherlands (including
Belgium and Luxembourg) 146 117 34 14 23.2% 12.0% 13.3%
Poland 27 37 - 9 - 24.2% 20.8%
Spain 174 97 92 49 53.0% 50.4% 45.9%
Other Europe 68 62 (3) (5) (4.4%) (8.0%) (5.4%)
Continental Europe 795 672 225 165 28.3% 24.6% 25.7%
International 148 120 32 20 21.7% 16.7% 22.2%
---------------------------------------------------------------------------------------------------------------------
1,745 1,746 437 416 25.0% 23.8% 24.4%
=====================================================================================================================
(1) Annual premium equivalent (APE) is the UK industry's standard measure of new regular premiums and 10% of single
premiums.
(2) Before effect of solvency margin.
(3) New business contribution before the effect of solvency margin includes minority interests in 2003 of
£77 million (nine months to 30 September 2002: £41 million). This comprises minority interests in France of
£3 million (nine months to 30 September 2002: £3 million), Italy £19 million (nine months to 30 September 2002:
£11 million), Spain £48 million (nine months to 30 September 2002: £26 million), Poland nil (nine months to
30 September 2002: £1 million) and Netherlands £7 million (nine months to 30 September 2002: nil).
(4) New business margin represents the ratio of new business contribution to annual premium equivalent, expressed
as a percentage.
(b) Including the effect of solvency margin(1)
9 months 9 months
2003 2002
£m £m
Life and pensions business
United Kingdom 161 218
France 20 27
Ireland 13 21
Italy 21 18
Netherlands (including Belgium and Luxembourg) 12 (1)
Poland (2) 7
Spain 79 41
Other Europe (6) (9)
Continental Europe 137 104
International 24 12
---------------------------------------------------------------------------------------------------------------------
322 334
=====================================================================================================================
(1) The effect of solvency margin represents the impact of holding the minimum European Union (EU) solvency margin
(or equivalent for non-EU operations) and discounting to present value the projected future releases from the
solvency margin to shareholders.
Supplement 5
Principal economic assumptions
Economic assumptions are derived actively based on market yields on risk free fixed interest assets at each period
end. Margins are applied on a consistent basis to risk-free yields to obtain investment return assumptions for
ordinary shares and property, and risk discount rates.
New business contribution has been calculated using the economic assumptions set at the end of the previous year, as
shown in the tables below:
United Kingdom France
---------------- ---------------
2002 2001 2002 2001
Risk discount rate 7.3% 7.7% 8.1% 8.6%
Pre-tax investment returns:
Base government
fixed interest 4.5% 5.0% 4.3% 5.1%
Ordinary shares 7.0% 7.5% 6.3% 7.1%
Property 6.0% 6.5% 5.8% 6.6%
Future expense inflation 3.6% 3.7% 2.5% 2.5%
Tax rate 30.0% 30.0% 35.4% 36.4%
Ireland Italy
---------------- ---------------
2002 2001 2002 2001
Risk discount rate 8.7% 9.3% 7.3% 7.6%
Pre-tax investment returns:
Base government
fixed interest 4.6% 5.3% 4.4% 5.3%
Ordinary shares 7.6% 8.3% 7.4% 8.3%
Property 6.1% 6.8% 5.9% 6.8%
Future expense inflation 4.0% 4.0% 3.3% 3.3%
Tax rate 12.5% 16.0% 39.8% 41.0%
Netherlands Poland*
--------------- ----------------
2002 2001 2002 2001
Risk discount rate 7.4% 8.0% 15.4% 18.5%
Pre-tax investment returns:
Base government
fixed interest 4.2% 5.1% 8.0% 12.5%
Ordinary shares 7.2% 8.1% 8.0% 12.5%
Property 5.7% 6.6% n/a n/a
Future expense inflation 2.5% 2.5% 5.4% 9.2%
Tax rate 25.0% 25.0% 27.0% 28.0%
Spain
----------------
2002 2001
Risk discount rate 7.7% 8.3%
Pre-tax investment returns
Base government
fixed interest 4.6% 5.3%
Ordinary shares 7.6% 8.3%
Property 6.1% 6.8%
Future expense inflation 3.0% 3.2%
Tax rate 35.0% 35.0%
* The economic assumptions shown above are those in the calculations for the life business. The economic assumptions
for the pension business are identical with the exception of the discount rate which is 13.8% (2001: 16.9%).
This information is provided by RNS
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