Aviva briefs investors on the quality of its balance sheet
Author: AVIVA, News release 
Date: Thursday, January 20, 2011

Source: AVIVA website, News release, January 20, 2011

Aviva briefs investors on the quality of its balance sheet

High quality and well managed balance sheet supporting strong capital generation, profits and dividend

  • Plan to reduce hybrid debt by at least £700 million over the next three years*
  • High quality and well managed balance sheet supporting strong capital generation, profits and dividend
  • Plan to reduce hybrid debt by at least £700 million over the next three years*
  • Pension deficit reduced to £0.4 billion (30 November 2010) from £1.7 billion (31 December 2009)
  • Economic capital surplus of £4.8 billion (31 December 2009), within the range of an AA calibrated risk appetite, based on Aviva’s capital model**
  • Proforma net asset value on a European Embedded Value equivalent basis is 617p (Q3 2010)***.

Aviva plc (“Aviva”) is holding a presentation for investors and analysts this morning on the strength of its balance sheet management and how this supports its resilient profits and capital generation.

Pat Regan, Aviva’s chief financial officer, will highlight Aviva’s effective management of credit and insurance risk and its disciplined asset/liability management. Aviva has high quality, well managed and diverse fixed income portfolios, and has delivered a consistently strong performance across these assets over a number of years. In line with the prudent management of its balance sheet in the current economic environment and its strong capital generation Aviva plans to reduce its hybrid debt by at least £700 million over the next three years.


Aviva will also provide further embedded value disclosure today. This will give additional clarity on the value of Aviva’s future cash flows and allow greater comparability with other UK insurers. On a European Embedded Value equivalent basis Aviva’s proforma net asset value per share is 617p (Q3 2010)***.


Andrew Moss, group chief executive, said: “I am confident that Aviva is in a very strong position to deliver value for our customers and shareholders. Pat will demonstrate today that Aviva’s high quality, well managed balance sheet is a major strength, underpinning our powerful capital generation. We have a clear strategy to grow our dividend and profits through increasing our geographic focus and in light of the changed economic environment and our strong capital generation we’re planning to reduce our hybrid debt over the next three years.”

Pat Regan, chief financial officer, said: “The strength of Aviva’s balance sheet rests on our successful track record of managing credit and insurance risk and the financial and risk actions we have taken, such as the material reduction of our pension deficit. We have also delivered consistent outperformance in our asset portfolios and we’re disclosing today a net asset value of 617p on an EEV equivalent basis.”

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* The planned reduction in hybrid debt assumes no material change in circumstances.

** This reflects Aviva’s own assessment of economic capital and is separate from capital required by regulators.

*** Proforma NAV includes an additional 10p benefit from the agreed closure of the pension scheme (reported at Q3 2010) and a 35p benefit from an additional reduction of the pension scheme deficit at 30 November 2010.

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