Building a global asset management business

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Building a global asset management business

  1. 1. Building a global asset management business Investor and analyst briefing on Aviva Investors and UKGI, 9 October 2008 08 October 2008 page 1
  2. 2. 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.
  3. 3. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Paul Abberley Richard Field Greg Boal 5. Investment in growth Alain Dromer 6. Summary
  4. 4. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Paul Abberley Richard Field Greg Boal 5. Investment in growth Alain Dromer 6. Summary
  5. 5. 1. A strong foundation - Alain Dromer Aviva Investors today AUM by geography AUM by asset class AUM by client Poland 1.4% Australia 1.9% Spain 0.4% Other 3% Fixed income Intermediary 5% Ireland 3.2% Cash 10% 49% Institutional US 8.4% Real estate 13% 12% France 27.2% UK 57.5% Equities 26% Internal 82% £235 billion in assets under management Data as of 30 June 2008 5
  6. 6. 1. A strong foundation - Alain Dromer Aviva Investors today Revenues by geography Revenues by client Intermediary 12% Asia 4% Europe 8% Institutional 16% US 11% Internal 72% France 13% UK 64% £400 million of annual revenues Data as at 31 December 2007 6
  7. 7. 1. A strong foundation - Alain Dromer Aviva Investors today Proportion of Aviva Investors to Group IFRS profits 3,000 FY H1 H1 Operating profit £m 2007 2007 2008 Aviva Investors 2,500 6.6% Profits in £ millions UK 70 33 28 Europe 43 21 19 2,000 North America 27 11 13 Asia 7 3 1 1,500 4.9% 5.9% Total 147 68 61 1,000 Cost: income ratio 62% 65% Cost: AUM bps 10.2 10.9 500 AUM £bn 240 235 0 FY 2007 H1 2007 H1 2008 Aviva Group Aviva Investors 7
  8. 8. 1. A strong foundation - Alain Dromer Good core capabilities with scale, areas to develop Asia-Pac ex Asia-Pac ex Emerging Emerging Asset Class Asset Class Global Global UK UK Europe Europe N America N America Japan Japan Japan Japan Markets Markets Fixed Income Fixed Income Equities Equities Real Estate Real Estate Quant/Index Quant/Index Structured Structured Protected Protected TAA TAA Alternatives Alternatives Convertibles Convertibles Private Equity Private Equity 0 1 2 3 0 1 2 3 0 1 2 3 0 1 2 3 0 1 2 3 0 1 2 3 0 1 2 3 Quality of capability Scale 0 = No capability 1 = Sub-scale 2 = Fit for purpose/change required for scaling up 3 = Fully scaleable 8
  9. 9. 1. A strong foundation - Alain Dromer Recognised strengths ● European Pensions Awards 2008 – ● Estates Gazette awards 2008 – Property Manager of the Year Norwich Union Life and Pension fund managed ● UK Pensions Awards 2008 and 2007 – Property Manager of the ● La Tribune: French asset Year management business ranked 5th best global asset manager ● Eurohedge Awards 2007 and 2006 – G7 Fund awarded Fixed Income ● Pension and Investment Provider Hedge Fund of the Year awards 2008 - Money Market Fund category winner ● Financial Review Smart Investor Awards 2008 – Elite Opportunities ● Engaged Investor Trustee Awards Trust, awarded Best Australian – Best Trustee Education Provider Equity – Large-Cap Share Fund ● Thomson Extel SRI Survey, 2007 – ● Financial News Excellence in No.1 fund manager Institutional Management Awards, Europe 2007 – Best Property Manager 9
  10. 10. 1. A strong foundation - Alain Dromer Experienced management team in place Alain Dromer Chief Executive Paul Abberley Craig Bingham Greg Boal Eric Duval de Ian Womack Chief Executive Chief Executive Chief Executive Aviva la Guierce Chief Executive Aviva Investors Aviva Investors Aviva Investors Chief Executive Aviva Investors London Asia Pacific North America Aviva Investors France Real Estate Veronique Arnoldi Siobhan Boylan Richard Field Chris Oglethorpe Chief Technology Chief Finance Global Investment Chief Operating Officer Officer Solutions Director Officer 10
  11. 11. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Paul Abberley Richard Field Greg Boal 5. Investment in growth Alain Dromer 6. Summary
  12. 12. 2. Vision - Alain Dromer One Aviva Investors, doubling contribution to the group Single, global, integrated asset manager Aspiration to increase operating ‘One Aviva, profit four times by twice the value’ 2012 Investing for growth 12
  13. 13. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Paul Abberley Richard Field Greg Boal 5. Investment in growth Alain Dromer 6. Summary
  14. 14. 3. Brand - Alain Dromer 360° asset management. 100% focused on you. Reinsert ad 14
  15. 15. 3. Brand - Alain Dromer The successful launch of our global brand Aviva structures around low and high Aviva investors launches with eye risk barbell theory on growth Aviva combines operations into new division Aviva Investors to boost hedge fund- style products Aviva Investors dilancar Aviva groups investment operations into new unit Aviva Investors formally launched Aviva- Fonds endgültig unter Dach with more than £235 billion assets and Fach under management Aviva Investors se donne cinq ans pour devenir une référence mondiale Aviva aims to be valuable asset in Fund manager Portfolio Partners has global market changed its name to Aviva Investors 15 Australia
  16. 16. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Driving investment performance Paul Abberley, Richard Field Growth of third party business Greg Boal Cross-border sales New and existing market presence Alain Dromer Improved operational efficiency 5. Investment in growth Alain Dromer 6. Summary
  17. 17. Driving investment performance - Alain Dromer Unbundling our portfolios to exploit market trends Creating more externally marketable products by unbundling Aligning capabilities to the evolving market traditional core mandates for our clients AUM by Product Type Single Market Impact to 2011E AUM by Product Type Aviva Aviva Investors vs Current and Projected Market Equity Fund client Investors vs. Market Forecast Before 4% 5% 8% 4% 8% 6% 2% £ 1bn @ 6% 7% 7% 12bps 28% Target Fee = £1.2m FT100 40% +1% 72% 40% 72% Tracking 20% error 2% 50% 18% 25% 20% Aviva Investors Market 18% 25% 15% £300m After @28.3bps 8% 8% Target 5% 7% Aviva Investors Market AUM Market AUM FT100 25% AUM Dec 2007 2006A 2011E +3.25% 40% Tracking £700m Absolute/ Hedge Funds Fee = £1.2m error 6.5% @5bps Active extension Target 40% 20% High alpha FT100 Tracking Enhanced index/ core 22% 25% error 0.05% Passive Aviva Investors Market Oliver Wyman analysis Illustrative example Based on sample from Mercer GIMD/Datastream 17
  18. 18. Driving investment performance - Alain Dromer Flexible component toolkit to meet client requirements Real Estate Real Estate High Alpha – High Alpha – Indexing Indexing Asia Asia High Alpha – High Alpha – London London Asset Asset Solutions Building allocation allocation Capability High Alpha – High Alpha – North America North America Structured Structured High Alpha – High Alpha – Products Products Europe Europe Multi-manager Multi-manager Real Estate Long only Private Equity funds funds funds 18
  19. 19. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Driving investment performance Paul Abberley, Richard Field Growth of third party business Greg Boal Cross-border sales New and existing market presence Alain Dromer Improved operational efficiency 5. Investment in growth Alain Dromer 6. Summary
  20. 20. Driving investment performance - Paul Abberley Local resources, global consistency Our manufacturing capability Aviva Investors London High Alpha Equities Aviva Investors High Alpha Fixed Income Europe Aviva Investors Asia Pacific Aviva Investors North America 20
  21. 21. Driving investment performance - Paul Abberley Local specialist teams, network benefits The network in practice: Global Credit Research Platform High Alpha Team A Investment research Best practice Investment process innovation Technology High Alpha Team B 21
  22. 22. Driving investment performance – Richard Field Global Investment Solutions Global activities ● Macroeconomic analysis ● Strategic and tactical asset allocation ● Portfolio construction and risk UK management ● Quant/index funds North Global Europe America Regional activities, coordinated globally ● Structured product development Asia Pacific ● Solutions design ● Manager research ● Investment mandates within multi-asset funds 22
  23. 23. Driving investment performance – Richard Field New and established capabilities Asset allocation Strategic investment advice + + Client-centric Internally Externally investment managed funds managed funds solutions + + Structuring Ongoing portfolio management 23
  24. 24. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Driving investment performance Paul Abberley, Richard Field Growth of third party business Greg Boal Cross-border sales New and existing market presence Alain Dromer Improved operational efficiency 5. Investment in growth Alain Dromer 6. Summary
  25. 25. Growth of third party business - Greg Boal North America ● Leverage best practices, capabilities, and products Optimise global ● Raise organisational capacity limits to mobilise business and transformation agenda operating models Key Initiatives ● Key element of success ● Investment in client service, direct sales, Build Business distribution capacity Development ● Leverage other distribution centres ● Accelerate Aviva Investors brand recognition Grow in existing and with North American consultants and potential new markets clients ● Target growth segments ● Deliver demand oriented investment solutions 25
  26. 26. Growth of third party business - Greg Boal North America Growth goals Key initiatives underway ● Materially increase top line revenue from external ● Penetrating market through more robust consultant clients relationships ● Attain broad US equity capability ● Leverage insurance company distribution ● Leverage existing capabilities ● Distribute credit research strength ● Penetrate Institutional market, Canada and US ● Building distribution capacity ● Product launches: Capabilities ● Global High Yield Current Under Near future Strategy capabilities development capability ● Investors Diversified Fund of Funds in December, Fixed income 2008 Structured products ● Canadian Core Plus solution Convertibles ● WealthPro Managed Account Equities ● Ensuring internal client satisfaction Hedge funds Liquidity funds Capable now Limited capability No capability 26
  27. 27. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Driving investment performance Paul Abberley, Richard Field Growth of third party business Greg Boal Cross-border sales Alain Dromer New and existing market presence Improved operational efficiency 5. Investment in growth 6. Summary
  28. 28. Cross-border sales - Alain Dromer Optimised to deliver performance to clients ● Creating a scalable infrastructure ● Leveraging our Luxembourg SICAV platforms ● New funds recently launched on platform ● Externalising our successful internal capabilities ● Opportunity to grow cross-border business tenfold 28
  29. 29. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Driving investment performance Paul Abberley, Richard Field Growth of third party business Greg Boal Cross-border sales New and existing market presence Alain Dromer Improved operational efficiency 5. Investment in growth 6. Summary
  30. 30. New and existing market presence - Alain Dromer Deeper penetration in mature markets; entry in high growth markets 2012 market portfolio Romania Bubble size High represents Aviva Investors forecast Poland revenues in China Market growth 2007-2012 (%) 2012 (£m). Middle East India Singapore Italy Ireland Nordic Australia North America UK Spain France Low Germany Small Market size Large Source: Cerulli Associates, 'Cerulli quantitative update: Global markets 2007', June 2007. 30
  31. 31. New and existing market presence - Alain Dromer Real estate: From UK market leader to top 3 truly global player Now 2012 Revenues (% mix) Revenues (% mix) Global securities 1% Global securities Asia 2% 12% Europe 12% Europe UK 42% UK 85% 22% Asia 24% Internal Internal 43% Third Party 57% 29% Third Party 71% 31
  32. 32. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Driving investment performance Paul Abberley, Richard Field Growth of third party business Greg Boal Cross-border sales New and existing market presence Improved operational efficiency Alain Dromer 5. Investment in growth 6. Summary
  33. 33. Improved operational efficiency - Alain Dromer Rationalised systems, streamlined operational model Research Decision support Portfolio risk Client services and construction management Full portfolio view Client reporting Portfolio Performance Fund performance Query management Rebalancing Pre - trade Attribution Relationship management Order placement compliance Order management New business development Trade execution Stock lending Trade capture Product development and management Post trade compliance Investment administration Trade settlement Business risk Corporate action Financial accounting processing Finance Transfer Fund servicing Corporate governance agency Valuation Fee billing Unit pricing Legal ● Standard processes and global system Key Portfolio accounting ● Multiple processes and multiple systems ● Standard processes and multiple systems 33
  34. 34. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Driving investment performance Paul Abberley, Richard Field Growth of third party business Greg Boal Cross-border sales New and existing market presence Improved operational efficiency 5. Investment in growth Alain Dromer 6. Summary
  35. 35. 5. Investment for growth - Alain Dromer Investment in distribution, product development and marketing North America 2007 2012 FTEs: 6 45 High growth UK 2007 2012 FTEs: 54 105 Medium growth Asia 2007 2012 FTEs: 9 80 High growth Europe 2007 2012 FTEs: 15 55 Medium growth 35
  36. 36. Building a global asset management business 1. A strong foundation 2. Vision Alain Dromer 3. Brand 4. Key levers of financial performance Driving investment performance Paul Abberley, Richard Field Growth of third party business Greg Boal Cross-border sales New and existing market presence Improved operational efficiency 5. Investment in growth 6. Summary Alain Dromer
  37. 37. 6. Summary – Alain Dromer Positioned for growth Achieved to date: Built the executive team Re-branded globally Reshaped the investment portfolios Have developed some global capabilities Work in progress: Continuing to improve investment performance Recruiting investment professionals Strengthening our solutions platform Investing and expanding our third party distribution capability and cross-border sales 37
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