Insurance Excellence in UKGI

Focus on Profit
Igal Mayer, 3rd June 2009

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.

Overview

An increasingly global company

£60
billion FY 2008 sales £51.4bn (1)

Asia Pacific North America UK GI

7% 14% 11%

22% General 10% Insurance

billion
3% 5%

£30

UK Life

26%

24%

78% Long Term Savings

Europe
34% 34%

42%

40%

(1)

2008 total long-term savings new business sales and G.I. and health net written premiums

FY 2000

FY 2008

Manage the composite portfolio Diversity, cash flow, resilient product range

Long Term savings General Insurance Composite

Increase customer reach Access to customers through preferred channels

Multi-distribution Direct Sales Bancassurance Independent Agents

Key financials - FY 2008 / Q1 2009

• Strong Full year 2008 operating results
• • • • • Life & pensions sales up 11% to £36,283m General insurance result improved and combined operating ratio on target at 98% Operating profits: IFRS up 4% to £2,297 million and MCEV up 10% to £3,358 million Total profits impacted by adverse investment variances Full year 2008 dividend maintained at 33.0p

• Resilient Q1 2009 trading
• • Q1 2009 life and pension sales up 11%, with margins maintained Group COR in line with 98% “meet or beat” target

• Strong balance sheet
• • • Strengthened reserves and provisions, with immaterial actual losses to date IGD surplus of £2.5 billion at 31 March 2009, with increased equity hedging – 40% fall reduces surplus by £200m, 40% rise increases surplus by £800m Net asset value per share at 31 December 2008: IFRS 416p and MCEV 486p

• Consistent strategy, with focus on capital management

The right strategy

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
• Globally integrated business

• Focus on target to double IFRS EPS by 2012 • Increasing emphasis on capital efficiency
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

• Decreasing emphasis on sales targets

• Transform the investment model

Aviva Investors Asset Management

• 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

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

mix, growth & margin
● Generate net capital

returns
● Contribute to doubling

IFRS EPS by 2012

Strong presence in our home market

£m

2008 IFRS operating profit by region

Competitive strength from market leadership in the UK
• Half of IFRS regional operating profits derived from UK businesses UK Life & GI

3000

UK Life
• Highest ever sales in 2008 • UK Life market share jumped 3% to 14% in Q4 2008 • 6 May investor day

2000

1000

Europe North America, Asia Pacific & Aviva Investors Central charges

UK GI
• Transformational change progressing • Visible signs of rate hardening • Voted General Insurer of the year for sixth year running

0

-1000

UK General Insurance

UK General insurance

Current position • Operates in the mature UK market • Aviva UKGI enjoys a 14% market share - the largest UK P&C insurer • Top one or two position in all our major classes • Focus on insurance excellence • Generation of capital and cashflow for Aviva

2008 Performance (UKGI only) • General insurance operating profit of £566m • General insurance COR of 99% (2007: 106%) • General insurance net written premiums (NWP) of £4,981m (2007: £5,440m), down 8% • Expense ratio improved to 12.1% (2007: 13.9%), reflecting benefits from cost saving initiatives

Diversified portfolio
Diversified portfolio of products and distribution channels

Strategy • There are 7 strategic priorities: • • • • • • • Win the Customer Win the Broker Building Core Insurance Capability Claims Inflation Busting Delivering the Promise of Scale Lean Manufacturing Win our People

Commercial - Broker Commercial - Other Personal - Broker Personal - Partnership Personal - Direct RAC income stream

Unparalleled customer reach

DIRECT

BROKERS 3,000 brokers

PARTNERS

Powerful brands
RAC - Best roadside assistance provider 2006 to 2008

#1 in the SME market Insurer of the year 2003 to 2008 … over 100 others

UKGI’s 7 strategic priorities

Win the Customer
• NUD fightback • 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

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

Lean Manufacturing
• Mass customisation • Service & process centre reengineering

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

UKGI’s 7 strategic priorities

RESHAPING THE BOOK

BUILDING CORE INSURANCE CAPABILITY

DELIVERING THE PROMISE OF SCALE
Win our People
• No1 for employees • Build core insurance skills • Pride & passion for insurance

Reshaping the book

Direct Fightback

Moments of Truth

• Direct is direct • Sophisticated pricing

• Profitable & growing medium sized brokers • Unique package • Increase market share

• Profitable & growing smaller brokers • Unique package • Increase market share

PERSONAL LINES
Panel
Multi channel approach Direct means direct RAC Panel for  aggregators Re‐grow with brokers Price competitive  sophisticated pricing

COMMERCIAL LINES
Products Grow small/medium  Pubs restaurants RAC independent brokers Self employed RESCUE Reduce commission  Manufacturing Property significantly & wholesaling owners Raise rates significantly Office  Shop & salon Retain Insurer of the  surgery Year – for 7th year ‘Fast Trade’
• e-broking portal • Straight thro processing • Fast referrals

• 11 panel insurers • 30-40% share

Financial strength & reassurance Truly global peer group Leveraged marketing

Brokers e-platform
Personal Lines: A Crystal-Clear Strategy
With Mass Customisation we can point everyone to the same engine and each "partner" will get the correct product and price.

Direct is ‘Direct’

Partners: Moments of Truth

Common Pricing/Products
Platinum Cover Cover Value Cover Gold Product Buildings Single Hi & Hig gh Blanket Low Sums her Contents PlatformBlanket Blanket er Inne Inne Specified Inner r Insured Inn r Limits Limi
Frozen Food

Partner Webs

Aviva Web Web Application

Call Centre Screens Quote NB Policy Real-time Administration Store QTE Pricing Price Risk Data Feeds Partner Integration

All web applications are built on the “NUD in a Box” standard All partner integration is provided using “NUD in a Pipe”
Broker Webs

MI

Integrated Partner Application

RAC Panel MTA Broker Integration

rd 33rd Party Data Party Data

Small Brokers & National Accounts

Leverage Membership Panels / Aggregators

Single Process Li Unlimited £400 tLimit £200 Limit mit £12,000 Limit £6,000 Limit Loss of Unlimited £1,000 rent and aOne Price List
t

er

Limi

£1,000

Sustainable growth and sustainable distribution cost

Reshaping the book
Summary By 2011 our UKGI book will have changed… • Direct grows • Brokers grow • Partnerships fall • RAC steady in Rescue but doubles in size for insurance • Motor grows • Home falls • Creditor falls • Commercial lines grow
Right balance of volume and profit

Building core insurance capability

Personal Lines – transforming pricing Credit
21% 19% 17% Frequency 15% 13% 11% 9% 7% 5% 1 2 3 4 5 6 7 8 9 10 80% 70% 60% 50% 120% 110% 100% Loss Ratio 90%

Make/Model
Vogue Vogue SE HST HSE HST SC HSE SC

Mass Customisation
Total Premium
Combined peril

3rd Party Data
CUE

Price Optimisation

Premium Total Premium Total Premium Premium
Multi peril

PTY DAMAGE 3rd PTY INJURY Total ACC DAMAGE Total

3rd

ARI Segment
Loss Ratio - Retro Sep 08 Written Frequency

Sep ’08 Motor Dec ’08 Home

Sep ’08

Mar ’09 Multi Peril

Commercial Lines – transforming underwriting Rating
10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0%

Cleanse the Book
1,800 160.0% 3-Year Core Claims Ratio 140.0% 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% CTB GWP Other 3-Year Core ECR

Commercial Rates to Apr ‘09

6.3% 5.7% 3.0%
GWP (£M)

1,600 1,400 1,200 1,000 800 600 400 200 0

Monitor, Mentor Measure
CHC Large Property Owners CHC Complex Schemes CCI General Combined CTC Construction Combined CPO Commercial Property Owners CMT Motor Trade AGR Agriculture CME General Commercial Combined (legacy Bonus) OSP/PRP etc Package Products TOTAL IB Region South West & South Wales London City London NB Midlands Scotland & NI North East North West East National Accounts Leicester NB Birmingham NB ManchesterNB Glasgow NB Unallocated Belfast NB Total 2009 Plan Core NECR
Key : NECR worse than Target by 5% points NECR within +/- 5% points of Target NECR better than Target by 5% points

Hawkeye

2 Yr GWP £71.9 £8.7 £72.5 £112.3 £11.0 £11.6 £25.8 £35.1 £20.0 £2.0 £4.5 £5.6 £1.0 £0.0 £3.4 £0.2 £386.4

2 Yr Core 2 Yr Core 2 Yr Core 2 Yr Core 2 Yr Core 2 Yr Core 2 Yr Core 2 Yr Core 2 Yr Core NECR 2 Yr GWP NECR 2 Yr GWP NECR 2 Yr GWP NECR 2 Yr GWP NECR 2 Yr GWP NECR 2 Yr GWP NECR 2 Yr GWP NECR 2 Yr GWP NECR 52.7% 28.3% 56.2% 39.7% 29.5% 51.0% 28.7% £8.8 £64.6 £24.5 46.1% £29.2 28.2% £39.7 £0.8 £10.6 £41.0 60.6% 59.8% 58.3% 55.3% 32.8% 30.0% £9.9 £62.9 39.5% £29.8 £27.9 33.9% £41.2 £4.3 £8.7 £38.8 41.5% 28.0% 24.2% 69.9% 68.8% 44.4% 46.2% 30.1% £41.9 40.0% £41.0 £10.2 46.3% £32.7 £14.9 £9.4 £3.0 £19.0 23.3% 66.7% 28.1% 19.6% 84.4% 55.4% 31.0% £8.5 £61.2 33.8% £5.5 £43.1 £5.8 £1.7 £12.3 £8.5 34.7% 50.6% 51.5% 63.1% 39.7% 46.3% 29.3% £6.5 £50.7 42.3% £24.0 £26.7 27.7% £33.6 £1.4 £6.4 37.4% £20.2 40.1% 60.0% 47.4% £16.4 35.3% £50.1 38.0% £23.0 £37.2 32.5% £28.0 51.0% £11.7 49.8% £11.3 41.7% £36.6 44.1% 51.1% 57.9% 27.0% 60.2% 30.7% 44.2% £12.3 £55.6 42.2% £16.3 £16.8 £29.0 £1.7 43.3% £11.7 £21.4 19.6% 57.9% 18.9% 54.6% 30.4% 48.9% 36.1% £3.6 £47.7 36.4% £20.4 £15.4 £32.6 £3.3 46.4% £4.1 £16.0 65.3% 46.0% 28.5% 33.1% 55.7% 76.5% 50.1% 45.4% £24.1 £42.1 £19.3 £31.3 £22.0 49.2% £7.4 £1.3 £15.9 38.5% 43.2% 51.6% 13.0% 75.3% 67.4% 45.7% £115.1 33.1% £9.9 £3.0 £8.9 £6.5 £12.7 £2.1 36.3% £5.0 37.9% 0.0% 47.1% 106.6% 48.0% 67.1% 96.4% 30.2% 30.5% £0.0 £23.8 £7.0 £10.8 £13.5 £0.6 £12.0 £10.2 37.4% 24.3% 52.9% 72.0% 12.5% 32.5% 27.1% £5.8 £24.7 42.9% £1.8 £4.4 32.4% £5.2 £0.1 £4.2 £2.0 1.2% 26.3% 23.7% 64.2% 0.0% 17.2% 20.7% 32.7% £0.1 £19.6 39.0% £1.8 £1.1 £2.7 £0.0 £3.3 £2.5 5.3% 0.0% 47.2% 26.6% 52.0% 18.6% 22.7% 16.0% £0.0 £14.9 £1.2 £10.3 31.4% £2.8 £1.3 £5.2 £0.9 8.3% 0.0% 22.3% 20.9% 4.3% 59.3% 65.7% 0.0% 408.3% £0.0 £3.7 £1.5 £1.5 £2.7 £0.8 £0.0 £0.1 40.8% 0.0% 31.0% 110.9% 15.4% 98.8% 24.0% £0.0 £5.1 £2.9 £3.1 £1.4 48.3% £0.1 £1.5 £2.1 33.9% 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% 32.0% 37.8% 38.0% 42.5% 32.2% 46.0% 47.3% 37.9% 38.7%

n -0 7 Fe b -0 7 Ma r - 07 Ap r - 07 Ma y - 07 Ju n -0 7 Ju l -0 7 Au g -0 7 Se p -0 7 Oc t - 07 No v -0 7 De c -0 7 Ja n -0 8 Fe b -0 8 Ma r - 08 Ap r - 08 Ma y - 08 Ju n -0 8 Ju l - 08 Au g -0 8 Se p -0 8 Oc t - 08 No v -0 8 De c -0 8 Ja n -0 9 Fe b -0 9 Ma r - 09 Ap r - 09

Ja

PROPERTY

LIABILITY (Incl PI)

MOTOR (Fleet/Minifleet)

ZERO

Red Rate Target Amber Rate Target Green Rate Target Overall Rate Target

£69.6 £200.1 £115.7 £385.4

10.1% 6.9% 5.0% 6.9%

£70.1 £173.3 £9.5 £252.9

6.6% 6.4% 5.0% 6.4%

£48.7 £372.5 £156.6 £577.8

10.3% 6.2% 5.0% 6.2%

£128.1 £34.8 £29.3 £192.2

10.2% 9.2% 5.0% 9.2%

£42.0 £135.8 £122.7 £300.5

12.6% 6.9% 5.0% 6.9%

£230.4 £51.4 £0.0 £281.8

7.7% 7.7% 7.7% 7.7%

£37.1 £16.7 £3.7 £57.5

6.1% 6.0% 5.0% 6.0%

£4.3 £19.8 £73.7 £97.8

6.3% 6.3% 6.3% 6.3%

£175.3 £49.4 £15.6 £240.2

4.8% 4.8% 4.8% 4.8%

5pts improvement in 2008 Trend positive so far Q1 ‘09

Exit 60% & carry 30% rate uplift on rest

Case level management

Investment in underwriting Insight on geographical risk

Building core insurance capability
Aviva Risk Index

Expected loss ratio vs actual frequency
21% 19% 17% Frequency 15% 13% 11% 9% 7% 5% 1 2 3 4 5 6 7 8 9 10 80% 70% 60% 50% 120% 110% 100% 90% Loss Ratio

ARI Segment ARI Segment
Loss Ratio - Retro
Sep 08 Written Frequency

• Expected loss ratio based on 2005 / 06 sample used as to assess ARI benefit • Actual Written frequency of policies written in September 08

Building core insurance capability
Aviva Risk Index

Retention & cancellations
35% 30% Cancellation Rate 25% 20% 15% 10% 5% 0% 1 2 3 4 5 6 7 Ritz S e gm ARI Segment e nt 8 9 10 55% 50% 65% 60% 75% 70% Retention Rate

NB Canc ellation Rate (Oc t 08)

Retention Rate (Feb - A pr 09)

• Retention rate is overall retention between February and April 2009 • Cancellation rate for new business written in October

Building core insurance capability
Rating

10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0%
O ct -0 7 N ov -0 7 D ec -0 7 Ja n08 Ap r07 M ay -0 7 Ju n07 Ap r08 M ay -0 8 Ju n08 Ju l-0 8 Au g08 Se p08 O ct -0 8 Ju l-0 7 Au g07 Se p07 N ov -0 8 D ec -0 8 Ja n09 Fe b08 M ar -0 8 Ja n07 Fe b07 Fe b09 M ar -0 9 ar -0 7 09 Ap r-

Commercial Rates to Apr ‘09

6.3% 5.7% 3.0%

M

PROPERTY

LIABILITY (Incl PI)

MOTOR (Fleet/Minifleet)

ZERO

Signs of hardening but market remains tough

Demonstrating leadership in the market

Delivering the promise of scale

Self Service

Operational & IT excellence to deliver sub 11% expense ratio
2007

Centres of Excellence
2010

Mass Customisation & Lean Manufacturing

c900 Applications

<300 Applications

IT Roadmap

Sustainable service excellence & benefit of scale

Delivering the promise of scale
Two major programmes

Operations2010
Personal Mixed Commercial Perth Noida

Bishopbriggs

Pune Cheadle Manchester Manchester Stretford Leicester Norwich Southend Bangalore

Migration to Centres of Excellence on schedule – 60% in place 10 major processes redesigned & in implementation, e.g. motor claims, with Q1 technology release completed Continuous improvement capability implemented to support new processes Annualised savings tracking to plan with costs also on target Service levels maintained or improved through transition Professional Broking Sentiment Survey no1, May ’09 Direct/RAC customer satisfaction ahead of 2008 for Q1 ‘09

IT2010
p Flight ath to 2010

2007

2008

2009

2010

2011

Delivered Benefit IT2010 benefits IT2010 benefits ‘End •-game ’ benefits

Front loaded cost efficiencies achieved for 2008 & on track to deliver full benefits by 2010 Datacentre outsource deal completed with EDS

£355m

£258m

£210m

£180m

£<180m

Delivering the promise of scale
Progress on expenses
• Progress ahead of what was promised in October 2008
Oneoffs Inflation

C&E £38m

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

Phase 2 Target: £150m • •
Phas
09 & 10 Inflation

Oneoffs

Operations IT

Phase 1 Cost Reduction

Phase e2 2 Cost Cost Reduction £150m

Expense Ratio

£150 m

2007 13.9%

2008 HY 12.8%

2008 FY 12.1%

2010 <11%

• Full year 2008 ratio of 12.1% achieved • Remaining phase 2 savings on track

… and as we became Aviva in the UK

GENERAL
• >80% awareness in 4 months • 16,000 pieces of literature reviewed & >40% made obselete
“Get me”

CUSTOMERS
• Communicated to 9m GI / 7m Life customers • New aviva.com/.co.uk • >40 websites rebranded

EMPLOYEES
• 3,000 managers attended ‘This is Our Story’ cinema presentations • All staff involved in ‘This is Us’ team sessions

“Get the plot”

“Get it done”

BROKERS/IFAs
• GI - 3,000 brokers contacted • Life - 30k distributors contacted

“ Building Aviva from the inside out “

Summary

2007 Expenses Commission Total Distn 13.9% 25.9% 39.8%

2008 12.1% 25.1% 37.2%
…”sub 11%”… …” targeted commission action”…

2011

30% world

10 point improvement

Loss Ratio

66.0%

62.1%

… “sophisticated pricing”… … “disciplined underwriting”…

Focus on Profit

Investor Presentation
May 2009