Adapting your Business Model to the Future

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Adapting your Business Model to the
Future Stuart Purdy, Group Chief Executive

Industry Leaders Summit 4 October 2007
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Agenda

• The context Aviva an increasingly
  international business
• Reviewing our business model for competitive
  advantage
• Operating in chosen markets
• Diversification providing strength
• Responding to changes in consumer behaviour
• The Reality Case Studies
• - Starting Up in India
• Maximising the Polish market
• Ireland
• A multi-distribution model
• The Future

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A business model to mirror how customers want to
buy
IFAs / Brokers
IFAs / Brokers
IFAs / Brokers
Tied Agents
Bancassurance including JVs
Bancassurance including JVs
Tied Agents
Bancassurance including JVs
Tied Agents
Tied Agents
Others
Others
Others
Others
RUSSIA CHINA INDIA
HUNGARY ROMANIA POLAND
ITALY SPAIN
TURKEY
IRELAND FRANCE NETHERLANDS
Examples
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.For pensions, Europeans polarise between banks
and brokers
49 of Irish customers go to bank/building
society, 22 to broker and 17 to insurer

Source Aviva Consumer Attitudes to Savings 2007
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..And for protection products, insurance
companies are the method of choice
62 of Irish customers go direct to insurers
Source Aviva Consumer Attitudes to Savings 2007
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Case Study 1
Starting up in India
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Differentiated strategy
High
Eliminate
Reduce
Raise
LIC
Private
Offering Level
Low
Traditional products
Distribution channels
Manpower turnover
Brand awareness and image
Policy TAT
Guarantees
Quality of advice
Focus on tax saving
Customer service
Mis-selling
Key Success Factors
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Developing the business The Aviva Way
Key Differentiator Introduce bancassurance
distribution channel, unit-linked products and
backed with in house fund management.
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Aviva India over the years
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Aviva India over the years
Present in close to 500 locations through BA
partnerships
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Key points

• 34 exclusive bank partners across the
  subcontinent.
• Leaders in bancassurance.
• Unit linked initiators.
• 82 brand recall for Aviva.

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Case Study 2
Maximising the Polish market
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A fifteen year history
2003
2003
2003
CU
CU
CU
2002
2002
2002
2005
2005
2007
Lithuania
Lithuania
Lithuania
CU Retail
CU Retail
CU Retail
Health
Health
Motor
Pension
Pension
Pension
Mutual
Mutual
Mutual
45 000
45 000
opportunity
opportunity
opportunity
Reform
Reform
Reform
Funds
Funds
Funds
explored
explored
explored
15 of the
15 of the
15 of the
1999
1999
1999
start
start
start
40 000
market after
40 000
market after
market after
1 million
1 million
1 million
3 months
3 months
3 months
life policy
life policy
life policy
2002
2002
2002
sold
sold
sold
35 000
35 000
2004
2004
2004
CU Lithuania
CU Lithuania
CU Lithuania
New
New
New
life
life
life
1999
1999
1999
headquarter
headquarter
headquarter
start
start
start
30 000
30 000
CU Pension
CU Pension
CU Pension
2002
2002
2002
start
start
start
New
New
New
25 000
25 000
2,3 m clients
2,3 m clients
2.3 m clients
1995
1995
1995
functional
functional
functional
AUM (m PLN)
AUM (m PLN)
gained
gained
gained
100 000
100 000
100 000
structure of
structure of
structure of
1997
1997
1997
20 000
20 000
policies
policies
policies
CU
CU
CU
CU General
CU General
CU General
1999
1999
1999
sold
sold
sold
implemented
implemented
implemented
start
start
start
CU
CU
CU
Sept
Sept
Sept
15 000
15 000
Wholesale
Wholesale
Wholesale
1992
1994
1992
1992
CUP
75 000
Investment
CUP
Investment
CUP
Investment
10 000
10 000
Life
policies
Management
Life
Management
Life

Management
start
start
start
sells
sold
sells
sells
5 000
5 000
1st
1st
1st
policy
policy
policy
0
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
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A direct sales force success story.

• The results
• Polands largest pensions provider
• Polands second largest life insurer
• Over 3m Customers - 1 in 5 of the Polish
  workforce
• Lithuanias number 3 insurer

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Poland continues to be a rapidly changing market
Number of internet users in Poland (million)
Percentage of population using internet and
share of broadband internet connections 2002 -
2006
Poland
UK
Source 15 SMG/KRC Net Track, Grudzien
2000-2005, 7 PBI/Gemius Megapanel, Listopad
2004-2005
Source SMG/KRC Net Track end of December 2000
- 2005
Source International Telecommunications Union
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Multi-distribution
The Irish Story
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What do we offer?

• A Multi-distribution strategy
• Broker is bedrock of our business
• IBA Service Awards for General Insurance
• Best general, commerical and personal insurer
• Hibernian Direct
• 27 branches nationwide
• Growth of internet www.hibernian.ie
• Corporate partnerships with Tesco, One Direct
• Strategic relationship with AIB

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What do Irish customers want?
43 Risk Averse Not prepared to accept higher
level of risk
In mature markets trust in financial institutions
is rising

Products with GUARANTEES
Products with better value for money
TRUST
61 view home as their pension
Keep promises
Advice and help i can trust
Anxious about retirement Over half worry they
havent saved enough 65 believe government will
not provide for retirement
Source Aviva January 2007 Consumer Attitudes to
Savings Investments
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Hibernian formed JV with AIB Bank for life and
pensions business

• Insurance expertise
• Investment management
• Broker bedrock
• Global bancassurance
• experience
• Multi-distribution to grow

Hibernian Life Pensions

• Brings
• Product Development
• Fund Choice
• Administration
• Multi-distribution platform

Hibernian Life Holdings (JV)
Ark Life Assurance Company

• Resulting in
• Added distribution capability
• Meeting customer wants
• Strong brand/Advertising
• Extensive branch network

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Hibernian leveraged Norwich Union RAC buyout for
motoring services

• Strong brand in Irish market
• Road safety at heart of ethos
• Insuring 1 in 4 Irish motorists

• Bought by Norwich Union in 2006
• Strong UK brand but no Irish presence
• Leverage expertise of RAC and strength of
  Hibernian brand
• Launch of Hibernian Motoring Services

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The future

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The challenges will continue into the future
A world of networks
A 24/7 world
A time poor world
Changing priorities