Insurance Excellence in UK GI: 'Focus on Profit' · Insurance Excellence in UK GI: 'Focus on Profit' Our agenda today 1. Insurance excellence Igal Mayer 2. Personal lines John Kitson

1

Insurance Excellence in UK GI“Focus on Profit”

Disclaimer

This presentation may include oral and written “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. These forward-looking statements sometimes use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’ or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which may be beyond Aviva’s control, including, among other things, UK domestic and global economic and 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, the possible effects of inflation or deflation, the timing impact and other uncertainties relating to acquisitions by the Aviva Group and relating to other future acquisitions or combinations within relevant industries, the impact of tax and other legislation and regulations in the jurisdictions in which Aviva and its affiliates operate, as well as the other risks and uncertainties set forth in our 2007 Annual Report to Shareholders. 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, and persons receiving this presentation should not place undue reliance on forward-looking statements.

Aviva undertakes no obligation to update the forward-looking statements made in this presentation or any other forward-looking statements we may make. Forward-looking statements made in this presentation are current only as of the date on which such statements are made.

Market Leadership

● Address legacy

● Transform business model

● Exploit UK synergies

● Generate capital

UK General Insurance – delivering transformational change

• Aviva is the largest GI insurer in the UK with a market share of 14.4%

• Generated 25% of Aviva’s H1 2008 IFRS operating profit

• Changing the business model to maintain our market leading position and win in a fast-changing competitive landscape

• Igal Mayer appointed CEO, UK General Insurance in July 2007

• Igal and the team are executing a transformational plan to maximise the value of this major business in Aviva

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4

Insurance Excellence in UK GI: 'Focus on Profit'Our agenda today

1. Insurance excellence Igal Mayer

2. Personal lines John Kitson

• Transforming pricing Dan Pickens

3. Commercial lines Janice Deakin

• Transforming underwriting Larry Harrington

4. Operations David McMillan

5. Summary Igal Mayer

Questions & Answers

5

Purpose

Regional / BU strategies

Vision

Group strategy and targets

Purpose

Prosperity &peace of mind

Strategic priorities

• Manage composite portfolio

• Build global Asset Management

• Allocate capital rigorously

• Increase customer reach

• Boost productivity

Targets

Vision

One Aviva,twice the value

• 98% meet or beat COR• Long Term Savings

growth targets• £500m cost savings by

2010• Double IFRS EPS by

2012 at the latest• 1.5 – 2 x dividend cover• 12.5% ROCE

UKMarket leadership●Address legacy● Transform business

model ●Exploit UK synergies●Generate capital

N. AmericaDouble scale● Focus: top 5 in

chosen segments● Integrate '07● Expand products,

distribution ’08+

EuropeScale, growth, capital●Seize unique growth

opportunities● Leverage scale●Generate capital

Asia PacificScale, growth● Prioritised portfolio● Regional operating

model● Investment required

Asset ManagementAsset ManagementAviva Investors

• Globally integrated business • Transform the investment model • Increase third party business

Insurance Excellence in UK GI: 'Focus on Profit'One Aviva, twice the value

1. Insurance Excellence Igal Mayer

6

Market leadership

● Address legacy

● Transform business model

● Exploit UK synergies

● Generate capital

UK

Insurance Excellence in UK GI: 'Focus on Profit'A clear role in Aviva


Purpose

Prosperity &peace of mind

Strategic priorities

• Manage composite portfolio

• Build global Asset Management

• Allocate capital rigorously

• Increase customer reach

• Boost productivity

Targets

Vision

One Aviva,twice the value

• 98% meet or beat COR• Long Term Savings growth

targets• £500m cost savings by

2010• Double IFRS EPS by 2012

at the latest• 1.5 – 2 x dividend cover• 12.5% ROCE

UKMarket leadership● Address legacy● Transform business

model ● Exploit UK synergies● Generate capital

N. AmericaDouble scale● Focus: top 5 in

chosen segments● Integrate '07● Expand products,

distribution ’08+

EuropeScale, growth, capital● Seize unique growth

opportunities● Leverage scale● Generate capital

Asia PacificScale, growth● Prioritised portfolio● Regional operating

model● Investment required

Asset ManagementAsset ManagementAviva Investors

• Globally integrated business • Transform the investment model • Increase third party business

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Insurance Excellence in UK GI: 'Focus on Profit'The UK market leader

• Consolidated market – top 6 insurers have over 50% market share

• Aviva is the largest GI insurer in UK

• Top 1 or 2 position in all our major classes

• Consistently delivering performance- 98% or better COR since 2004 1

- £3.9bn operating profit over last 5 years

Aviva14.4%

RSA8.5%

AXA6.5%

Zurich5.6%

AIG5.2%

Allianz4.0%

BUPA3.4%

HBOS2.5%

Rest of Market37.6%

RBSI (including

Direct Line)

12.3%

Source: Datamonitor 2007 (1) Excludes impact of 2007 summer floods


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DIRECT BROKERS PARTNERS

#1 in the SME market

Insurer of the year 2003 to 2007

… over 100 others

Banking AffinityRetail

Powerful brands

3,000 brokers

Insurance Excellence in UK GI: 'Focus on Profit'Unparalleled customer reach

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DIRECT BROKERS PARTNERS

#1 in the SME market

Insurer of the year 2003 to 2007

… over 100 others

Banking AffinityRetail

Powerful brands

3,000 brokers

Insurance Excellence in UK GI: 'Focus on Profit'Unparalleled customer reach

Aviva brand - June 1st 2009

Customer insightsCustomer insights• Combination of NU

heritage, trust, safety… ‘non-toxic’ + Aviva’s global, confident brand

DirectDirect• Re-launch away

from ‘expensive’, ‘traditional’…Happy provides the bridge

EmployeesEmployees• Build Aviva from

the inside out• Reposition what

we stand for globally

Brokers & partnersBrokers & partners• Global player, not

just parochial SME

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Delivering the Promise of Scale• Sub 11% expense ratio• Halve IT costs• Exploit UK synergies

Lean Manufacturing• Mass customisation• Service & process centre reengineering

Win the Customer• NUD relaunch• RAC membership• Partnerships moments of truth

Win the Broker• War for distribution

Building Core Insurance Capability• Sophisticated pricing• Rating leadership• Price & product optimisation

Claims Inflation Busting• Sustainable benefits year on year

Win our People• No1 for employees• Build core insurance skills• Pride & passion for insurance


Insurance Excellence in UK GI: 'Focus on Profit'NUI’s 7 strategic priorities

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Win our People


Seán EganChief Information Officer

Igal MayerChief Executive

John KitsonSales & Marketing Director

Janice DeakinCorporate Sales Director

Dan PickensPersonal Lines Director

Larry HarringtonCommercial Lines Director

Valerie MarkhamHR Director

David McMillanChief Operating Officer

Insurance Excellence in UK GI: 'Focus on Profit'Our people

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Revenue£5.4bn NWP

Profit£855m Operating Profit*

Commercial – 49%

Commercial – 36%

Personal – 51%

Personal – 64%

Personal Lines• Marketplace

- Aggregators have grown significantly- Panel operators becoming potential adversaries- On-line growing

• We have a clear strategy- Relaunch of Direct and RAC- Partnerships where the partner has a unique moment of truth- Independent brokers still an important route to market- Executing pricing sophistication

Commercial Lines• Marketplace

- Consolidators have grown but lost momentum- After lengthy period of soft conditions, positive signs of hardening

• We have a clear strategy- Independent brokers are our distribution, leveraging UK u/w footprint- War for distribution- Executing underwriting and pricing excellence

Insurance Excellence in UK GI: 'Focus on Profit'Summary – our business

* 2007operating profit excl weather

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Questions & Answers

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2. Personal Lines John Kitson

• Sales & marketing context

• Market snapshot

• Crystal clear strategy

• Direct

• Partners

• Brokers

• RAC – insurance

• Summary

Insurance Excellence in UK GI: 'Focus on Profit'Personal lines

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Broker

Direct

RAC

Broker

Direct

RAC

Partners

Working across all classes

Personal

Broker

Commercial

Bringing all the distribution channels together into onefront facing sales and marketing team has put a different lens on how we truly

optimise the multi distribution nature of our business

Marketing

Insurance Excellence in UK GI: 'Focus on Profit'One portfolio

Partners

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NUD, 45%

Partnerships, 23%

IB, 18%

RAC, 14%

• The personal market is 64% of NUI’s turnover and c 51% of operating profit• Partners dominate turnover and in particular household, but for 2008 Direct is

the majority of the personal profits

Insurance Excellence in UK GI: 'Focus on Profit'Share of business

NUD, 16%

Partnerships, 51%

IB, 21%

RAC, 12%

Personal GWP by channel Personal operating profit* by channel


Brokers, 21%

Partners, 51%

Direct, 16%

Direct, 45%

Partners, 23%

Brokers, 18%

RAC, 12%RAC, 14%

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Money Supermarket

Confused.com

Google Trends = numbers of people searching on these two terms

• Aggregator grip on private car market has tightened from 8% of total ‘direct’ market in 2004 to 30% by 2007

• Influx of new aggregators

• Customers using aggregators to create shopping list

• “Which” criticisms

• Panels - giving away commission / net pricing / claims farming

• Spend isn’t sustainable


Insurance Excellence in UK GI: 'Focus on Profit'Personal market trends

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Insurance Excellence in UK GI: 'Focus on Profit'Crystal clear strategy


Direct is direct

Leverage Membership Panels

/ Aggregators

Partners: Moments of truth

Small brokers

Large aggressive

panels

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Personal Motor Competitiveness Index - Motor - Comp cover - 779 risks

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Mar

05

April

05

May

05

Jun

05

Jul 0

5

Aug

05

Sep

05

Oct

05

Nov

05

Dec

05

Jan

06

Feb

06

Mar

06

Apr

06

May

06

Jun

06

Jul 0

6

Aug

06

Sep

06

Oct

06

Nov

06

Dec

06

Jan

07

Feb

07

Mar

07

Apr

07

May

07

Jun

07

Jul 0

7

Aug

07

Sep

07

Oct

07

Nov

07

Dec

07

Com

petit

iven

ess

- che

apes

t or w

ithin

10%

Budget Direct Line NUD Privilege RAC

• price perception and position average

• increasing cost to acquire

• aggregator growth continues

Direct has not been on the shopping list…0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Churchill

AA Insu

ranceDire

ct Line

Admiral

More Than

Norwich U

nion

EsureBudget

Tesco PF

RACElephantHastin

gsDiamond

Post Offic

e

Q1 07 Q2 07 Q3 07 Q3 Ave Q2 Ave Q1 Ave

MOTORPercentage of shoppers getting a quote from each company


Insurance Excellence in UK GI: 'Focus on Profit'Direct

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Position in the portfolio

• Direct is our core offering into the personal market - underpins our pricing and systems approach

Competitiveness

• highly competitive and no other channel will have a better core price

Direct

• is a direct offering which means it is not on aggregators

“We’re so confident about our price we’ll show you our competitors, even if they are cheaper”


Insurance Excellence in UK GI: 'Focus on Profit'Direct – strategic principles

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TickerTicker ‘‘Someone like youSomeone like you’’ Full Full ‘‘like for likelike for like’’• Web home page

• Price comparison examples

• Web car landing page

• In call centre

• During quote stage

• Price comparison based on

similar customer profile

• New concept

• Web – price, inbound - facts

• Option after NUD pricedelivered

• Web and phone

Increasing confidence in NU’s priceIncreasing confidence in NU’s price


Insurance Excellence in UK GI: 'Focus on Profit'Direct – price check

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Insurance Excellence in UK GI: 'Focus on Profit'Direct – advertising

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Insurance Excellence in UK GI: 'Focus on Profit'Direct - Aviva brand

Clear plans in place Seamless migration already started

Aviva brand TV starting 26 Dec

24

Inbound Motor Quotes & Sales

0

10000

20000

30000

40000

50000

Jul Aug Sep (Forecast)

Quo

tes

02000400060008000100001200014000

Sale

s QuotesSales


Online Motor Non Agg Quotes & Sales

020000400006000080000

100000120000140000160000

Jul Aug Sep

Quo

tes

0

2000

4000

6000

8000

10000

12000

Sale

s QuotesSales


New business sales volumes up 18% year on year

Shopping List

Pre Happy: 7th or 8th

Aim: Top 3

Competitive Position

Aim: Within 10% of the cheapest 22% of the time


Insurance Excellence in UK GI: 'Focus on Profit'Direct – aiming points & progress

Sep

25


0

10000

20000

30000

40000

50000

Jul Aug Sep (Forecast)

Quo

tes

02000400060008000100001200014000

Sale

s QuotesSales



020000400006000080000

100000120000140000160000

Jul Aug Sep

Quo

tes

0

2000

4000

6000

8000

10000

12000

Sale

s QuotesSales


New business sales volumes up 18% year on year

Shopping List

Pre Happy: 7th or 8th

Aim: Top 3

Competitive Position

Aim: Within 10% of the cheapest 22% of the time


Insurance Excellence in UK GI: 'Focus on Profit'Direct – aiming points & progress

Sep

26

A significant part of the portfolio

• Provided significant scale in the personal portfolio; 100 partners

• Dominated distribution in this channel

History shows profit performance with room for improvement

• Distribution ratio is the largest

• Some accounts have not been profitable over their life of contract

• Motor very hard

Sustainable financials

• Clarity on what are acceptable terms

• Account managed to deliver them

• Retain, renegotiate or exit

Challenge is to make portfolio more profitable


Insurance Excellence in UK GI: 'Focus on Profit'Partnerships – current position

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We will focus on Partners who offer a clear “moment of truth”:“Customers we can’t win on our own”


Insurance Excellence in UK GI: 'Focus on Profit'Partnerships – strategic principles

Home Motor SME Creditor

Banks / BS’s

Yes

Motor Mans / Dealers No No No

YesNo No

Yes

Travel Rescue

BarclaysHSBCAbbey

No

No

No

No

Retailers

No No NoNoASDA NoYesNo

Post Office Yes? No NoYes No

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Insurance Excellence in UK GI: 'Focus on Profit'Partnerships – actions to date

• No moments of truth

• Unacceptable returns

• Exit to broking partner

• Some Moments of truth

• But driven by Aggregators

• JV with broking partner

• Keep only what we want

• Moment of truth

• Renegotiate until 2010 with required return

• A&L and B&B present opportunities

• No Moment of truth

• Broking solution only?

• Exit

• Long term relationship

• Exit all lines during 2009

All about execution

– one by one –

return by return

Major deals renegotiations completed


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Insurance Excellence in UK GI: 'Focus on Profit'Brokers

• £700m personal lines revenue

• Take core NUD & offer to brokers through different technology routes

• Pull out of aggressive panels

• Commercially connected / HNW attractive

• Now in execution


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Insurance Excellence in UK GI: 'Focus on Profit'Brokers

• £700m personal lines revenue

• Take core NUD & offer to brokers through different technology routes

• Pull out of aggressive panels

• Commercially connected / HNW attractive

• Now in execution


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Trusted and admired by the motorist

• Achieved so far

– Great integrated Rescue business with 2.3m members

– Synergies

– Partnerships grown by 2m customers & £40m revenue

– JD Power no1 Rescue company

How do we leverage RAC into consumer insurance brand?...


Insurance Excellence in UK GI: 'Focus on Profit'RAC

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• 3 years on

• 260,000 insurance customers

• Honed distribution strategy

… RAC relaunched as membership & retail panel player

• Signed 5 year deal with Budget

• Sales & service all RAC staff

• Signing up insurers... Launch Q1

• Scale via cross sell / aggregators

• NU take 30% / 40% of panel premium

• All parties not to claim farm


Insurance Excellence in UK GI: 'Focus on Profit'RAC insurance

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• 3 years on

• 260,000 insurance customers

• Honed distribution strategy

… RAC relaunched as membership & retail panel player

• Signed 5 year deal with Budget

• Sales & service all RAC staff

• Signing up insurers... Launch Q1

• Scale via cross sell / aggregators

• NU take 30% / 40% of panel premium

• All parties not to claim farm


Insurance Excellence in UK GI: 'Focus on Profit'RAC insurance

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By 2011 our personal lines book will have changed…

• Direct grows

• Brokers grow

• Partnerships fall

• RAC steady in Rescue but doubles in size for insurance

• Motor grows

• Home grows

• Creditor falls


Insurance Excellence in UK GI: 'Focus on Profit'Reshaping the book

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Insurance Excellence in UK GI: 'Focus on Profit'Summary of reshaping

• Crystal clear clarity on strategy

– Direct

– Partnerships

– Brokers

– RAC

• Value choices made

• Well into execution …


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Questions & Answers

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2. PL – Transforming Pricing Dan Pickens

Insurance Excellence in UK GI: 'Focus on Profit'Transforming personal lines pricing

• Product complexity and mass customisation

• Risk segmentation – a pricing function!

• Use of credit

• Mass customised pricing

• Flight path of initiatives

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Insurance Excellence in UK GI: 'Focus on Profit'Reduce complexity

• Current Product Portfolio

– 70 Motor Products– 17 Home Products– 74 Travel Products– 158 Creditor Products

• Does NOT provide meaningful differentiation in the market• Creates internal complexity, inefficiencies and external confusion

Bespoke products with differing cover

and rating

IT Architecture to “mass customise” product delivered in September for Direct channel


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Insurance Excellence in UK GI: 'Focus on Profit'Mass customised product – future state

Platinum Cover Gold Cover Value CoverBuildings & Contents

Sums Insured

Specified Inner Limits

Frozen Food

Blanket

Higher Inner Limit

Unlimited

Blanket Blanket

Higher Inner Limit Low Inner Limit

£400 Limit £200 Limit

Loss of rent and alternative accommodation £12,000 Limit £6,000 Limit

Visitors Personal EffectUnlimited £1,000

Sport Equipment£1,000

Single Product Platform

Single Process

One Price List


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Insurance Excellence in UK GI: 'Focus on Profit‘Risk segmentation

Risk segmentation has been a marketing function!


41

Insurance Excellence in UK GI: 'Focus on Profit'Risk segmentation

Defined as ability to quantify and price risk:• Number of pricing cells• Rate dispersion


Risk segmentation is a pricing function!

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Defined as ability to quantify and price risk:

• Number of pricing cells




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Defined as ability to quantify and price risk:

• Rate dispersion

Insurance Excellence in UK GI: 'Focus on Profit'Risk segmentation – a pricing function!



44

Approaches• Statistical techniques



∫∫ f(x,y,z) dxyz


45

Approaches• Statistical techniques• Multi-peril pricing model



Yi = B(1+xi)(1+yi)(1+zi)…

Yi1 = B(1+xi1)(1+yi1)(1+zi1)…

Yi3 = B(1+xi3)(1+yi3)(1+zi3)…

∑Yik

Yi2 = B(1+xi2)(1+yi2)(1+zi2)…


46

Approaches• Statistical techniques• Multi-peril pricing model• Use of third-party data



- CUE

CREDIT!


47

Old RatingMakeSegment (i.e. SUV)Number of DoorsEngine (Size and Fuel)TransmissionAgeABI Group

Insurance Excellence in UK GI: 'Focus on Profit'Make / model adjustments


Vehicle Old Factor New Factor

Vogue 1.00 1.00Vogue SE 1.00 1.05HST 1.00 1.10HSE 1.00 1.12HST SC 1.00 1.15HSE SC 1.00 1.18

Insurance Excellence in UK GI: 'Focus on Profit'Impact of credit – new rating variable


60%

70%

80%

90%

100%

110%

120%

1-575 576-605 606-626 627-642 643-656 657-669 670-681 682-693 694-707 708+

Credit Score

Cla

im R

atio

Implemented in June for Motor and September for Household

Personal Motor Results

Worse Better

Worse

Better

11 22 99 1010

49

0

0.02

0.04

0.06

0.08

0.1

0.12

-50% -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

Applied Rate Change

Perc

enta

ge o

f Pol

icie

s

Overall Price Neutral Change

Individual policy changes range from -50% to +55%

Insurance Excellence in UK GI: 'Focus on Profit'Impact of credit – new rating variable


Insurance Excellence in UK GI: 'Focus on Profit'Motor credit – early results

Combined Inbound and Web Results

First Two Weeks Most Recent Two Weeks

30.4%£38520.3%47.7%43.0%30.8%£51218.3%34.5%34.4%Summary 6-10

62.4%£77416.7%52.3%57.0%57.6%£74518.2%65.5%65.6%Summary 1-5

21.7%£28421.2%9.8%8.4%17.8%£35918.8%6.2%6.1%708+10

27.3%£33021.1%10.0%8.6%25.4%£45318.2%6.5%6.5%694-7079

28.3%£38920.0%9.4%8.6%34.3%£56617.4%6.2%6.6%682-6938

35.3%£42020.6%9.2%8.2%34.5%£58319.2%7.5%7.1%670-6817

40.2%£49418.7%9.3%9.1%39.0%£56618.0%8.0%8.1%657-6696

47.6%£58218.7%8.7%8.5%38.8%£55417.7%9.1%9.4%643-6565

52.6%£64017.6%9.9%10.3%46.0%£61917.9%12.2%12.4%627-6424

57.4%£72116.0%10.5%12.1%54.7%£72717.6%14.0%14.5%606-6263

65.2%£94215.0%11.4%13.9%63.5%£88517.9%15.6%15.9%576-6052

83.2%£88017.5%11.8%12.3%75.7%£85119.9%14.6%13.3%1-5751

% Monthly

Quoted Avg

PremCR% SoldQuote Distn

% Monthly

Quoted Avg

PremCR% SoldQuote DistnSegment


WORST

BEST

Insurance Excellence in UK GI: 'Focus on Profit'Motor credit – early results

Combined Inbound and Web Results

First Two Weeks Most Recent Two Weeks

30.4%£38520.3%47.7%43.0%30.8%£51218.3%34.5%34.4%Summary 6-10‘Better’

62.4%£77416.7%52.3%57.0%57.6%£74518.2%65.5%65.6%Summary 1-5‘Worse’


CRQuoted

AvgPrem

CRQuoted

AvgPrem

52

Common Loss Cost Models (age, sex, marital status, credit, type of car, post code, etc)

Direct Brokers Partners

Common Platform

Distribution Expenses

Price Optimisation

Insurance Excellence in UK GI: 'Focus on Profit'Mass customised pricing

IndividualCustomer

Profitability

IndividualCustomer

Profitability

IndividualCustomer

Profitability


53

Credit - Motor

Credit - Home

ABI, Make/Model, NCD Validation, and Post Code

Mass Customised Product Architecture

Mass Customised PricingPrice Optimisation

Q2 2008 Q3 2008 Q2 2009 Q4 2009

DVLA / CUE

Q1 2009

Insurance Excellence in UK GI: 'Focus on Profit'Progress


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Questions & Answers

55

3. Commercial Lines Janice Deakin

Insurance Excellence in UK GI: 'Focus on Profit'The jewel in the crown

• The market

• Distribution strategy

• Consolidation

• Commission

• Winning the crowd

56


Source: 2007 FSA returns with overseas business removedEstimated market size based on 2006 data

Includes Healthcare, excludes Marine, Aviation & Transport

Aviva13.4%

AIG

9.8%RSA

7.7%

Zurich

7.2%AXA

6.9%NFU

3.4%Allianz

3.1%

QBE

3.0%

Rest of Market32.0%

RBSI (including

Direct Line)

10.5%

ACE

3.0%

• No 1 commercial insurer in the UK

• 36% of NU premium, 49% of operating profit

• SME our heartland – 18% share

Even after years of consolidation, distribution dominated by brokers

providing local advice


57

*2007 includes the impact of the summer floods

Data taken from FSA returns may differ from result announcements

Data is for commercial Motor, Property and Liability

Aviva v. Market - Commercial lines COR 05-07*

• No1 through successful focus on SME via brokers

• Commercial lines are profitable

• This is a priority for Aviva in the UK



105

75

95

85

2005 2006 2007Aviva AvivaAvivaMarket MarketMarket

58


Insurance Excellence in UK GI: 'Focus on Profit'What we believe

• Local independent advice is key for commercial customers

• Support the independent broker and win the crowd

• ‘No’ to commercial direct

• Brokers will continue to dominate – with sustainable distribution ratios

• Consolidations have peaked – 85% of brokers expect to stay independent

• Historically our actions have fuelled consolidation – actions today are reversing this trend

• ‘No’ to buying brokers

59


Insurance Excellence in UK GI: 'Focus on Profit'Local underwriting strength

2010 End State Vision

Offshore locations to be confirmed following ongoing commercial negotiations with offshore partners

Perth

StretfordManchester

NorwichCheadle

BishopbriggsPerth

Stretford

Norwich

Bishopbriggs

Pune

Bangalore

Personal

Commercial

Mixed

Southend

Manchester

Leicester

Perth

StretfordManchester

NorwichCheadle

BishopbriggsPerth

Stretford

Norwich

Bishopbriggs

Pune

Bangalore

Personal

Commercial

Mixed

SouthendSouthend

ManchesterManchester

LeicesterLeicester

NoidaNoida

We recently announced…2010 Operations End State Vision

But the UK wide trading locations remain…our local underwriting strength

60

• Aberdeen

• Birmingham

• Basildon

• Belfast

• Brighton

• Bristol

• Cardiff

• Chelmsford

• Cheltenham

• Croydon

• Edinburgh

• Exeter

• Glasgow

• Ipswich

• Leeds

• Leicester

• Liverpool

• London

• Luton

• Maidstone

• Manchester

• Newcastle

• Northampton

• Norwich

• Nottingham

• Oxford

• Perth

• Plymouth

• Preston

• Reading

• Southampton

• Swansea

1,200 strong underwriting & trading team


Insurance Excellence in UK GI: 'Focus on Profit'Local underwriting strength

61

Protectand

Grow

Consolidators

Reduce premium

Sustainable commission

Strong relationships

Limited delegated underwriting

Brokers Join Networks

Strong relationships with selected networks – but best deal from NU directly

Independent Organic Growth

Differentiated offer to 3000 small brokers

Grow share of business

Self serve for SME

Independent Brokers

Differentiate through 110 broker club

Succession planning

Long term support

Ensuring brokers survive and thrive

• Growth through independent and smaller brokers• Less reliance on consolidators = lower commissions

Our strategies to reshape our book…


Insurance Excellence in UK GI: 'Focus on Profit'War for distribution

62

• Changing the shape of our book

• Reduce consolidator premium with higher commissions

• Grow significantly through smaller independents

• Stop increases for new consolidations

• Underwrite ourselves through 1200 underwriters – no work transfer

• More commission contingent on profit

• Fix or exit poor performing business

NUI Intermediary Business – Commercial Lines Commission 2004-2010

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1 2 3 4 5 6 72004 2005 2006 2007 2008 2009 2010

= CL commission = CL consolidatorcommission


Insurance Excellence in UK GI: 'Focus on Profit'Significant action to bring commission down









0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1 2 3 4 5 6 72004 2005 2006 2007 2008 2009 2010












0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1 2 3 4 5 6 72004 2005 2006 2007 2008 2009 2010




65


Insurance Excellence in UK GI: 'Focus on Profit'War for distribution

66

We can only do this by winning the crowd…

• Voted Insurer of the year 5 years running

• Strongest underwriting footprint in UK, 1200 underwriters, 400 sitting in our brokers offices

• Consistently “provides brokers best service”. Improving year on year

"It was the first time in many years that I have left a conference believing that the directors of an insurer were actually going to do what they said and that they would also be acting in our best interests.“

"From a broker perspective it is brilliant to see that Aviva have recognised the need to focus resource on the independents and I truly look forward to going forward with you guys over the coming years.“

"I think if you can deliver on what was outlined on Friday and re-enforced over the weekend you will certainly steal a march on the competition.“

"After speaking with a number of delegates, we all believe there is the commitment - the "can do" will result in the "will do" - and we very much wish to be part of this.“


Insurance Excellence in UK GI: 'Focus on Profit'Winning the crowd

We can only do this by winning the crowd…

• Voted Insurer of the year 5 years running

• Strongest underwriting footprint in UK, 1200 underwriters, 400 sitting in our brokers offices

• Consistently “provides brokers best service”. Improving year on year

"It was the first time in many years that I have left a conference believing that the directors of an insurer were actually going to do what they said and that they would also be acting in our best interests.“

"From a broker perspective it is brilliant to see that Aviva have recognised the need to focus resource on the independents and I truly look forward to going forward with you guys over the coming years.“

"I think if you can deliver on what was outlined on Friday and re-enforced over the weekend you will certainly steal a march on the competition.“

"After speaking with a number of delegates, we all believe there is the commitment - the "can do" will result in the "will do" - and we very much wish to be part of this.“


Insurance Excellence in UK GI: 'Focus on Profit'Winning the crowd

68

Insurance Excellence in UK GI: 'Focus on Profit'How far we’ve come

2007• Unprecedented pace of broker

consolidations

• Ever increasing trend on commission

• Rates going backwards for 4 years

• NU-consolidator business growing rapidly fuelling increased commission

• NU premium through independent broker shrinking

NUI No1 for brokers 4 years running

Now

• 85% of brokers say they are staying independent

• Actions in place to reduce commission significantly

• Rate increases of 3% across the book, plans in place for Q4 and 2009

• Consolidators business has shrunk by 4% in 2008

• NU premium through independent brokers up 5% year on year



Insurance Excellence in UK GI: 'Focus on Profit'How far we’ve come

2007• Unprecedented pace of broker

consolidations

• Ever increasing trend on commission

• Rates going backwards for 4 years

• NU-consolidator business growing rapidly fuelling increased commission

• NU premium through independent broker shrinking


Now

• 85% of brokers say they are staying independent

• Actions in place to reduce commission significantly

• Rate increases of 3% across the book, plans in place for Q4 and 2009

• Consolidators business has shrunk by 4% in 2008

• NU premium through independent brokers up 5% year on year



70









Questions & Answers

71

Insurance Excellence in UK GI: 'Focus on Profit'Commercial lines underwriting

3. CL – Transforming underwriting Larry Harrington

• Historical context

• Rating – phase 1

• Rating – phase 2

• Underwriting for profit

• Sustainable profit through the cycle

72

Commercial Overall (excl. Other) Rate Growth & Volume Retention

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Jan-

07

Feb-

07

Mar

-07

Apr-

07

May

- 07

Jun-

07

Jul-0

7

Aug-

07

Sep-

07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb-

08

Mar

-08

Apr-

08

May

-08

Jun-

08

Jul-0

8

Aug-

08

72%

74%

76%

78%

80%

82%

84%

Rate Grow th Volume Retention Rate

Insurance Excellence in UK GI: 'Focus on Profit'Rating for profit – phase 1

Commercial Motor Rate Growth & Volume Retention

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

Jan-

07

Feb-

07

Mar

-07

Apr-

07

May

-07

Jun-

07

Jul-0

7

Aug-

07

Sep-

07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb-

08

Mar

-08

Apr-

08

May

-08

Jun-

08

Jul-0

8

Aug-

08

60%

62%

64%

66%

68%

70%

72%

74%

76%

78%

Rate Growth Volume Retention Rate

• We have been driving up rates over the last 12 months

• Rate versus retention impacts monitored to assess elasticity & push the market

• Taken us from negative territory into positive; delivering a 6% point improvement


73

Insurance Excellence in UK GI: 'Focus on Profit'Rating for profit – phase 2

• Massive database

• Use it to segment activity to lose accounts or get needed rate

– New vs renewal

– Office level and product class

• 12 months ago we got the market moving… now getting more sophisticated in segmenting the book


TOTAL IB

Region 2 Yr GWP2 Yr Core

NECR 2 Yr GWP2 Yr Core








NECRSouth £71.9 28.7% £8.8 52.7% £64.6 28.3% £24.5 46.1% £29.2 28.2% £39.7 56.2% £0.8 39.7% £10.6 29.5% £41.0 51.0%West & South Wales £8.7 30.0% £9.9 60.6% £62.9 39.5% £29.8 59.8% £27.9 33.9% £41.2 58.3% £4.3 55.3% £8.7 32.8% £38.8 41.5%London City £72.5 30.1% £41.9 40.0% £41.0 28.0% £10.2 46.3% £32.7 24.2% £14.9 69.9% £9.4 68.8% £3.0 44.4% £19.0 46.2%London NB £112.3 23.3% £8.5 66.7% £61.2 33.8% £5.5 28.1% £43.1 19.6% £5.8 84.4% £1.7 55.4% £12.3 31.0% £8.5 34.7%Midlands £11.0 29.3% £6.5 50.6% £50.7 42.3% £24.0 51.5% £26.7 27.7% £33.6 63.1% £1.4 39.7% £6.4 37.4% £20.2 46.3%Scotland & NI £11.6 40.1% £16.4 35.3% £50.1 38.0% £23.0 60.0% £37.2 32.5% £28.0 51.0% £11.7 49.8% £11.3 41.7% £36.6 47.4%North East £25.8 44.1% £12.3 51.1% £55.6 42.2% £16.3 57.9% £16.8 27.0% £29.0 60.2% £1.7 43.3% £11.7 30.7% £21.4 44.2%North West £35.1 36.1% £3.6 19.6% £47.7 36.4% £20.4 57.9% £15.4 18.9% £32.6 54.6% £3.3 46.4% £4.1 30.4% £16.0 48.9%East £20.0 65.3% £24.1 46.0% £42.1 28.5% £19.3 33.1% £31.3 55.7% £22.0 49.2% £7.4 76.5% £1.3 50.1% £15.9 45.4%National Accounts £2.0 38.5% £115.1 33.1% £9.9 43.2% £3.0 51.6% £8.9 13.0% £6.5 75.3% £12.7 67.4% £2.1 36.3% £5.0 45.7%Leicester NB £4.5 37.9% £0.0 0.0% £23.8 47.1% £7.0 106.6% £10.8 48.0% £13.5 67.1% £0.6 96.4% £12.0 30.2% £10.2 30.5%Birmingham NB £5.6 37.4% £5.8 24.3% £24.7 42.9% £1.8 52.9% £4.4 32.4% £5.2 72.0% £0.1 12.5% £4.2 32.5% £2.0 27.1%ManchesterNB £1.0 32.7% £0.1 1.2% £19.6 39.0% £1.8 26.3% £1.1 23.7% £2.7 64.2% £0.0 0.0% £3.3 17.2% £2.5 20.7%Glasgow NB £0.0 5.3% £0.0 0.0% £14.9 47.2% £1.2 26.6% £10.3 31.4% £2.8 52.0% £1.3 18.6% £5.2 22.7% £0.9 16.0%Unallocated £3.4 8.3% £0.0 0.0% £3.7 22.3% £1.5 20.9% £1.5 4.3% £2.7 59.3% £0.8 65.7% £0.0 0.0% £0.1 408.3%Belfast NB £0.2 40.8% £0.0 0.0% £5.1 31.0% £2.9 110.9% £3.1 15.4% £1.4 48.3% £0.1 98.8% £1.5 24.0% £2.1 33.9%Total £386.4 31.9% £252.9 39.8% £577.8 36.4% £192.2 53.4% £300.5 30.0% £281.8 59.2% £57.5 59.7% £97.9 32.7% £240.2 44.8%

2009 Plan Core NECR 32.0% 37.8% 38.0% 42.5% 32.2% 46.0% 47.3% 37.9% 38.7%

Key :NECR worse than Target by 5% pointsNECR within +/- 5% points of TargetNECR better than Target by 5% points

Red Rate Target £69.6 10.1% £70.1 6.6% £48.7 10.3% £128.1 10.2% £42.0 12.6% £230.4 7.7% £37.1 6.1% £4.3 6.3% £175.3 4.8%Amber Rate Target £200.1 6.9% £173.3 6.4% £372.5 6.2% £34.8 9.2% £135.8 6.9% £51.4 7.7% £16.7 6.0% £19.8 6.3% £49.4 4.8%Green Rate Target £115.7 5.0% £9.5 5.0% £156.6 5.0% £29.3 5.0% £122.7 5.0% £0.0 7.7% £3.7 5.0% £73.7 6.3% £15.6 4.8%

Overall Rate Target £385.4 6.9% £252.9 6.4% £577.8 6.2% £192.2 9.2% £300.5 6.9% £281.8 7.7% £57.5 6.0% £97.8 6.3% £240.2 4.8%

CHC

Large Property Owners General Combined

OSP/PRP etcCMT CMEAGRCCI CTC

Construction Combined

Commercial Property OwnersComplex Schemes

CHC CPO

Motor Trade AgricultureGeneral Commercial

Combined (legacy Bonus)

Package Products

Insurance Excellence in UK GI: 'Focus on Profit'Underwriting for profit

• 3000 poor performing accounts/schemes identified

• Cases where 2 out of last 3 years underlying loss ratios >80%

• Target is exit or major (+25% min) price rise

• Branches working through case by case

Support profitable CORs through the cycles'


£m’s

-£200

-£180

-£160

-£140

-£120

-£100

-£80

-£60

-£40

-£20

£0

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

GW

P Lo

ss£0

£10

£20

£30

£40

£50

£60

£70

£80

£90

£100

Cumulative Lapsed Premium Cumulative Operating Profit

Prof

it B

enef

it (w

ritte

n)

<<< TIME >>><<< TIME >>>

7474

75

Insurance Excellence in UK GI: 'Focus on Profit'Sustainable profit through the cycle

• Philosophy of excellence in execution at transaction level

– Delivered through 1,200 UK-wide underwriters

– More than segmented rating action

– Exposure recognition

– Influence behaviours of underwriters

• Monitoring, mentoring, measuring

This is where our future results are made


76

Insurance Excellence in UK GI: 'Focus on Profit'Sustainable profit through the cycle

SME market has been price driven... We need to differentiate ourselves

• Segmented products tailored to customer needs

• E-broking – making it easy:

– cuts the cost for broker and NU

– self binding approach with 15 minute turnaround on referrals

• Capitalise on NU Risk Services:

– 130 risk specialists; our face to the customer

– value and reputation enhancing

– plans in place to further exploit this capability

Norwich Union is a great company to do business with


77



Rating

Cleanse the book

Differentiating ourselves in the SME market

Sustainable profit through the cycle

78









Questions & Answers

79


Insurance Excellence in UK GI: 'Focus on Profit'Delivering the promise of scale

• The vision for Operations

• Footprint consolidation

• Lean manufacturing

• Right-shoring

• Self service

• Mass customisation

• IT architecture

Delivering the promise of scale

80


2006UK best of breed expense

ratio1

applied to NUI channel / product mix:

(1) Expense ratios exclude CHE and commission

(2) Based on leading cost performance in channel, weighted to reflect NUI mix

Source: FSA Returns (2006)

NUI

Expenses

UK Best of

Breed

Personal Lines

Motor 16.1% 12.3%

Property 11.0% 9.7%

Creditor 1.3% 1.3%

RAC Rescue 27.5% 27.5%

Commercial Lines

Motor 13.8% 8.2%

Property 16.3% 15.2%

Liability 11.6% 11.6%

NUI Total 13.9% 12.0%

Breed Co. 2

Best of

Direct Line, Fortis

Direct Line, NU

NU

NU

Brit

Axa

NU

NUI Total2007 13.9% 12.0%

NUI Total – ½ Year2008 12.8%

NUI Total – Full Year 12.1%Ph1 achieves benchmark..


81

Inflation

C&E £38m

One-offs

09 & 10 Inflation

One-offs

Phase 2 Cost

£150m

Phase 1 Cost

Reduction

2007 20102008 FY<11%

Phase 2 Target : £150m• Operations• IT

2008 HY 12.1%12.8%

Phase 1 Cost

ReductionPhase 2

Cost

£150m

Reduction

Phase 1 Target : £200m• Sales & Marketing• IT• Support Services• Change



13.9%

Expense Ratio

82

• Footprint consolidation

• Lean manufacturing

• Right-shoring

• Self service

• Mass customisation

• IT architecture

Systems Complexity

Process Complexity

Product Complexity

Organisation Complexity

Cost Drivers Key Strategies


Insurance Excellence in UK GI: 'Focus on Profit'The vision for Operations

83

2008 End State - 2010

Perth

StretfordManchester

Norwich

Cheadle

BishopbriggsPerth

Stretford

Norwich

Bishopbriggs

Pune

Bangalore

Personal

Commercial

Mixed

Perth

Stretford

Bradford

WorthingExeter

Belfast

Dundee

Manchester

Birmingham Norwich

Southend

Glasgow

Liverpool

Cheadle

Bishopbriggs

Sheffield

Basildon

Ipswich

Leeds

Leicester

Bristol

Perth

Stretford

Bradford

WorthingExeter

Belfast

Dundee

Manchester

Birmingham Norwich

Southend

Glasgow

Liverpool

Cheadle

Bishopbriggs

Sheffield

Basildon

Ipswich

Leeds

Leicester

Bristol

Noida

Pune

Bangalore Chennai

Personal

Commercial

Mixed

Southampton Colombo

Leicester

Manchester

Southend


Insurance Excellence in UK GI: 'Focus on Profit'Footprint consolidation

Centres of Excellence:UK – 7

India – 2

84

Pro

cess

Tra

nsf

orm

ati

on

Policy Sales & Service

Claims

Collections

Q2 Q3’08 Q4’08 Q1’09

Direct, Broker - Personal & Commercial

Household & Personal Motor

Commercial Property & Motor

Creditor

Resolve Payment & Collection Issues – Direct & Broker

Aims

• Best in class processes

• Improved customer experience

• Increased efficiency

• YOY continuous improvement capability


Insurance Excellence in UK GI: 'Focus on Profit'Lean manufacturing

85

Insurance Excellence in UK GI: 'Focus on Profit'Offshore

Policy Sales

First Claim Call

Back office

Collections / Recoveries /

Analytics

“Right-shoring” key customer moments of truth


86

• Self service has matured in the direct channels (50% of quotes online)

• Created best in class self service– Leading quote and buy capability– Renewals online and self service of 72

mid-term adjustments– 115,000 registrations per month– Insurance documents online

• Cutting edge natural language call automation

• Significant increase in online capability for intermediated business

• Introducing online claims notification and tracking

Insurance Excellence in UK GI: 'Focus on Profit'Self service

Self service propositions already built


Primary Customer Access Channels (Current / Target)

Claims Tracking

0% 30%

Direct

CP

Broker

Claims Reporting

0% 5%

Servicing

0% 18%

Sales

0% 39%50% 60%

5% 24%

80% 85%

Contact Channel

Web Self service

Web Self service

4% 40%

Self Service EDI

Web Self Service

Primary Customer Access Channels (Current / Target)

Claims Tracking

0% 30%

Direct

CP

Broker

Claims Reporting

0% 5%

Servicing

0% 18%

Sales

0% 39%50% 60%

5% 24%

80% 85%

Contact Channel

Web Self service

Web Self service

4% 40%

Self Service EDI

Web Self Service

87

Fewer core products 161* to 3

Fewer pricing algorithms 45 to 3

Fewer operational processes 3600 to 720

Fewer IT applications c900 to <300

Fewer documents 2450 to 60 (core templates)

Faster to market 6 mths to 1mth

Simpler products enable simpler processes enable simpler IT….

… which means lower costs, better pricing and faster to market

Modular core product allows “mass customisation”


Insurance Excellence in UK GI: 'Focus on Profit'Mass customisation

* excludes Creditor

88

2007 2008 2009 2010 2011

£355m £258m £210m £180m £<180m

IT2010 benefits

IT2010 benefits‘End•-game’

benefits

Flightpath to 2010

Delivered Benefit

c900 Applications <300 Applications

2007 2010

Reduction in IT costs from 5.5% of GWP to industry benchmark of sub 3%, enabled by :

• Simplified product set

• Reduction in headcount

• Tighter supply chain management

• Targeted outsourcing

• Process improvement

IT spend <3% of GWP


Insurance Excellence in UK GI: 'Focus on Profit'IT architecture

89

Operations Headcount c10,000 c7,000

IT & Operational Services c2,900 c1,700Headcount

Sites 27 9

Desk Utilisation 73% 107%

Sales Online 35% 60%

Service Online 1% 39%

Core IT Platforms 900 300

IT spend as % of GWP 5.5% <3%

Core Products 161* 3

Expense Ratio 13.9% <11%

2007 Target

Notes: Headcount, sites & Desk Utilisation excludes RAC

* Excludes creditor


Insurance Excellence in UK GI: 'Focus on Profit'Operational excellence – key metrics

90


Sale of offshore operations

New operating model announced

End to end core process re-engineering Dec 2008

Footprint rationalisation commences Q1 2009

Right-shoring of core processes H2 2009

IT Data Centres hand over Q3 2009

Mass Customised products and self serviceproposition developed



Sale of offshore operations

New operating model announced

End to end core process re-engineering Dec 2008

Footprint rationalisation commences Q1 2009

Right-shoring of core processes H2 2009

IT Data Centres hand over Q3 2009

Mass Customised products and self serviceproposition developed


92









Questions & Answers

93


Insurance Excellence in UK GI: 'Focus on Profit'Reshaping the book

We are leveraging our unparalleled access to customers and reshaping the front end of our business

Reshaping the book..

Protectand

Grow

Consolidators

Reduce premium

Sustainable commission

Strong relationships

Limited delegated underwriting

Brokers Join NetworksBrokers Join Networks

Strong relationships with selected networks Strong relationships with selected networks –– but best deal but best deal from NU directlyfrom NU directly

Independent Organic GrowthIndependent Organic Growth

Differentiated offer to 3000 small brokersDifferentiated offer to 3000 small brokers

Grow share of businessGrow share of business

Self serve for SMESelf serve for SME

Independent BrokersIndependent Brokers

Differentiate through 110 broker clubDifferentiate through 110 broker club

Succession planningSuccession planning

Long term supportLong term support

Direct RelaunchPanel Proposition

Leverage Membership

Moments of truthWinning route for commercial via

independent brokers

Sustainable growth and sustainable distribution cost


Insurance Excellence in UK GI: 'Focus on Profit'Building core insurance capability

Personal Lines - Transforming Pricing

Commercial Lines – Transforming Underwriting

Gold Cover Silver Cover Bronze CoverBuildings & Contents

Sums Insured

Specified Inner Limits

Frozen Food

Blanket

Higher Inner Limit

Unlimited

Blanket Blanket

Higher Inner Limit

Low Inner Limit

£400 Limit £200 Limit

Loss of rent and alternative accommodation

£12,000 Limit £6,000 Limit

Visitors Personal Effect Unlimited £1,000

Sport Equipment£1,000

0

0.02

0.04

0.06

0.08

0.1

0.12

-50% -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

Applied Rate Change

Perc

enta

ge o

f Pol

icie

s

Overall Price Neutral Change

Individual policy changes range from -50% to +55%

Commercial Overall (excl. Other) Rate Growth & Volume Retention

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Jan-

0 7

F eb-

0 7

Ma r

- 07

Apr -

07

Ma y

-07

J un -

0 7

Jul- 0

7

A ug-

0 7

S ep -

07

Oct

- 07

No v

-07

De c

-07

J an -

08

Feb-

0 8

Mar

- 08

Apr -

08

Ma y

-08

Jun-

0 8

J ul - 0

8

A ug -

08

72%

74%

76%

78%

80%

82%

84%

Rate Grow th Volume Retention Rate

TOTAL IB

Region 2 Yr GWP2 Yr Core









NECRSouth £71.9 28.7% £8.8 52.7% £64.6 28.3% £24.5 46.1% £29.2 28.2% £39.7 56.2% £0.8 39.7% £10.6 29.5% £41.0 51.0%West & South Wales £8.7 30.0% £9.9 60.6% £62.9 39.5% £29.8 59.8% £27.9 33.9% £41.2 58.3% £4.3 55.3% £8.7 32.8% £38.8 41.5%London City £72.5 30.1% £41.9 40.0% £41.0 28.0% £10.2 46.3% £32.7 24.2% £14.9 69.9% £9.4 68.8% £3.0 44.4% £19.0 46.2%London NB £112.3 23.3% £8.5 66.7% £61.2 33.8% £5.5 28.1% £43.1 19.6% £5.8 84.4% £1.7 55.4% £12.3 31.0% £8.5 34.7%Midlands £11.0 29.3% £6.5 50.6% £50.7 42.3% £24.0 51.5% £26.7 27.7% £33.6 63.1% £1.4 39.7% £6.4 37.4% £20.2 46.3%Scotland & NI £11.6 40.1% £16.4 35.3% £50.1 38.0% £23.0 60.0% £37.2 32.5% £28.0 51.0% £11.7 49.8% £11.3 41.7% £36.6 47.4%North East £25.8 44.1% £12.3 51.1% £55.6 42.2% £16.3 57.9% £16.8 27.0% £29.0 60.2% £1.7 43.3% £11.7 30.7% £21.4 44.2%North West £35.1 36.1% £3.6 19.6% £47.7 36.4% £20.4 57.9% £15.4 18.9% £32.6 54.6% £3.3 46.4% £4.1 30.4% £16.0 48.9%East £20.0 65.3% £24.1 46.0% £42.1 28.5% £19.3 33.1% £31.3 55.7% £22.0 49.2% £7.4 76.5% £1.3 50.1% £15.9 45.4%National Accounts £2.0 38.5% £115.1 33.1% £9.9 43.2% £3.0 51.6% £8.9 13.0% £6.5 75.3% £12.7 67.4% £2.1 36.3% £5.0 45.7%Leicester NB £4.5 37.9% £0.0 0.0% £23.8 47.1% £7.0 106.6% £10.8 48.0% £13.5 67.1% £0.6 96.4% £12.0 30.2% £10.2 30.5%Birmingham NB £5.6 37.4% £5.8 24.3% £24.7 42.9% £1.8 52.9% £4.4 32.4% £5.2 72.0% £0.1 12.5% £4.2 32.5% £2.0 27.1%ManchesterNB £1.0 32.7% £0.1 1.2% £19.6 39.0% £1.8 26.3% £1.1 23.7% £2.7 64.2% £0.0 0.0% £3.3 17.2% £2.5 20.7%Glasgow NB £0.0 5.3% £0.0 0.0% £14.9 47.2% £1.2 26.6% £10.3 31.4% £2.8 52.0% £1.3 18.6% £5.2 22.7% £0.9 16.0%Unallocated £3.4 8.3% £0.0 0.0% £3.7 22.3% £1.5 20.9% £1.5 4.3% £2.7 59.3% £0.8 65.7% £0.0 0.0% £0.1 408.3%Belfast NB £0.2 40.8% £0.0 0.0% £5.1 31.0% £2.9 110.9% £3.1 15.4% £1.4 48.3% £0.1 98.8% £1.5 24.0% £2.1 33.9%Total £386.4 31.9% £252.9 39.8% £577.8 36.4% £192.2 53.4% £300.5 30.0% £281.8 59.2% £57.5 59.7% £97.9 32.7% £240.2 44.8%

2009 Plan Core NECR 32.0% 37.8% 38.0% 42.5% 32.2% 46.0% 47.3% 37.9% 38.7%

Key :NECR worse than Target by 5% pointsNECR within +/- 5% points of TargetNECR better than Target by 5% points

Red Rate Target £69.6 10.1% £70.1 6.6% £48.7 10.3% £128.1 10.2% £42.0 12.6% £230.4 7.7% £37.1 6.1% £4.3 6.3% £175.3 4.8%Amber Rate Target £200.1 6.9% £173.3 6.4% £372.5 6.2% £34.8 9.2% £135.8 6.9% £51.4 7.7% £16.7 6.0% £19.8 6.3% £49.4 4.8%Green Rate Target £115.7 5.0% £9.5 5.0% £156.6 5.0% £29.3 5.0% £122.7 5.0% £0.0 7.7% £3.7 5.0% £73.7 6.3% £15.6 4.8%

Overall Rate Target £385.4 6.9% £252.9 6.4% £577.8 6.2% £192.2 9.2% £300.5 6.9% £281.8 7.7% £57.5 6.0% £97.8 6.3% £240.2 4.8%

CHC

Large Property Owners General Combined

OSP/PRP etcCMT CMEAGRCCI CTC

Construction Combined

Commercial Property OwnersComplex Schemes

CHC CPO

Motor Trade AgricultureGeneral Commercial

Combined (legacy Bonus)

Package Products

Old RatingMakeSegment (i.e. SUV)Number of DoorsEngine (Size and Fuel)TransmissionAgeABI Group

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95



c900 Applications <300 Applications

2007 2010

Sustainable service excellence & benefit of scale

Operational & IT excellence to deliver

sub 11% expense ratio

Self Service Centres of Excellence

Mass Customisation & Lean Manufacturing IT Roadmap


Reshaping the book

• Sacrifice volume for profit

• Sustainable distribution ratio

Building core insurance capability

• Rating at or above inflation & cleanse the book

• Sophisticated pricing

• Inflation busting

Delivering the promise of scale

• £200m cost savings delivered

• Expense ratio reduced to 12.1% in 2008

• Plans well advanced for further £150m, giving sub 11% expense ratio

Insurance Excellence in UK GI: 'Focus on Profit'Financial impacts

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Questions & Answers

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Documents

Insurance Excellence in UK GI: 'Focus on Profit' · Insurance Excellence in UK GI: 'Focus on Profit' Our agenda today 1. Insurance excellence Igal Mayer 2. Personal lines John Kitson