COMPANY PROFILE -Aviva Plc.
Business Sector :Insurance
Operating Geography :Europe, UK, Global
About Aviva Plc. :Aviva Plc. is a multinational insurance major headquartered in London, UK and was established in the year 2000 as a result of merger of two British insurance companies, Norwich Union and CGU. Aviva operates in 16 countries globally, serves more than 33 million customers and has 29,600 employees as of 2015.
Aviva Plc. Revenue :£ 55.29 billion (FY ending Dec 2016)
Competitive Analysis of Aviva Plc.
|1. Strong financial performance|
2. Consistent performance across business segments
3. Focused three-pronged strategy
4. High brand awareness and cross-selling
|1. Significant exposure in troubled European nations|
|1. Asian markets offer good growth potential|
2. Leveraging data for business insights
3. Increase in Europe’s pension savings gap
|1. Uncertainty over Brexit
2. Threat from entry of non-traditional firms
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Detailed SWOT Analysis of Aviva Plc.
1. Strong Financial Performance: Aviva delivered a strong set of numbers in FY15. Its operating profit was up by 20% at £2,665m (IFRS basis) and new business registered a growth of 24% to £1,192m (including the acquisition of Friends Life). Aviva also achieved a reduction in internal loan by February 2016 to £1.5 billion. The complete integration of Friends Life into Aviva is further expected to reduce costs and improve synergies. The final dividend payout stood at 14.05p, an increase of 15% y-o-y, a payout ratio of 42% which Aviva aims to increase to 50% pay-out ratio in 2017.
2. Consistent Performance Across Business Segments: Aviva has a well-diversified, customer-focused portfolio across the insurance business segments. Aviva’s fund management segment - Aviva Investors Multi-Strategy (AIMS), gained traction from the acquisition of Friends Life in 2015 and integration of its assets. The assets under management in AIMS more than doubled in HY16 to £6.2bn. The Commercial real estate segment for Aviva is substantially risk-free with Loan-To-Value Ratio (LTV) at 60% at Half Year(HY) 2016 from 102% in FY11. The loan interest cover for Aviva was what 2.14x at HY2016, significantly improving from 1.47x in FY14. Also the portfolio has zero loans in arrears as of HY2016. The Life insurance segment in UK has also been boosted by Friends Life run-rate synergies getting reflected from 2016. Aviva’s had a leading market share of 12% in General insurance and 14% in Life Insurance in UK as of 2015.
3. Focused Three-Pronged Strategy: Aviva has successfully focusing on a three pronged strategy which has allowed it to generate growth and market share. First is offering solutions and services to customers across life, general, accident & health insurance and asset management. Second is focusing on customer experience driven by digitization – leveraging the various facets of digitization such as mobility, cloud and analytics. Thirdly it is only focusing on the select geographies where it has business presence and aims to further diversify its offerings in those markets. The company will continue with this strategy for further development of its business and markets.
4. High Brand Awareness and Cross-Selling: Aviva has a high brand awareness and also is the preferred brand for consolidation from the customers perspective according to UBS Evidence Lab. This indicates a clear link between cross-selling of products and the Aviva brand. Also increase in available data and usage of analytics enables Aviva to understand customer profiles better and offer them the right solutions. Aviva has managed to tap customers who have taken at least one product from Aviva to take up other offerings provided by the insurer. This has been true specially in the UK market for Aviva, and the brand recognition is a key competitive advantage for the company.
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References used in Aviva Plc. Analysis Report
1. Aviva Annual Report 2015: www.aviva.com/reports/2015ar/
2. Aviva 2016 Half Year Results: https://www.aviva.com/media/upload/Aviva-HY16-presentation.pdf
3. Aviva Capital Markets Day 2016: https://www.aviva.com/media/upload/Capital_Markets_Day_2016_slides_updated.pdf
4. Avia About Us - UK: https://www.aviva.com/about-us/aviva-worldwide/uk/
5. Aviva calls for fixed plan on Brexit: https://www.standard.co.uk/business/aviva-calls-for-fixed-plan-on-brexit-a3341081.html
6. Aviva to reopen UK property fund shut by Brexit turmoil: https://uk.reuters.com/article/uk-britain-property-funds-aviva-idUKKBN13I0P3
7. Inside Aviva's Shifting Mindset: https://www.eiuperspectives.economist.com/technology-innovation/hyperconnected-organisations/case-study/case-study/inside-avivas-shifting-mindset
8. Top 10 Trends in Insurance in 2016 – Capgemini: https://www.uk.capgemini-consulting.com/resource-file-access/resource/pdf/insurance_trends_2016_0.pdf
9. PwC Insurance Issues 2016: https://www.pwc.com/us/en/insurance/publications/assets/pwc-top-issues-the-insurance-industry-2016.pdf
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SWOT & PESTLE.com (2020). Aviva Plc. SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/aviva-plc/ [Accessed 23 Feb, 2020].
In-text: (SWOT & PESTLE.com, 2020)
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Aviva Plc. SWOT and PESTLE analysis is reviewed by senior analysts from Barakaat Consulting.