Aviva Newsroom - 16 May 2013

Aviva plc First Quarter 2013 Interim Management Statement

Cash flow

  • Operating capital generation stable at £0.5 billion (1Q12: £0.5 billion)
  • Continued focus on improving remittance ratios


  • Operating expenses 10% lower at £769 million1 (1Q12: £852 million
  • Restructuring costs of £54 million in the quarter

Value of new business

  • Pro forma2 value of new business up 18% to £191 million (1Q12: £162 million
  • Increase driven by improved profitability in UK Life and Asian growth

Combined operating ratio

  • Combined operating ratio stable at 96% (1Q12: 96%)

Balance sheet

  • IFRS net asset value3 increased 9% to 302p (FY12: 278p4)
  • Pro forma5 economic capital surplus6 £7.3 billion, 173% (FY12: £7.1 billion, 172%)
  • Internal debt reduced by £300 million
  • Sale of remaining shareholding in Delta Lloyd, and disposal of businesses in Russia and Malaysia completed
  • Cash proceeds of €608 million for the transfer of Aseval received in April

Mark Wilson, Group Chief Executive Officer, said:

"In the first quarter we have taken steps to deliver our investment thesis of cash flow and growth."

"Our operating expenses are now 10% lower and we are on track to deliver our cost savings target of £400 million."

"Our key measure of growth — value of new business — has increased by 18% driven by actions to improve profitability in UK Life and growth in our Asian business. In general insurance, our profitability was stable with a COR of 96% with a strong result in Canada."

"Net asset value has increased by 9% to 302 pence and our internal debt level has reduced by £300 million."

"Today’s results demonstrate the first steps towards delivery. I am conscious of the challenges and do not want to set expectations at an unrealistic level. Progress so far has been satisfactory and there is a great deal more we need to do for our shareholders."

1 Operating expenses excludes integration and restructuring costs and US Life. Total expense base including integration and restructuring costs and US Life business is 9% lower at £887 million (1Q 12: £980 million).
2 Pro forma basis excludes US Life, Aseval, Russia, Malaysia, Sri Lanka, Ark Life, Czech Republic, Hungary and Romania Life.
3 The pro forma IFRS net asset value reflects the proceeds of the Aseval transaction with Bankia and the sale of our business in Malaysia.
4 The FY12 IFRS NAV of 278p excludes the proceeds of the Aseval transaction with Bankia and the sale of our business in Malaysia.
5 The pro forma economic capital surplus includes the impact of the US Life, Malaysia and Aseval transactions and an increase in pension scheme risk allowance from five to ten years of stressed contributions.
6 The economic capital surplus represents an estimated position. The capital requirement is based on Aviva’s own internal assessment and capital management policies. The term ‘economic capital’ does not imply capital as required by regulators or other third parties.

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About Aviva plc

Aviva provides 34 million customers* with insurance, savings and investment products. We are the UK's* largest insurer and one of Europe's leading providers of life and general insurance*.

We combine strong life insurance, general insurance and asset management businesses under one powerful brand. We are committed to serving our customers well in order to build a stronger, sustainable business, which makes a positive contribution to society, and for which our people are proud to work.

* Source: 2012 Aviva plc annual report.