UK Life, Driving value through excellence

Investor and Analyst Event, Wednesday 6th May 2009

Andrew Moss NUL18.11.08

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 2008 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.
Andrew Moss NUL18.11.08

Today

• UK Life is in excellent shape • Delivering a consistent and compelling strategy • Transforming the business to a modern, low cost and dynamic organisation • Delivering previous promises • Well positioned for growth, profit and value • Clear plans and priorities for the future

UK Life, well positioned to drive further value
3

Agenda

• UK Life in excellent shape • Driving up profitability & generating capital • Delivering operational excellence • Break and innovation demonstrations • Strategic outlook • Strategic focus

Mark Hodges, Chief Executive Officer John Lister, Finance Director Toby Strauss, Chief Operating Officer UK Life Management Team Mark Hodges, Chief Executive Officer David Barral, Marketing Director Questions & answers Lunch

4

An experienced and proven team

Mark Hodges Ian Butterworth
Chief Information Officer Chief Executive Officer

Rita Agati
HR Director

David Barral
Marketing Director

John Lister
Finance Director

Angela Seymour Jackson Toby Strauss
Chief Operating Officer Distribution Director, Intermediaries & Partners

Graham Boffey
Distribution Director, Corporate & Consumer

5

UK Life within Aviva
Life New Business Sales
UK Life 33%

IFRS Life Operating Profit
UK Life 33%

Rest of Group 67%

Rest of Group 67%

MCEV Life Operating Profit
UK Life 32% UK Life 35%

Embedded Value

Rest of Group 68%

Rest of Group 65%

On all measures, UK Life is a key component of the Group result
Source: 2008 data for new business sales (PVNBP), IFRS and MCEV operating profit and 31 December 2008 life and related business embedded value.

6

One Aviva

Purpose Prosperity & peace of mind Vision One Aviva, twice the value Strategic priorities • Manage composite portfolio • Build global Asset Management • Allocate capital rigorously • Increase customer reach • Boost productivity Targets • 98% meet or beat COR • £500m cost savings by 2010 • Double IFRS EPS by 2012 at the latest • 1.5 – 2 x dividend cover on IFRS post tax operating earnings

UK Life Market leadership
Drive up profitability Generate capital Operational excellence Competitive advantage

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

UK
Market leadership • Address legacy • Transform business model • Exploit UK synergies • Generate capital

Europe
Scale, growth, capital • Seize unique growth opportunities • Leverage scale • Generate capital

N. America
• Optimise business mix, growth & margin • Generate net capital returns • Contribute to doubling IFRS EPS by 2012

Asia Pacific
Scale, growth • Prioritised portfolio • Regional operating model • Investment required

UK Life, fundamental to delivering One Aviva, twice the value
7

Agenda

• UK Life in excellent shape • Driving up profitability & generating capital • Delivering operational excellence • Break and innovation demonstrations • Strategic outlook • Strategic focus

Mark Hodges, Chief Executive Officer John Lister, Finance Director Toby Strauss, Chief Operating Officer UK Life Management Team Mark Hodges, Chief Executive Officer David Barral, Marketing Director Questions & answers Lunch

8

Driving up profitability

2005

2008

+/-

Life & Pensions sales (PVNBP)1 Life & Pensions margin1,2 Cost overrun New business IRR Existing Business operating return EV operating profit IFRS operating profit

£9,185m 2.9% £140m 10.6% £372m £589m £382m

£11,669m 3.5% £40m 14.0% £679m £883m £751m

+27% +60bp 71% +340bp +83% +50% +97%

Significant progress on delivering the One Aviva, twice the value agenda
2005 shown on an EEV basis, 2008 on a MCEV basis. 1Data shown on an EEV basis. 2Margin pre cost of capital and taxation, 2008 margin unaudited, published MCEV margin 1.7%.

9

Widening the income and expense ‘jaws’
Life & Pensions Sales and Operating Expenses
35%

25%

L&P Sales

• Increasing sales while growing margin • Targeted cost reductions, driving out inefficiencies and reducing operating expenses
2005 2006 2007 2008 2009

15%

5%

Growth
-5%

-15%

• Lower, more flexible and variable cost base
Operating Expenses

-25%

Expense over-run eliminated in 2009
Life & Pension sales calculated on an EEV basis for comparative basis.

10

Driving up profitability

2005

2008

+/-

Life & Pensions sales (PVNBP)1 Life & Pensions margin1,2 Cost overrun New business IRR Existing Business operating return EV operating profit IFRS operating profit

£9,185m 2.9% £140m 10.6% £372m £589m £382m

£11,669m 3.5% £40m 14.0% £679m £883m £751m

+27% +60bp 71% +340bp +83% +50% +97%

Significant progress on delivering the One Aviva, twice the value agenda
2005 shown on an EEV basis, 2008 on a MCEV basis. 1Data shown on an EEV basis. 2Margin pre cost of capital and taxation, 2008 margin unaudited, published MCEV margin 1.7%.

11

Generating capital
2005 New business capital strain(1) Strain % of L&P sales (PVNBP)(2) Free surplus generation £488m 5.3% £365m 2008 £293m 2.5% £704m +/-40% -2.8pps +93%

£500m dividend paid over the last three years

Delivering value to group
(1) New

business strain includes initial capital strain and changes in required capital. (2) Life & Pensions sales calculated on an EEV basis for comparative basis.

12

Delivering operational excellence
2005 UK headcount Policies per headcount Core admin systems Value on scale platforms Distributor service rating Customer recommendation score Employee morale score 12,500 1,032 20 60% 1 star 38% 49% 2009 Q1 9,200 1,485 4 75% 4 star 68% 68% +/-26% +44% -80% +15pps +3 +30pps +19pps

We have transformed our operating model
13

We have delivered our promises

• Rationalise costs • Simplify the legacy • Value out of service • Manage retention

• Develop the business • Strong balance sheet • Capital efficiency

UK Life is in excellent shape
14

Hot topics

Trading through the recession

Commercial mortgages

Re-attribution of the inherited estate

Brand re-launch

15

Trading through the recession – our progress
Quarterly Sales
PVNBP £m 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Q1 08 Q2 08 Pension Q3 08 Bonds & other Q4 08 Annuities Q1 09 Protection
% 15% 14% 13% 12% 11% 10% 9% 8% Q1 08 Q2 08 Q3 08 Q4 08

Quarterly Market Share

• Sales slow but within forecast • Market share increase at higher margin • Q1 net outflow only £0.1bn (excluding expected endowment maturities) • No unusual lapse experience

Thriving in challenging markets
Quarterly sales (PVNBP) calculated on an MCEV basis. Market share based on ABI data.

16

Trading through the recession – our focus

• Holding tight financial discipline for value – Rigorous hurdle rates – e.g. bulk purchase annuities – Re-pricing – group personal pensions, protection and annuities – Commission reduction – bonds and pensions – Withdraw unprofitable products – Inflation Protected Guarantee bond

• Benefit from ongoing innovation through 2009 – Customer portal – Adviser portal – Pensions tracker – Customer data e.g. Protection postcode rating

Focus on profitable growth
17

Commercial mortgage portfolio

£bn
12

Commercial Mortgage Portfolio Growth 1992-2008

£bn
20 18

10

16 14 12

8

6

10 8

4

6 4 2

2

0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

0

Commercial

UK NHS Healthcare

Annuity Book (RH Scale)

• Portfolio developed to support profitable growth in our annuity business • Producing higher yielding fixed rate assets (average 164bps above gilts since 2000)

A portfolio to support profitable growth in our annuity business
18

A high quality portfolio
31 Mar 2009 Portfolio Data Number of borrowers Number of properties
Total UK commercial mortgage portfolio £11.4bn Remaining UK commercial loans £8.6bn Commercial property portfolio £8.9bn

31 Mar 2009 536 3,473 6,110 £650m £857m 12.5 yrs 15 yrs

Number of tenants Annual interest income Annual rental income Average lease term

Gov’t Tenants £0.3bn NHS Healthcare £2.5bn

Average remaining loan term

• No high risk lending such as interest only loans with high LTVs • All loans secured by first charge on properties • Strong matching of lease terms to remaining loan terms • Business written with experienced property professionals with strong track records

Cautiously constructed portfolio
19

A well constructed and highly diversified portfolio
Portfolio by Sector (compared to industry benchmark)
60% 50% 50% 47%
50% 60%

Portfolio by Region (compared to industry benchmark)

40% % of Portfolio

30% 24% 20% 12% 10% 6% 8% 3% 0% Industrial Leisure Office Other Retail
UK Life

% of Portfolio

35%

40%

37%

30% 21% 20% 14% 10% 8% 5% 10%

26% 22%

25%

15%

15% 6% 6% 3% 2%

0% London
Benchmark

East Anglia

Midlands

South

North

Scotland

Wales

• Underweight in the office sector (most volatile) and slightly overweight in retail (less volatile) • Underweight in London (most volatile) when compared to the IPD Commercial Property Universe • c6,500 commercial tenants, our biggest with a 5% share and 10 others with around 1%

Portfolio well diversified geographically, by sector, borrower and tenant
UK commercial property loans portfolio as at 31 March 2009

20

Portfolio developed on sound lending principles

30 Dec 2007 Interest service cover Average loan to value Vacancy rates Interest arrears Interest arrears 1.29 76% 3.8% £0.1m 0.01%

30 Jun 2008 1.28 81% 3.7% £0.1m 0.01%

31 Dec 2008 1.30 103% 4.1% £0.2m 0.02%

31 Mar 2009 1.31 105% 4.8% £2.2m 0.25%

• Primary focus on income quality and longevity to support loan service and debt reduction • Strong loan and interest service cover • Minimal interest arrears at ¼ of 1 per cent of annual interest • Provisions of c£700m established (c7.9% of commercial property loans)

Strong interest service cover, low vacancy rates and interest arrears
21

Commercial mortgages summary

• Developed to support annuity business • Well constructed and diversified portfolio • Strong loan and interest service cover • Primarily long-term with limited short term maturities • Minimal arrears • Provisions of c£700m established (c7.9% of commercial property loans) • Proven and effective loss mitigation process • No new defaults year-to-date

A high quality commercial mortgage portfolio
22

Inherited estate reattribution – customer perspective
• Strong customer story – 1million customers benefit • Policyholder Advocate supportive • Incentive payment of £400m(1) that increase with the value of estate • Average payment per electing customer of £500(1) (minimum of £200) • 1st June election commences - Individual choice - No majority vote • 1st October effective date

A deal that flexes the incentive payment to the size of the estate
(1)

Based on estate value of £1.2bn and 80% take-up

23

Inherited estate reattribution – shareholder perspective

• New deal reduces incentive payment, flexes with size of estate – Revalued at the average of 1 June, 1 July and 1 August • Plans in place to offset IGD impact in 2009 – Payment in Q4 – UK Life actions to contribute a further £200m • Policyholder incentive payment acquires: – Assets backing the estate (£1.5bn at 31.12.08)* – Assets and Liabilities backing the cost of guarantees (£3bn at 31.12.08)*

* Based on 100% policyholder take-up

A good deal for shareholders
24

Inherited estate reattribution – shareholder perspective

• Significant capital and earnings benefits: – Provides £600m of new business capital strain funded from reattributed estate in first 5 years – 3 year cash payback – One off £156 million MCEV profit – One off £58 million IFRS profit – Ongoing IFRS profit c£50m per annum

Significant capital and return benefits
25

Inherited estate reattribution – shareholder perspective

Significant potential upside:

• • • •

Post reattribution lapse increase of 1% would increase IFRS and MCEV results by £20m 1% decrease in equity volatility would increase IFRS and MCEV results by £15m 1% recovery in property values would increase IFRS and MCEV results by £8m 50bps narrowing of credit spreads would increase IFRS and MCEV results by £16m

A good deal for shareholders with significant upside potential
26

Maximising the re-brand opportunity

• Aviva from 1st June • Awareness of name change 76% • Consideration trebled to 32% in just 3 months • World’s 4th most valuable insurance brand (c$6.1bn, Brand Finance global 500 report April 2009) • Individual recognition at core

Intensive activity provides a real opportunity to re-position UK Life
27

Agenda

• UK Life in excellent shape • Driving up profitability & generating capital • Delivering operational excellence • Break and innovation demonstrations • Strategic outlook • Strategic focus

Mark Hodges, Chief Executive Officer John Lister, Finance Director Toby Strauss, Chief Operating Officer UK Life Management Team Mark Hodges, Chief Executive Officer David Barral, Marketing Director Questions & answers Lunch

28

UK Life, Driving Value Through Excellence

• Improve quality of earnings

UK Life Market leadership
Purpose Prosperity & peace of mind Vision One Aviva, twice the value Strategic priorities • • • • • Manage composite portfolio Build global Asset Management Allocate capital rigorously Increase customer reach Boost productivity • • • • Targets

• Grow market position • Reshape business mix

Drive up profitability
Generate capital Operational excellence Competitive advantage

• Drive margin and IRR improvements • Reduce new business strain • Greater value from large back book

98% meet or beat COR £500m cost savings by 2010 Double IFRS EPS by 2012 at the latest 1.5 – 2 x dividend cover on IFRS post tax operating earnings

Globally integrated business •

Aviva Investors Transform the investment model • • • •

Increase third party business Asia Pacific Scale, growth • Prioritised portfolio • Regional operating model • Investment required

UK Market leadership • Address legacy • Transform business model • Exploit UK synergies • Generate capital

Europe Scale, growth, capital • Seize unique growth opportunities • Leverage scale • Generate capital

N. America Optimise business mix, growth & margin Generate net capital returns Contribute to doubling IFRS EPS by 2012

Drive up profitability
29

Driving up profitability

2005

2008

+/-

Life & Pensions sales (PVNBP)1 Life & Pensions margin1,2 Cost overrun New business IRR Existing Business operating return EV operating profit IFRS operating profit

£9,185m 2.9% £140m 10.6% £372m £589m £382m

£11,669m 3.5% £40m 14.0% £679m £883m £751m

+27% +60bp 71% +340bp +83% +50% +97%

Significant progress on delivering the One Aviva, twice the value agenda
2005 shown on an EEV basis, 2008 on a MCEV basis. 1Data shown on an EEV basis. 2Margin pre cost of capital and taxation, 2008 margin unaudited, published MCEV margin 1.7%.

30

Sustaining our market share….

Market Share 2008

• 11.3% overall L&P market share in 2008 benefiting from: – Launch of Simplified Life proposition in 2006 – Income Drawdown launch 2007

18 16 14 12

(1)

Overall market share

– Flight to quality Q3/Q4 2008 – Growth in bulk purchase annuity business with 39 schemes won in 2008

Market share

10 8 6 4 2 0 Annuities Protection Pension Bonds

14%

16%

10%

9%

• Top 3 ranking in all L&P product lines

Richer mix and overweight in risk business
(1) Excluding all BPAs: Aviva UK Life share of BPA market 9%, Market share and position based on FY08 ABI returns

31

… while enhancing returns …

2005 – 2008 New Business Margin Improvement

• Commission bill maintained at c£550m as PVNBP grew by 27% by: – Reducing individual pension, group pension and bonds commissions – Greater proportion of bond commission fund-based versus initial commission for IFAs – Growth of fee-based Employee Benefit Consultant business

7.00% 6.00% 5.00%

% PVNBP

4.00% 3.00% 2.00% 1.00% 0.00% 2005 Margin % 2006 2007 2008 NB Expenses %

• New business expenses reduced by £27m despite volume growth by – Customer service efficiencies, – e-Commerce and – Improved mix

Commission Paid %

Significantly leveraging pricing, commission and expenses
32

…and moving our mix towards higher margin risk products
2005 – 2008 Sales Growth (33)% (19)% +49%
Ot her, 4% Prot ect ion, 9%

• Good growth in annuities through: – Innovative pricing using rating factors and – Compelling BPA proposition to 50 EBCs
Individual pensions, 18%

• Protection down only 19% despite collapse in mortgage market – Excellent growth of Simplified Life product • Individual Pension growth supported by market leading e-Commerce • Group and corporate pensions secured 18 schemes in Q4 2008, £788m PVNBP

+53%

Annuities, 21%

+41%

Corporat e & Group Pensions, 21%

+26%

Bonds, 28%

• Bonds impacted by market conditions and CGT changes

PVNBP share1of 2008 portfolio

Driving profitability, driving value
Group life business moved from protection to GP in 2008 for comparative growth purposes

33

Our focus on annuities is delivering benefits
New Business Margin IRR Payback (years) Capital strain £m Capital strain % 2005 5.2% 9.5% 12 96 6.1% 2008 9.1% 16.7% 8 67 2.8% +/+3.9pps +7.2pps 4 yrs -30% -3.3pps

• Extra rating factors (size/postcode/marital status & smoker status) delivering underwriting profit • Increase speed to market and flexibility of rating changes • Established strong BPA proposition • Reduced capital in market place drives increased returns

IRR benefits from improved pricing, lower expenses and capital efficiency
New business margin shown on an EEV basis. 34

Our focus on protection is delivering benefits
New Business Margin IRR Payback (years) Capital strain £m Capital strain % 2005 9.2% 16.5% 6 153 12.5% 2008 7.8% 23.5% 4 58 5.1% +/-1.4pps +7.0pps 2 yrs -62% -7.4pps

• Highly competitive market with downward pressure on core mortgage and term products • Improved re-insurance structures & reduced re-insurance costs • Differentiated pricing by Channel / Distributor • Implementation of enhanced rating factors • IRR benefits from lower capital requirements from PS06/14 IRR benefits from improved pricing, lower expenses and capital efficiency
New business margin shown on an EEV basis. 35

Key actions to improve margins in pensions
New Business Margin IRR Payback (years) Capital strain £m Capital strain % 2005 1.2% 8.2% 12 148 4.9% 2008 1.6% 12.4% 9 146 3.2% +/+0.4pps +4.2pps 3 yrs -1% -1.7pps

• Increased operational efficiency reducing new business costs • Commission levels reduced in 2008 and 2009 to date. Key actions include: – GPP 3% reduction in initial commission, 0.05% increase in FOC charge Q4 08 – IPP single premium commission reduced by 0.5% to 6.0% Q1 09 • Implementation of customer agreed remuneration IRR benefits from improved pricing, lower expenses and capital efficiency
New business margin shown on an EEV basis. 36

Key action in place to improve margins in bonds
New Business Margin IRR Payback (years) Capital strain £m Capital strain % 2005 0.8% 9.7% 9 77 2.9% 2008 0.1% 7.7% 14 26 0.8% +/-0.7pps -2.0pps 5 yrs 66% 2.1pps

• Persistency assumptions strengthened • IFA commission rates reduced by 1% Q4 08 • Allocation rate reductions by up to 2% Q1 09 • Guaranteed Fund Commission reduction Q2 09 • IPG profit impacted by market volatility and withdrawn from 17th April 2009

New business margin shown on an EEV basis.

37

Key action in place to improve margins in bonds
Bonds PVNBP 2005 - 2008
4,000 3,500 3,000 PVNBP 2,500 2,000 1,500 1,000 500 0 2005 Unit Linked 2006 Unitised With Profits 2007 Offshore 2008 Other

• Unit linked bonds managed for value via commission and allocation changes • With Profits will reduce as IPG withdrawn • Offshore bond business under review Continuing participation in this market dependent on favourable returns
38

Generating superior returns through channel mix
Life & Pensions New Business Channel and Margin Growth 2005-08
7 Retail
Channel margin %

Increased focus on corporate channel • BPA with pricing discipline • Innovative GPP e-commerce proposition
Corporate

6 5
RBS JV

4 B Soc 3 2 1 0 -50 0 50 100
Channel growth %

• Actively promoted by 30 out of 40 target accounts

IFA

Excellent RBS JV growth • 80% growth in Bancassurance market share
150 200

• 50% increase in sales consultants

High growth in richer margin channels
Bubble size represents 2008 sales calculated on a PVNBP basis (EEV)

39

Driving value from sizeable back-book

In-Force Operating Profits 2005-2008
£m
800 700 600 500 400 300 200 372 100 0 2005 2005 Expected Experience 2008 2008 679

ROEV 7.1%

• Maturity of back book generating increased absolute returns • Reduced expense over-run through operational initiatives, on target to eliminate in 2009 • Improved focus on retention - keeping an existing customer generates 3 times as much value as attracting a new customer

ROEV 4.9%

Rigorous focus on eliminating experience variances
40

With profit fund persistency

WP Persistency
£m
30 20 10 0 -10 -20 -30 2005 2006 2007 2008

• 2005 and 2006 experience adversely impacted: – With profit pensions, bonds, low cost endowment exits – MVR removal in 2006 saw increase in level of bond surrenders • Persistency profits made in the last 2 years • Likely to reverse following reattribution – 1% lapse results in £20m additional IFRS profit

With profit persistency is better than our allowances
41

Growing IFRS operating earnings

2005 £m Underlying business profitability One-off items: • PS06/14 • Pension Scheme deficit funding by WP • Special distribution • Other Reported for the year 382 382

2006 £m 435

2007 £m 556

2008 £m 627

2nd & 3rd tranche of special distribution will benefit 2009 & 2010 64% higher underlying profit driven by: – £225m of expense saving initiatives (£200m delivered) – Lower new business strain – Higher annual management charges and WP bonus as markets rose


149 130 (85) 629 167 723 124 751

Reattribution will further enhance future earnings

Sustainable drivers of IFRS growth in plan
(1) Share of historic pension scheme deficit funding borne by shareholders charged to with-profit fund DAC write down following increases to lapse assumptions

42

UK Life, Driving Value Through Excellence

UK Life Market leadership
Drive up profitability
Purpose Prosperity & peace of mind Vision One Aviva, twice the value Strategic priorities • • • • • Manage composite portfolio Build global Asset Management Allocate capital rigorously Increase customer reach Boost productivity • • • • Targets

• Strong and resilient capital position • Self-financing capital model • Well capitalised with-profit business

Generate capital
Operational excellence Competitive advantage

98% meet or beat COR £500m cost savings by 2010 Double IFRS EPS by 2012 at the latest 1.5 – 2 x dividend cover on IFRS post tax operating earnings

Globally integrated business •

Aviva Investors Transform the investment model • • • •

Increase third party business Asia Pacific Scale, growth • Prioritised portfolio • Regional operating model • Investment required

UK Market leadership • Address legacy • Transform business model • Exploit UK synergies • Generate capital

Europe Scale, growth, capital • Seize unique growth opportunities • Leverage scale • Generate capital

N. America Optimise business mix, growth & margin Generate net capital returns Contribute to doubling IFRS EPS by 2012

Generating capital
43

Generating capital
2005 New business capital strain1 Strain % of L&P sales (PVNBP)2 Free surplus generation £488m 5.3% £365m 2008 £293m 2.5% £704m +/-40% -2.8pps +93%

£500m dividend paid over the last three years

Delivering value to group
1 New

business strain includes initial capital strain and changes in required capital.2 Life & Pensions sales calculated on an EEV basis for comparative basis.

44

Actively managing the capital position
With Profit funds • Dynamically hedging impact on cost of guarantees of equity market and interest rate risk • Managing funds in line with their Principles and Practices of Financial Management – Changing asset mix – Reducing bonus rates

Non Profit funds • Hedging market risk associated with AMCs • Raising regulatory capital • Tightening our underwriting criteria further on commercial mortgages

Maintaining and managing our credit risk exposure

Experts at managing capital risks
45

UK Life, a strong capital position
Capital Position by Fund 31 December 2008 3,500 3,000 2,500

£m

2,000 1,500 1,000 500

CGNU

CULAC Shareholder fund

NUL&P WP Long-term fund

NUA

NUL&P NP

Required capital

Well capitalised and managed funds, in excess of required capital
Note: NUL&P shareholder fund included in NUL&P NP section 46

UK Life driving up net worth

Net worth Surplus Generation

• £1.2bn increase in net worth over three years:
5,000

– Existing book surplus of £1.6bn
4,500 4,000

– Capital transactions releasing VIF of £0.8bn – One off benefits from PS06/14 of £0.3bn – Exceptional market falls £0.3m
2827

3,500

3,000

£m
2,500 2,000

• This has allowed us to fund: – New business strain of £0.7bn – Dividends to group of £0.5bn
2005 Existing Capital book surplus transactions One off benefits New business strain Dividends to Group Other 2008

1,500

1,000

500

In tough financial markets, increasing capital strength while growing the business
47

With-profit business well capitalised
Realistic Excess Capital in With Profit Funds 2005-2008 (Pillar 1 Peak 2)
1,800 1,600 1,400 1,200 1,000 £m 800 600 400 200 CGNU CULAC NUL&P

• With-profit funds all show significant surpluses

• No burn-through risk pre or post reattribution

Strong capital position
48

Driving up profitability and generating capital

• Good market share, strong presence in growth areas • Driving portfolio to more profitable product and channel mix, decisive pricing and commission action • Eliminating the expense over-run and extracting value from the back book • Sustainable underlying earnings • Strong capital position, self-financing business model delivering returns • An inherited estate reattribution deal that creates capital opportunities

Driving value through financial and capital excellence
49

Agenda

• UK Life in excellent shape • Driving up profitability & generating capital • Delivering operational excellence • Break and innovation demonstrations • Strategic outlook • Strategic focus

Mark Hodges, Chief Executive Officer John Lister, Finance Director Toby Strauss, Chief Operating Officer UK Life Management Team Mark Hodges, Chief Executive Officer David Barral, Marketing Director Questions & answers Lunch

50

UK Life, Driving Value Through Excellence

• Offshoring and outsourcing UK Life Market leadership
Purpose Prosperity & peace of mind Vision One Aviva, twice the value Strategic priorities • • • • • Manage composite portfolio Build global Asset Management Allocate capital rigorously Increase customer reach Boost productivity • • • • Targets

• Simplification • Service • RBS Joint Venture • Retention • Culture and leadership

Drive up profitability Generate capital

Operational excellence
Competitive advantage

98% meet or beat COR £500m cost savings by 2010 Double IFRS EPS by 2012 at the latest 1.5 – 2 x dividend cover on IFRS post tax operating earnings

Globally integrated business •

Aviva Investors Transform the investment model • • • •

Increase third party business Asia Pacific Scale, growth • Prioritised portfolio • Regional operating model • Investment required

UK Market leadership • Address legacy • Transform business model • Exploit UK synergies • Generate capital

Europe Scale, growth, capital • Seize unique growth opportunities • Leverage scale • Generate capital

N. America Optimise business mix, growth & margin Generate net capital returns Contribute to doubling IFRS EPS by 2012

Operational excellence
51

The start of the journey

2005

A strategic opportunity to drive value

• • • • • • •

Labour intensive organisation High cost base Complex inflexible IT & processes

Offshoring and outsourcing Simplification Service

Poor service levels RBS Joint Venture Product complexity Minimal retention activity Lack of employee engagement Retention Culture and leadership

52

Offshoring and outsourcing
Customer Operations 2005 Customer Operations 2009
36% Outsourced

98% In-house

98% In-house

46% In-house

18% offshore

Increased flexibility and efficiency of operations
53

Simplification

2005
550 systems System decommissioning 20 core admin systems ‘Fix’ or migrate strategy Mandatory change £9m Site rationalisation 12,500 UK headcount eCommerce & self-serve Limited eComm

2009
Closed over 300 systems 4 admin systems Mandatory change £4m 9,200 UK headcount 7 million policies on-line Simplified operating environment
54

Site rationalisation
Life Customer Operations 2005 Footprint Life Customer Operations 2009 Footprint

Glasgow Bangalore Newcastle Sheffield York Norwich

Pune Bangalore Chennai

York Sheffield

Stevenage Bristol Southampton Eastleigh Bristol

Norwich

Eastleigh

Reduction in fixed costs; nine key sites to five
55

Simplification

Scale Operations In-force Policies per Headcount
1,600

1,400 Policies

1,200 1,485 1,000 1,032 800 2006 2007 2008 2009 1,069 1,148

Managing 44% more policies per head in 2009

Driving efficiency into the business
56

RBS Joint Venture

Long-term Savings sales (PVNBP £m)
1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2005 2006 2007 2008

• 119% sales growth • 80% growth in Bancassurance market share • Promotion of Life, Pensions and Investment products • 50% increase in sales consultants • Well positioned to benefit from RDR

Driving growth in strategic distribution channels
Life & Pensions sales (PVNBP) calculated on an EEV basis.

57

Service

2005 1 Financial Advisor awards
Distributor satisfaction
41%

Service Promises for all products

Q1 2009 4 Financial Advisor awards
Distributor satisfaction
76%

£6m invested in our Communications

Customer satisfaction
38%

61% reduction in complaints

Customer satisfaction
68%

Customers recommend us
57%

Listening to 56k customers & 17k distributors

Customers recommend us
77%

Distributors recommend us
57%

85% distributor interactions ‘One & Done’

Distributors recommend us
86%

Operating model driving service improvements across the board
58

Retention

2005
Transactional customer service Specialist team of retention experts

2009
30 experts retaining 11,000 customers

No financial advice on existing products

Trained financial advisors

3,000 customers without advisers receiving financial advice

No proactive retention

Retention training ‘in the line’

55,000 customers retained this year within BAU

Zero engagement

Active distributor management

500 accounts engaged over 100 closed

Focused strategy driving retention activity across the business
59

Culture and leadership

Leadership Capability 63% new Directors

Employee Engagement
CII accredited Service Academy 3,000 graduates
49% 68%

Talking Talent 7,900 employees

Bonuses aligned to IFRS profit 2005 Brand Engagement £2.6m investment in our people 2009

Investment in leadership, capability and engagement
60

Customer Driven Design
IPP New Business Processing Reduction from an average of 39 days to 14 days

No. of customer days

Nov 08

Dec 08

Jan 09

Feb 09

Mar 09

Apr09

Removing waste, improving efficiency
61

Customer Driven Design
GPP Valuations Processing Reduction from an average of 52 days to 3 days

No. of customer days

Dec 08

Jan 09

Feb 09

Mar 09

Apr09

Removing waste, improving efficiency
62

Operational excellence: The journey does not stop here
Customer Portal

Adviser Portal

On-line Pensions

Significant investment in eCommerce
63

Operational excellence: The journey does not stop here
Customer Portal

Significant investment in eCommerce
64

Operational excellence: The journey does not stop here
Adviser Portal

Significant investment in eCommerce
65

Operational excellence: The journey does not stop here

On-line Pensions

Significant investment in eCommerce
66

Expectations
• 55% outsourced or offshored • 2.7m policies migrated • Flexible & efficient • Continuing to reduce fixed costs • 80% Protection NB on-line • 90% Bonds NB on-line • Over 7 million policies on-line • 70k customers using pensions tracker by 2010 • 68% Employee Engagement • 86% Distributor Satisfaction • 77% Customer Satisfaction • 5 Star Service • £5m investment • Redesign across all products • 85% distributor transactions One & Done • 40% reduction in waste

Operational Leverage

eCommerce

Brand and People

Customer-driven design

The business is now engineered to deliver sustainable operational effectiveness
67

Agenda

• UK Life in excellent shape • Driving up profitability & generating capital • Delivering operational excellence • Break and innovation demonstrations • Strategic outlook • Strategic focus

Mark Hodges, Chief Executive Officer John Lister, Finance Director Toby Strauss, Chief Operating Officer UK Life Management Team Mark Hodges, Chief Executive Officer David Barral, Marketing Director Questions & answers Lunch

68

Innovation Demonstrations
Unlocking Value from Customer Data On-line Pensions

Clive Bolton, Director of Annuity Business Pricing and Retention

Brian Bussell, Director of Marketing, Pensions

Adviser Portal

Customer Portal

Billy Burnside, Head of Distribution, E-business

Chris Abrathat, Head of Marketing, E-commerce

69

UK Life, Driving value through excellence
Investor and Analyst Event, Wednesday 6th May 2009

Andrew Moss NUL18.11.08