Aviva PLC

Ladies and gentlemen, thank you for standing by and welcome to the Aviva Plc 4-year 2020 results and strategy update. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star and 1 on your telephone keypad. I must advise you this conference is being recorded today on Thursday 4th March 2021. I will now hand the conference over to your Group CEO, Amanda Blanc. Please go ahead.

Good morning, everyone. Thank you for joining us for our 2020 results presentation. As usual, I'm joined today by Jason Windsor, our CFO. I know I've said this at previous financial updates, but it's worth repeating, so I do hope you're all staying safe and keeping well. Before we get into the detail of today, let me start by saying how incredibly proud I am of Aviva's response to COVID. Our people have consistently stepped up and delivered beyond expectations since we sent them home to work remotely in March last year. They continue to deliver for our customers doing what I think we can all agree have been the most challenging of circumstances. And Aviva has also stepped up the support we provide to our communities. From £43 million of charitable and community donations to providing support to highly deserving NHS staff. I would like to take this opportunity to say thank you to each and every one of our employees. Turning to today's agenda, shown on slide three. First, I will provide an update on the progress we are making towards our strategic priorities. Second, Jason will take you through the full year results. And finally, I will provide you with further colour on how we are transforming performance and accelerating growth in the UK. We'll then open the lines for your questions. So let's turn to slide five. Seven months ago I set out three strategic priorities for Aviva which to remind you were focus the portfolio, transform performance and financial strength. I'm pleased to report that we are making excellent progress on all fronts. We said we would focus on the strongest businesses in the UK, Ireland and Canada and manage our international businesses for long-term shareholder value and that is exactly what we have done. In less than seven months we have announced the exit of France, Singapore, Italy, Hong Kong, Indonesia, Vietnam and Turkey. The sales of France and Italy are of course the most significant steps forward in Aviva's strategic transformation. We have strengthened our capital and liquidity, materially reduced our balance sheet exposure to macro risks and realised significant value for our shareholders. We have also made good early progress on the critical task of transforming the performance of our core markets, effectively the new Aviva, but there is still much to do. More on this in a moment. Central to the delivery of our strategic priorities is the financial strength of the business. We continue to benefit from a robust balance sheet with a healthy capital surplus of £13 billion, cover ratio of 202% and central equitability of £4.1 billion. These will serve to strengthen as we complete the announced disposals in 2021. In November, we set out our clear intent to deliver a sustainable, ordinary dividend to our shareholders, covered by capital generation, cash remittances and growth from our core businesses. Today we are announcing a full year 2020 dividend of 21 pence per share, with a final dividend of 14 pence per share. Now moving on to discuss our trading performance on slide 6. Despite the challenges we all face in 2020, our financial and trading performance has been robust, with record trading results in the key growth areas. 8% year-on-year commercial lines growth.

£6 billion of BPA in new business sales is a record for Aviva.

£8.5 billion of savings and retirement net inflows. There were less than pleasing performances in personal lines where top lines fell and Aviva investors with weak profitability. Rest assured we're honest and these issues are being addressed. We are ahead of our plans in delivering 300 million of cost savings by the end of 2022 with 180 million achieved to date. all of which contributed to 2.5 billion operating profit from our core markets and 1.4 billion of cash remitted to the group, a much stronger second half performance. However, turning to slide seven, it is clear to me we need to do a lot more to truly transform the performance of the new Aviva. This is crucial to our future success and to deliver value to our shareholders. We currently serve 18 million customers across our core markets and our business must be built around each one of them, serving their needs seamlessly and efficiently, regardless of whether they're an individual, a business or an intermediary. My intention is to focus Aviva on serving more of our customers' needs, especially where we have leading positions and clearly have the capabilities to win. We will be targeting growth. We have an absolute focus on execution with the goal of building upon these leading positions and creating further value for our shareholders. As it appears we said before, we will not be holding a capital markets day. This is not what is needed here. You may even be relieved that you won't have to sit through one. Instead, we will be providing you with regular strategy updates and occasional deep dives into our businesses. Consistent with this, today I will be providing an update on the UK, our largest and our home market. In future sessions we will provide you with updates on Canada, Ireland and Aviva Investors. Let's move the slide out. A key part of delivering the necessary transformation starts at the top of the house. In my first 8 months as CEO I have made 7 appointments to my leadership team and we are now strengthening the next layer. All our leaders have a very clear understanding of what is expected of them, from what they need to do to how they need to do it. When I arrived, 90% of employees had no performance ratings or even simple conversations on how they were performing. How on earth do we raise our game if we're not having honest conversations on performance? I have made immediate changes so that everyone has simple, clear, aligned objectives and understands how they are performing. This will help us to deliver and develop and retain our people, deliver on our objectives and attract the critical talent we need into the organisation. I am breaking down the silo mentality and establishing a unified, collaborative approach and culture across the business. If we want customers to see Aviva as one business, capable of serving more of their needs, we need to think, behave and act as one business. Nothing less than this will do. So now let's talk about where we are heading and our targets. Turning to slide 9. Aviva has been a recognised leader on ESG issues for many years. But we are going further. As you will have seen earlier this week, we have elevated our ambition. We intend to be net zero by 2040. This is the most ambitious goal set by any UK financial institution. And yes, we do mean the carbon emissions we produce ourselves, those contributed by our suppliers, and the investments we make for our customers and shareholders. It is a clear direction of travel that I know our employees, partners and customers will want to get behind and enthusiastically support. Meeting these commitments will be hard, I make no apology for that, but what became clear to me when I arrived at Aviva is that we cannot wait for everything to be neatly laid out before we move the organisation on the right direction. Let me be clear that we are not doing this just because we believe it's the right thing to do.

We're doing this because we believe it makes sound commercial sense.

And ultimately, we are focused on creating value for our shareholders. Today I am providing further clarity on how we will achieve this by setting out our new financial targets, which are set out on slide 10. We are targeting 5 billion plus of cash remittances to the group over the next three years, with the ambition to grow annual cash remittances to 1.8 billion by 2023. In November, we upgraded our cost savings target to 300 million from the core market by the end of 2022. Today, I am reconfirming this target and going further. Once the 300 million savings have been achieved, We will expect all our business lines to go on and deliver top quartile efficiency versus their peers, and this will give us a more stretching and dynamic goal to target over time. And I am reconfirming our target debt leverage ratio to be below 30%. As you will appreciate, against the backdrop of ongoing national lockdowns and economic uncertainty, we are not announcing specific targets by line of business today. However, we are confident in our plans to grow the overall cash generation of the business and the targets I have just laid out. Turning to deployment of excess capital. In November, I set out our capital framework with the priorities for deployment being debt reduction, investing to grow our core businesses and shareholder returns. As a result of the rapid progress we have made with disposals, I am today announcing that we will redeem 1.7 billion of debt during the first half of 2021. As we promised, this accelerates our delivery of the debt reduction and Jason will provide more detail on this shortly. Following the completion of the remaining disposals, we will then also be in a position to make a substantial return of capital to our shareholders. While we have made excellent progress in reshaping the portfolio quickly, and I think we really have, we understand that substantial long-term value creation will mostly stem from returning to growth and transforming Aviva's performance. I will return to this topic shortly. But at this point let me hand over to Jason to take you through our full year 2020 financial results and to provide further detail on these targets.

Thanks Amanda, good morning everyone. I'm going to start on slide 12 and spend a few minutes to take you through what has been a very busy year with resilient financial performance setting us up well as we move into 2021. Before I do that I'll spend some time looking at how we're delivering against our strategic priorities. We've delivered strongly against the strategy with the recently announced divestment of France and today's announcement for the sale of our remaining Italian visitors we've made decisive progress Our Solvency II position and sense of equity are strong, providing a significant financial flexibility. Today we are announcing plans to reduce debt by £1.7 billion in the first half of this year, including an £800 million tender offer on our debt. This is an important first step in delivering against our capital framework, providing a clear path to returning excess capital to shareholders. As Amanda just mentioned, We're also announcing a new three-year cash remittance target from our core businesses. This £5 billion plus target will underpin growth in our sustainable dividend. We're setting this new target with strong momentum across our core markets of UK, Ireland and Canada. Even in a turbulent year like 2020, we have delivered, absorbing the impact of COVID-19 and making good progress of transforming our performance. But there's a lot more to do. and we committed to better performance. Moving to slide 13, the sales of France and Italy are the most important steps in our strategic transformation, which allow us to focus the group and they also reposition the balance sheet. The transactions significantly strengthen our capital and liquidity with excess capital above 180% expected to increase by 3 billion pounds and send the cash by 3.9. France and Italy were each predominantly traditional guaranteed savings businesses, and this is why the group capital release is so significant. Despite the loss of diversification benefits, bringing up capital for investment and return to shareholders, following the sales, we will still retain around 2.5 billion in diversification across the group, with over 2 billion relating to our core life and GI markets, a clear benefit about business model. We expect the transactions to complete by the end of 2021, so there is still some time before we book the benefits in our capital and cash position. Let's now turn to an important first step in the progress against our capital framework on slide 14. As a recap, under our capital framework announced in November, we are targeting leverage below 30% and a solvency working range of 160 to 180%. and we target AA credit rating metrics. We've also said that we will invest to grow our core business and that capital above 180% was excess. We're announcing today debt reduction plans of 1.7 billion pounds, including an 800 million debt tender offer, together with maturities and calls of 900 million pounds. This will lead to a reduction in our leverage ratio of 4 percentage points to 27% by the first half of 2021. Significantly less than a 30% target. The tender will result in us having to pay a premium for part. However, the targeted bonds are relatively short dated and we estimate the cost is around 100 million. At the same time, we expect an ongoing annual interest saving around 100 million from its overall debt reduction. Turning to the next slide, we can see on the left The tenancy leveraging actions will utilise a large proportion of our excess capital above the 180% solvency 2 ratio, approximately 12 percentage points. On the right, we can see that we will use a large proportion of the excess central liquidity, approximately 1.8 billion. So clearly, before we take any significant further actions against our capital framework, we will need to wait for completion of the France and Italy transactions in the second half of the year But this step today unlocks a clear path to substantial future returns to shareholders. However, longest-term value creation for shareholders must be sustainable and not just driven by capital actions. To that end, we're announcing today a new cash remittance target from our core markets, as you can see on slide 16. This target is over £5 billion of cash for the three years 2021-2023. It's an ambitious target, but one that's achievable given the strong cash generation of our business and the improvements in performance we are pursuing. While we're not setting individual annual targets, we're guiding you to £1.8 billion of cash remittances by 2023. This, combined with lower centre cash outflows, as we reduce interest and other costs, should help us grow excess centre cash flow available for dividends and reinvestments. Let's now turn to one of the levers that will help us achieve these cash remittance targets, our ability to reduce costs. Our 300 million cost reduction represents a significant improvement in efficiency. But as we mentioned at Q3, we're now aiming to deliver it solely from our core markets, increasing the cost reduction from 7.5 to 9.5% of the 2018 cost base. As a reminder, it's an absolute cost reduction target So we are also absorbing four years of inflation. We are now more than halfway through the program and have delivered 180 million pounds of cost savings to date. Over the last 12 months, we've seen a 4% reduction in our workforce, largely through national attrition. We've also seen a 30% reduction in use of more expensive contractors. Product simplification within general insurance is also paying off. We've further migrated our IT to the cloud. and our experience with working from home will allow us to rationalise our property footprint, accelerating some savings, which Amanda will cover in a moment. While this is a good start, we have more to do as we strive for top four style efficiency across the business. Let's now turn to the 2020 results, which have been resilient over the year, with a strong second half. This is on slide 18. Group operating profit was stable at around 3.2 billion. while IFRS profit after tax increased 9% to 2.9 billion. Cash remittances were much stronger in the second half, totalling 1.5 billion for the year across the group, with the vast majority of this coming from the core markets. Operating capital generation showed similar resilience, with core markets up 5% to 1.95 billion. At group level, ACG was lower, primarily owing to changes to the French Life Model. and these changes also had a negative impact on the Group Solvency II return on equity, which reduced to 9.8%. However, underlying ROE improved from 8.1 to 9.8%. So let's look in a bit more detail at how each of our core markets has performed, starting with UK and Ireland Life. Overall, UK and Ireland Life operating profit was 3% lower at £1.9 billion. There was good growth in savings and retirement BPAs and Group Protection, as well as a £98 million high benefit from management actions and other. This was partly offset by lower new business profits in individual protection and equity release. We'll come back to each of these areas in more detail in a moment. Profits from heresies were £68 million lower, reflecting the run-off of the book, broadly as we would have expected, and either life made a small loss owing to transformation spend and higher protection claims. Operating capital generation was stable at 1.26 billion, with new business train also stable, despite the increase in BPA volumes. We continue to focus on expense efficiency, which helped reduce costs by 5%. There's more that we can do as we pursue our goal of being top quartile for efficiency. So let's now go into the areas that will drive quality growth. These, as Amanda will come back to in a moment, are large and fast growing segments of the market, where we already have leading positions and capabilities. So on slide 20 you can see that savings and retirement achieved a 35% increase in operating profit in 2020 up by a 17% increase in revenue to £571 million. The cost income ratio in the business remained high at 79%. This is a business which will benefit greatly from operational leverage and we expect this to be more evident in future years and Focus on Efficiency. The strong revenue growth benefited from higher average assets, which rose 13%, driven by market movements, and record net inflows at 8.5 billion pounds. These strong flows were underpinned by Workplace, which added almost a quarter of a million new members. Our platform also performed well, achieving 3.7 billion in net flows, ranking second in the market, increasing its assets by 18% in the year. Moving on to annuities and equity release, where we had a good year, particularly in bulks, which grew new business by 48% to £6 billion. Operating profit of £815 million was 6% lower, as higher profit from bulks was offset by lower profits from individual, and equity released in particular. In terms of profitability, BPA VNB increased by 33%, however new business operating profit was more neutral, We expect to continue to grow in BPAs, albeit not always at the rate seen in 2020, and the growth may be lumpy year to year. We maintain our number one position in individual annuities with sales of £1 billion, as demand was impacted by historic low interest rates. However, we also managed to double BNV to £65 million. Equity Release New Business was most directly impacted by the lockdown restrictions, with sales and new business profits down. Looking forward, we expect our strong position in this market to deliver growth as people increasingly access the significant values locked up in their homes. Moving to another of our leading franchises, protection and health. With a number two position in group and individual protection, and number three in health. The strength of our offering has helped drive a 2% increase in sales driven by a record year for group protection with sales of over a third to 0.7 billion. However, our individual protection business saw a reduction in sales of 11% as lockdown measures impacted the housing market as well as some of our distributors. This was the main reason for the reduction in operating profit across protection and health. Health sales were flat with growth in corporate of setting more subdued market in SME and consumer. Before I move on to GI, I wanted to state you through management actions and other. The benefit of these items increased by 98 million to 469 million pounds. And as I signalled at Q3, this was above our longer term guidance of up to 200 million a year. We continue to see benefits of longevity releases, although these halved compared to 2019, 390 million. The benefit in 2020 stems from our detailed analysis of trends. It is not an effect of COVID-19, the impact of which is still too early to predict. Importantly, we also benefited from improvements in efficiency, which have led to 123 million expense reserve reduction, compared to an expense reserve increase of 60 million in 2019. We continue to expect the benefits of management actions and assumption changes to be approximately £200 million per year on average. Let's now turn to the core GI businesses in the UK, Ireland and Canada. As you know, this part of our business has been most directly impacted by COVID-19, so it is reassuring to see that despite an £84 million impact on claims and commissions from COVID and lower investment returns, the business delivered a 2% increase in profit to £500 million. This increase in profit has been driven by a strong improvement in the under-icing result, with core improving to 96.8%. Core, based on average weather losses and excluding the impact of prior year development and COVID-19, improved by 5 percentage points to 95.8%. Premiums remain stable, reflecting a buoyant commercial lines market and more challenging conditions in personal lines. So let's look at this in a bit more detail, starting first with the UK. In personal lines, premiums declined by 7% as COVID lockdown impacted our distribution partners, including the UK banks. We also assisted some unprofitable lines of business. Personal lines underwriting improved significantly, partly boosted by prior year development and weather, as well as the impacts of COVID on claims frequency and other commissions. The core exceeding these items also improves, but at 101.6% remains too high. We must continue to improve the efficiency for the business. Turning to commercial lines, we can see that it's part of the business which is really moving ahead of pace, with double digit top line growth. The business has benefited from rate hardening and high levels of retention, cementing our number one position. It was also very encouraging that despite the backdrop of the pandemic, Our trust score with brokers remained significantly ahead of our nearest competitors and even increased over the last four months to 95% despite the challenges posed by business interruption claims. Let's now turn to our Canadian business on slide 24. Within personal lines, we saw a largely flat premium of around 2.1 billion pounds as customer relief measures and COVID-19 impacted our distributors as in the UK. The underwriting margin improved strongly, building on the profitability actions we initiated in 2018 and 2019, and we saw favorable weather and lower claims frequency. Our business is well positioned for the future, and we are investing in our product range, including a digital, direct-to-consumer offering. Commercial lives continue to see good top-line growth, with rate hardening partly upset by focus on more profitable business. In contrast, the underwriting result worsened mainly owing to the business interruption claims. While 2020 has been a tough year for profitability and commercial lines, the underlying performance has improved significantly, and we expect this to continue, with tailwinds in the rates environment. Turning now to Beaver Investors on page 25. Overall, the business had a tougher year, with lower revenues only partly offset by lower costs. However, it was pleasing to see that in contrast to many asset managers, The business continued to attract assets, although some of these came from lower margin liquidity funds. Total net flows were 8.5 billion, of which 1.7 billion was from third parties. As announced last week, Aviva Investors France is part of the perimeter of the France investment, which therefore highlighted separately the operating profit for Aviva Investors France. So if we're spending a moment on the crucial role Aviva Investors plays in our strategy, and the growth ambitions under the new leadership of Mark Bursey was recently taken up the reins. First, its investment solutions help millions of customers stay for retirement for our workplace pension business. And second, its capabilities will continue to be pivotal to help us grow in the bulk annuity space. We see huge potential in leveraging our decades-long track record at the forefront of ESG and sustainable investing for the benefit of the wider group and third-party clients. We intend to build on significant success with strong momentum in real assets, liability management and credit, areas that are close to our insurance heritage. We also know that we can become more efficient. The actions we are taking to drive efficiency, combined with future growth, will enable us to significantly improve our cost-to-income ratio. I'll touch quickly on the performance of the managed spending market set out in slide 26. Profit was stable as we saw improved product mix, which offset adverse protection claims. However, as we indicated with Q3, OCG reduced as a result of a correction to a misapplied rule in the French Life Model that was exacerbated by the low interest rate environment. The impact on this group OCG based diversification was much lower. This impact on capital, together with the regulatory restrictions on the payment of dividends as a result of COVID, Significantly impacted cash remittances from the managed value markets, which fell to 127 million, or just 8.5% of group remittances. Our Polish business delivered a resilient performance despite the impact of COVID, while in Italy, higher AUM as well as favourable claims experience resulted in profit growth. With the announcements regarding France and Italy, as well as the sale of Turkey, we're making excellent progress in re-focusing the group on our strongest markets. So in summary, as I've just mentioned, we've made decisive progress on focusing the portfolio just seven months after announcing the new strategy. We've accelerated execution against our capital framework, with action on debt that will reduce leverage below 30% by the half year, and that will bring us closer to returning excess capital to shareholders. Most importantly, our business is well positioned for growth, with new cash remittance targets underpinned by further efficiencies and winning positions across the UK, Ireland and Canada in savings and insurance, we can deliver sustainable long-term growth. With that, I will hand back to Amanda who will outline in more detail why and how we can win in the UK.

Thanks Jason. As I said earlier, we are making tremendous progress in focusing the portfolio on the new Aviva of UK, Ireland and Canada. In this and in subsequent sessions, I intend to set out for you our key strengths How we will grow the business, how we will transform performance and ultimately how we will create value for our customers, our shareholders and our people. I will start today with the UK, our largest business and our home market. In future presentations we will provide detail on the other core markets. Okay, so let's turn to slide 29 and get going. For Aviva to be successful, we must win in our home market. We have a unique opportunity here that we must capitalise on. I have a big vision for the UK, to be the leading insurer by establishing ourselves as the go-to customer brand for all our customers' insurance, protection, savings and retirement needs for individuals, corporates and their respective intermediaries. Aviva is the only insurer in the UK that supports customers throughout their lives, from buying their first car through to starting a family, saving for their future and securing an income in retirement. Over the next few minutes I want to share with you my views on the strength of the UK business and our strategic priorities to transform performance and deliver growth. Now I know many of you would have heard this kind of presentation many times before and you will be sceptical, I get that. But please allow me to step you through this. Hopefully you are beginning to see that we are delivering what I said we would and we intend to continue to do this. Slide 30 sets out our strategy which is ultimately centred on our customers. What they need and what they want from their insurer. From individuals to multinational corporations, they are all seeking financial security, be it saving for the future, securing income in retirement, or protecting what matters most to them. The insurance industry has typically made the customer experience more difficult and complicated than it needs to be. But what customers want from their insurer is really very simple, their prices, A trusted brand that delivers on its promises, excellent service, ease of access and all of this from a company that acts in a sustainable and responsible way. Aviva understands this and can deliver on all of those points. It is unique. On the next slide you will see we have been serving customers for over 300 years. We are part of the financial fabric of the UK of more than one in seven UK adults Save and retire with Aviva and we already serve 15 million UK customers. We have a strong platform that we can develop and grow. We are the number one trusted brand. We are recognised for our excellent and leading customer service. We have developed strong digital assets which customers are using on a more frequent basis. 5 million customers are now registered on MyAviva. and customers are buying more from Aviva, with 30% now holding two or more products with us. And as set out on slide 32, I see our intermediaries as important customers as well. They play a crucial distribution role in this market. As the chart on the left illustrates, most of our segments are more than 70% intermediated, and this has been consistent over recent years. Given our market position, it's no accident that Aviva has the strongest relationship with these intermediaries. We are consistently ranked number one in broker surveys and won General Insurer of the Year at the Insurance Times Awards in December. What intermediaries value from us is in no different to our direct customers. They want a company with a strong brand and financial strength. They want fair prices and great service. They want the issues resolved quickly. and they want a company that's efficient and simple to deal with. And we can deliver all of those things. These strong relationships are a key underpin to Aviva owning lead market positions across UK insurance.

Slide 33 sets these out.

Number one in general insurance. Number one in workplace pensions. Number two in protection and health. A top three player across annuities and equity release. And these are attractive and growing business lines. Yes, I said growing. We absolutely see opportunities across our key business lines to deliver meaningful growth and I will go into more detail on this shortly. Now I'm aware of course that there has been talk about whether Aviva can truly be successful as a composite in the UK. But to my mind it completely misses the unique opportunity and potential that is right in front of our noses. Aviva is the only insurer in the UK capable of serving all customer needs. That is unique. A tremendous asset and a platform from which we can expand and develop further. Let me bring this to life for you with a very simple but powerful example on slide 34. One of the many examples that we can demonstrate. You can see on the slide how Aviva's wide offering means that we can meet multiple customer needs from our leading physician in workplace pensions. We can offer our 24,000 workplace corporate clients broader employee benefits, for example, health and protection, as well as helping them de-risk their balance sheets through defined benefit solutions. For their 4 million employees who are now Aviva customers, we can offer personal insurance, health insurance, and many more. And that's just one example, one of the many opportunities we have in the UK because of the breadth of our coverage. Structure not only delivers benefits in meeting multiple customer needs, it also delivers significant synergies. Be they capital diversification, benefits from economies of scale, brand leverage, or capturing more of the value chain. But, and here is the opportunity, it is obvious to me that we are not capitalizing on these strengths as effectively as we should be. Let's turn to slide 35. Aviva has not delivered the growth or the underlying performance that I think it should have done, given these strong foundations and leading positions. Our people deliver amazing service for our customers day in and day out, but it is not consistent enough. We are hitting trading records, but they are not translating into the market-leading performance that we should aspire to deliver. Therefore, to address this, I have identified four actionable priorities to turn our unique position into a sustained advantage. Improving our financial delivery, bring more customers into our franchise and serve more of their needs. Let's step through each one of these in turn. The first priority on slide 36 is to continue to propel Aviva into the modern world to ensure we can meet the ever increasing customer expectations. Being efficient and simple to transact with is a non-negotiable and we are dialling up our delivery on this. As Jason outlined earlier, we are making good progress on cost savings. You don't just deliver £180 million of savings from trimming around the edges. However, with our ambition to deliver top quartile efficiency, there is a lot more to do and we're on it. We're digitising and automating more of our customer journeys. As of today, we are at 50%, which is increasing our speed of service and delivering better customer outcomes. I am raising that with the ambition to be at 75% by 2023. Helping customers with a complex health claim or supporting a loved one following the loss of a partner will always involve human interaction with an experienced and sensitive aviva representative. But the reality is most of our customer interaction should be through digital channels. In general insurance we have been making excellent progress in simplifying the number of products. delivering a 30% rationalisation of the product estate over the past two years. We will go further with this. Tackling the legacy in our IT estate is also vital. Aviva is this year celebrating 325 years and in some parts of the organisation the IT is a bit too, shall I say, heritage. We have made good progress, cutting 27% of IT applications since 2018 but we intend to go further and faster with this. And as we enable a greater level of digitization and agility across our operations, we will need fewer physical premises, with our employees able to work remotely as they service the needs of our customers. By the end of 2021, we will reduce our property footprint by 30%. All these actions will help deliver better customer outcomes, sustainable cost transformation, and bring greater agility to Aviva's operations. The next key priority, which I have set out on slide 37, is growth. Some people tell you that the UK insurance market is mature with limited growth opportunities. I absolutely disagree with that, and the facts speak for themselves. There are macro trends driving customer needs over the coming years that present material opportunities to build upon our success and deliver material growth. We will allocate our capital and target our attention towards these opportunities. For example, one in four people in the UK are forecast to be over 65 by 2039, presenting a massive opportunity to deliver substantial growth in our individual savings and retirement business. If we consider the BPA market, current forecasts estimate 30 to 60 billion of flows per annum over the next five years. That's a tremendous opportunity for Aviva to sustain the record volumes we have delivered in 2020 and to go further. In commercial lines, we are witnessing one of the hardest rate markets in living memory. We have achieved good growth in 2020, 7% from rate increases and 4% from new business, but we can do more. Our leading positions in SME and mid-market set us up for tremendous success and further growth. Across personal lines, we are targeting areas of profitable growth. For example, we announced earlier this week we are expanding our high net worth offering with the market leading underwriting team joining Aviva from a competitor. The outcome of the SBA pricing review will result in customers moving to stronger brands and of course Aviva has the strongest brand in UK insurance, 10 points higher than the nearest competitor. Speaking of brands, turning to slide 38. I said in November we would relaunch, reposition and weaponise the Aviva brand to go further and ensure we deliver this growth. Our brand needs to be built upon trust with our customers. It must build confidence and reassurance that our product offering will meet their needs at every point in their lives. In April we will be relaunching the Aviva brand under the title It Takes Aviva. This will be supported by a full media campaign, We expect the vast majority of the UK population will view the brand at least 21 times within Q2. I make no apologies that you will be seeing a great deal of us. But awareness of the brand is just one measure.

We want our brand to work harder to create a more meaningful, emotional engagement with our customers.

And this connects to our final priority, set out on slide 39.

We must drive greater customer engagement.

We must service more of our customers' needs, offer them the opportunity to more easily purchase more products from us and to stay with us for the long term. Ultimately, we need to build an efficient, enjoyable, engaging and digitally led customer experience and to do this consistently across our business. Customers want to purchase and interact with their insurers through mobile-led platforms. If we look at our own experience, My Aviva logins per user are at 45% during 2020. Our Q3 launch of Aviva Connect for our intermediaries has been tremendously successful, with 410,000 logins in January. We need to leverage these digital interactions by connecting the rich data we collect to offer customers the right products and services at the right time in their lives. And to sustain our position as the UK's leading insurer and be here to celebrate another 300 years, we need to continue to lead the UK market with innovative products and services. So let me recap and turn into slide 40. Aviva is the only insurer in the UK that can serve all our customers needs at every stage of their lives. That's a unique ability and we need to make much better use of that than we have in the past. We will achieve this by delivering meaningful growth, simpler and more agile operations, building engaging digitally led customer experience and ultimately a transformed financial performance. So as we set out to deliver this transformation, how will we measure our success? On slide 42, I summarise the metrics and KPIs that we will focus on as we go forward. We will be expanding our customer franchise by winning more customers, meeting more of their needs and delivering meaningful growth. We will modernise our operations, delivering top-quarter customer service and an increase in digitisation. We will continue to be the UK's financial services leader on sustainability, and seek to grow our share of the UK population saving and retiring with Aviva. And ultimately we will create value for our shareholders by growing the cash generation of our businesses to support dividend growth over the long term. So tuning to slide 43, let me conclude. I am under no illusions that our shareholders expect us to deliver tangible improvements in our financial performance and to do it at pace. I understand this and all my senior colleagues understand it too. I am confident we have the right priorities in place to deliver this. We are focusing our attention only on our core markets and have announced it to both of France, Singapore and Italy in less than seven months. As a result of this rapid progress, we will redeem 1.7 billion of debt in the first half of 2021. We will then be in a position to make a substantial return of capital to our shareholders. I have reinvigorated the senior leadership team. This will have an impact. Our strategy is clear, placing the customer at the centre of everything we do and serving more of their needs throughout their lifetime. We will enhance customer engagement by placing digital at the heart of our business. And there are clear opportunities to accelerate growth in areas where we have leading capabilities. We have actionable plans and a way to exploit them. Transforming financial delivery is our absolute focus. It will take time and we will keep you updated as we make progress. Thank you for listening. I'll now pass back to the operator and we'll open the lines to take your questions.

Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. Should you wish to cancel your request, please press the hash key. Your first question comes from the line of Jane Shook of City. Please ask your question.

Thank you. Good morning, everybody. Two questions from me. First question, thank you for your commitment to return capital above the 180% solvency to ratio. I'm just interested to know to what extent the leverage target of below 30% is a binding constraint. So if you have line of sight into that number, can it go up above that 30% threshold? if you have line of sight that it will drop down below 30 given book value growth or future disposals. That's the first question. And secondly, just on Poland, please, would you mind giving us the OWN funds and the SCR as well as the diversification benefit for Poland? Thank you.

Okay, thanks, James. I'm going to let Jason take those questions.

Hey, good morning, James. On the first one, Our strategic target for levels is less than 30 times. That means it could, in time, go slightly higher or lower. But that's the level that we want to be at. I wouldn't expect us to be higher than that for any prolonged period of time. I think if you're touching on in 2022, where we've got some significant maturities, 1.3 billion and if we had actions that sort of looked forward and looked through the reduction of those, then yes, the conceptually we could. If it was very near term and it was very clear that we had the cash at hand on the balance sheet and we had a book leverage figure on a gross basis, we would look at the cash and the debt together. There's no reason we wouldn't be able to do that. On the Poland-owned funds figure, If you don't have that in my fingertips, it's a random billion from memory. Unless you don't take that as scripture, I'll come back to you with a more precise figure. I think in terms of Dirtification, It's a much smaller figure for Poland, given the nature of its business. There's not much risk in the Polish business compared to Italy and France, and therefore there is much lower SDR in that business. And the diversification obviously is proportionate to that, but it's a small number of hundreds.

Great, that's very helpful. Thank you very much.

Thank you. The next question comes from the line of Oliver Steele of Deutsche Bank. Please ask your question.

Good morning. And without sounding too creepy, can I congratulate you on everything you've achieved so far? First question is just looking at the cash remittance targets you've set. I mean, 1.8 billion by 2023. That's presumably based on the higher tax rate as well. It implies 10% growth from the 2020 core remittance, 10% per annum. And then on top of that, you've got lower central costs and lower debt costs. So I'm just trying to sort of rationalise in my mind how that sort of interacts with the low to mid single digit dividend growth rate and what you're planning to do with the excess that implicitly builds up in every year. Secondly, You talk about sort of investment into the business and obviously you know one of the sort of key topics at the moment is how much excess capital you might want to return eventually to shareholders and can you give us a bit more guidance on what you're thinking that you'll be investing in or indeed the cost of that and then the third question I've got is are you considering buying back any of the senior debt because obviously that doesn't count towards solvency

Okay, thanks, Oliver. I'll pick up the first two of those sessions and Jason can pick up the third one. So, yeah, on the cash targets and the growth and the generation from the core market and the dividend connectivity, I think I would like to start by saying sort of one step at a time. We're sort of in the process of resetting the perimeter and I think we've made quite rapid progress on that. and you know we thought for the time being we're not changing our dividend guidance we think it's set us at sensible level our aim is to sensibly grow the dividend for share over time by low to mid single digits and for the time being you know we really want to focus on delivery and being resilient we are we are confident on the cash generation of the business and you know coupled with our focus on the transformation of performance um but i think you know at this point in time we just focus on delivery In terms of the investment in the business, then I think obviously the new cash and business targets demonstrate that we are confident about the delivery. And we will invest in the core businesses if we see material opportunities to accelerate the growth ambition. We already have, and I think we've mentioned on various calls before, 400 million annual investment across the group, which is now of course being focused on the core market. So we believe that is a significant investment and any additional investments that we would put into the business would be directly focused on accelerating growth and continuing the transformation of the business. You know, you saw earlier this week we made the announcement around the high net worth team and you know, it would be in those sort of areas really. But we're very focused on the long term view and generating strong shareholder return. We'll be disappointed, Jason.

I have a very easy third question. Yes, we published this morning this enterprise across three said bonds, which we've got very mature, the two senior bonds are included in that. We're looking, I think it's got a national, just over 5 billion, we're looking to, as we've said, take 800 million of that.

Sorry, sorry, just to save me having to sort of crawl through that document, you're saying the whole 800 million you're accelerating the buyback of is senior, is that right?

No, it's the 800 across a series of bonds I think there's six ones in total. The senior are two of them. I think there's actually eight ones. There's six priority ones, two others, to make sure we get the voting done. The senior is part of it. Pro rata is about 28% of the total. Great. Thank you very much.

Thank you. Your next question comes from the line of John Hocken of Morgan Stanley. Please ask your question.

Hi there. Good morning everybody. Just on the first question, please. In terms of the substantial return of capital that Amanda referenced, have you got any views in terms of what form that capital return might take? I think everyone's assuming it's going to be a buyback, but would a special dividend or any other form of capital return be something you might consider? Secondly, on the 1.8 billion remittances in 2023, just to sort of follow up a lot on this point, is that reflected in the UK corporate tax rate and is that a level which you might expect to grow from or at least maintain? Are there any sort of one-offs in that 1.8 billion? And then just finally on the IT spend, Amanda, you referenced some of the sort of heritage IT that you've got. Are you intending to sort of re-platform I think you've still got quite a lot of legacy mainframes, middleware, etc. Is that going to be something which is going to be contained within the £400 million of investments that you just mentioned? Thank you.

Okay, Sean, I'll pick up one and three and I'll ask Jason to pick up two. So in terms of the substantial return of capital, I guess we were sort of expecting the question around this. I guess we'll get asked it a number of times today. We're not going to outline today in what form that is going to take. We set out the framework last November. We stated that once we completed the restructure of the group, we'll return the excess capital above 180% to shareholders. I think we've made good progress with the disposals. We're clear on the priorities. First is debt reduction. Jason's outlined today what we're going to do. We've used the collected liquidity so far to deliver the announced 1.7 billion debt reduction. That will be completed by the first half. Then we talked about the investment in the business and the substantial return of capital to shareholders. You know, when we've got more to say on that, you know, we will update you on progress, but we're not going to be drawn today on what that, in what form that will be. On the IT spend and the re-platforming, look, you know, I'm not a massive fan of major IT projects and re-platforming, I have to say. I think that, you know, you can confuse the organisation massively, spend a lot of money and perhaps not even get to where you need to get to. There are, though, areas of the businesses where we really could invest in the effort to release business in some of the systems there. We know that the digital is really our key focus, how do we simplify The journey is moving more applications to the cloud. We've already done some of that. We can do more of that. So these are the sort of investments that we would consider. Yes, a significant amount of that is in the budget that we've already set. I don't want people to get spooked by what we are saying. What we're saying about investment is to accelerate growth and it is where we believe in areas where we believe we don't currently have capabilities. Jason?

So insurance tax is obviously extremely complex across many different features. We are in 2023, I don't know if Mr Sunak knew this, but we're bringing in IFRS 17, which will change substantially the profit recognition within insurance as well. So needless to say, you know, we thought about IFRS 17, we didn't anticipate quite a big rise, but we were expecting a rise in corporate tax. To put a long story short, we don't see significant impacts of tax on our businesses but we'll just have to work it through.

Absent tax, are there any sort of one-offs you're expecting in the 1.8? Is that a new runway that we can sort of pencil in going forward?

Yeah, sorry to answer that. Nothing beyond the guidance that I gave that we've got the sort of 200 million approximately for management actions and other that we expect and we plan for. So no specials or anything like I've indicated before.

Thank you. Thank you. Your next question comes from the line of Blair Stewart of Bank of America. Please ask your question.

Thank you. Good morning. Good morning all. I've got three questions, I think. The first one is really just to check on my numbers, please, Jason. You talked about pro forma capital ratio of 236. We then need to knock off, I guess, 12 or so points for the debt. So about 220, so about 40 points over the 180, which by my reckoning is about 4 billion of excess capital. Is there anything wrong in those calculations? My second question just on growth Amanda you talked about accelerating growth in the core businesses is that something that you're currently looking at purely organically or are there inorganic opportunities as well that you might consider and thirdly I just wondered how you saw Aviva is Aviva a dividend stock in your eyes from an equity story perspective at the moment you pay out 80% Thank you.

OK, thank you, Jason. Join us. Thank you.

On the first line, though, we try and set out two things here. We'll obviously give an update in Q1 once we've been through the dead tender. But the post-crash in Italy's position is the most significant change to the balance sheet. And you can see the big dip in SVR from 12.8 to 10.4 pro forma. And that's a you know that sets a new baseline so 180% of that is obviously less than 180% of the higher figure so you just need to get make sure you just sort of work that through when you do your model and then the if you think of the absolute reduction in debt as a percentage it's going to be slightly higher on phase lower STR based the 12 points that I'm indicating there very broadly your numbers are right you know in terms of the the proceeds and the and the debt reductions

On your second question around growth and I think you spoke about inorganic, I mean look we do see tremendous opportunities to grow Aviva and I think you know my confidence has been improved by enhanced by what we've seen during 2020. Commercial lines we can see that the market is hardening there and we've got a really key position we've seen you know eight and a half billion of savings and retirement net flows I think that's a really really strong performance and we know that that was you know that that is going to be um there's a real demand there six billion of the BPA um new business so you know we see that the macro trends do support our growth opportunities and we believe that we've got some capabilities that that can meet those and on your um your sort of inorganic In the past I think we've said never say never to that question. I think as we seek to transform and grow the core business, whilst inorganic activity is not currently a priority for us, you know we will be thoughtful about where M&A could enhance our capabilities or accelerate our strategic development but to just reassure everyone you know this will be a high bar and anything that we do must enhance value for our shareholders and it's a one step at a time you know we've got we've got a lot to deliver um on your question around um what what you see you know whether I see it as a dividend stock I mean obviously dividend is very important for our shareholders we know that um I guess we'll let you decide how you define it, but we are focused on cash generation and growing the customer franchise. That's our key areas of focus.

And on the 80% payouts as an appropriate level?

I think, Blair, we've not set ourselves were all firm targets for that. I was at Payne's in November to talk about the new BPS, which we've delivered today, the 21 pence, and we've set the lowest mid-single-digit growth rate. So think of that as we go through the transformation. That's the sort of guidance that I wanted everyone to take away. The cover in 2020 is clearly quite depressed relative to that, and we're expecting that to deliver, but it's sort of one step at a time as we start to think about how we develop from here.

I appreciate that and I won't push the point but I do think that low to mid single digit dividend per share growth is the anomaly here I think it's already come out in a couple of questions it doesn't make sense given everything that you're doing but I do respect the fact that you want to be given time to do what you're doing Thank you

Your next question comes from the line of Andrew Crean of Autominus. Please ask your question.

Good morning everyone. Three questions I had. The first one is I just wanted to dig a bit more on the debt. Obviously you're looking to pay down 1.7 billion of debt this year. You've got redemptions of 1.3 billion coming up next year. I'm just wondering how much of the All that is you're going to be tendering this year and whether you're intending to redeem everything next year without refining in order to increase the amount of debt that you pay back as you equally reduce the capital to buy the house. That was the first question. Second question is on slide 13 where the FCR is falling from 12.8 to 10.4 billion, Could you tell us what the loss of diversification was on the French and Italian businesses? And also in the final bullet you said that of the two and a half billion of remaining diversification, two billion is from core markets. Does that mean essentially that there's about a half a million potential loss of diversification if you sell Poland? And then the third question, a simple one, The legacy book, the UK legacy book, would there be any intentions to look to dispose of any part of your legacy UK life business?

Okay thanks Andrew, I'll let you take up this question and I'll take up the third question Jason.

Yeah, morning Andrew, thanks for that. So on the side, the 2022 bonds are in the tender offer and we are not indicating what we'll do more in 2022. It's the wrong thing to do around those bonds. I think our clear statement is to take Thank you for joining us today. I've talked in the past about GI and I've talked in the past about international life, but to pick the French business, it's around 1.5. Italy, much, much smaller than that. Lower percentage, I can't think of the exact number, but around 200, 300 million in the Italian SDR. I think of the remainder, it's not all Poland, other businesses in there, there's China, there's the state in Singapore, there is Poland, it's not just the 0.5 and this is an arse little bit, I was trying to say exactly how it would rerun through the model once we took things out, but Poland is a piece of that, but it's certainly not anything like 500 million, I think the SCR in Poland is only around four or five hundred million in total.

And on your point around heritage, it's a key part of the group and we focus on serving the main customers that we look after there.

So that's core?

Yes.

Okay, thanks.

Thank you. Thank you. Your next question comes from the line of Colm Kelly of UBS. Please ask your question.

Yeah, morning and thanks for taking the questions. Most of mine have been asked, but I have one remaining just on the returns and growth for the core business. So we've seen good progress this year on the underlying Solvency II return and equity has increased 1.7 percentage points to 9.8%. It's still a bit below the 12% you're targeting by 2022. So is that still a key target for you? And then related to that, I think one of the main levers you stated to achieving that target was active capital allocations higher returning segments which makes a lot of sense given three quarters of the capital you allocate to the core markets is the UK life which is generating an underlying return of 5.1 percent this year whereas the other business divisions are generating three to four times that even within a COVID year so If I look at the mix of capital between 2019 and 2020, that mix across the core businesses hasn't really changed much. So it feels like that, you know, you've made a lot of progress on cost-based growth, but it feels like maybe the active allocation to higher returning segments is one of those areas where there's a bit more to do that you talk about. So can you articulate a bit more the actions you're taking to amplify that capital allocation, the higher turning segments within the target of 12% return on equity? Thanks.

Thanks Paul. You're right, we've made a significant step forward in the underlying return. I know the UK Life business Mrs Metwick can sometimes, certainly not flatter, has made quite significant steps, always come from, as you say, from 4% up to 5.1% underlying, but there are the other actions. It does beat the cost of capital at the overall level. I think that the 12% figure that you mentioned needs to be retuned following the reshaping of the group and the reshaping of the balance sheets. you know if you think of UK life being a much higher percentage you know that is a lower return it's much higher in terms of cash flow it's good quality and it's more predictable and it's long-dated you don't get you know over a period of time decanting almost doesn't let you book you know that level of return you bring it forward so we will be recalibrating that and it's not going to be as high as 12% for the group in the future

Okay and in terms of allocation of capital to higher returning segments is there any anything you can say around taking actions around that because I suppose it was one of the levers you stated to getting that that return on equity up?

Yeah sure there's a series of sort of more major actions for example around cost reduction which does you know drive there is a More significant piece of work around how we use reinsurance, particularly on BPA, which allow us to improve return on capital. And then the whole swathe of micro-actions, as you would imagine, fine-tuning distribution channels, fine-tuning different product pricing structures. and starting up General Insurance which is a higher ROC business. We've done that pretty well in terms of commercial lines in 2020 and we expect that to continue in 2021. So we will make sure that the GI business has more than enough capital to make sure that it can continue to grow.

Okay, and just to follow up briefly, I mean, is there any plan to withdraw some capital from the UK Life segment and recycle it into those other divisions to accelerate that?

I think, you know, you see the sort of heritage runoff of effectively doing that. Amanda mentioned the question a moment ago, but that is producing capital each year. We take that out of UK Life and then we sort of allocate it out of the dividends or we grow in the other segments, you know, across the board. We are trying to grow the UK life business at the same time. So allocating capital into annuities and professions and savings and retirement, you know, these are cash generatives but we don't want to pull out more capital than they make. We're going to continue to see some growth potential in those segments.

Okay, excellent. Thanks a million.

Thank you. Your next question comes from the line of Ashik Musadi of JP Morgan. Please ask your question.

yeah thank you hi Amanda hi Jason just a couple of question is first of all on the cash outflows from the from the central liquidity basically if I look at the last year it was about 630 million of cash outflows it is external debt internal debt cost some other incoming as well so how do we think about that I mean the reason I'm asking is basically I'm just trying to square up the cost saving number into this central spend as well as your plan to reduce internal debt. So how that will work out. So that would be the first one. And secondly is UK PNP results were pretty strong in second half. Any thoughts on that would be great. And lastly, I mean, the managed for value business is Poland and other JVs. If you just remind us, what are these other JVs? I remember India is one of them, but any other JVs that you would flag would be great. Thank you.

Thanks. You Jason, do you wanna pick up the first one?

Sure. I think I've got the question. The cash out flows are going to come down for three reasons. First and foremost, lower interest costs. And I placed the 1.7 billion, released about 100 million run rate reduction. Second, lower central spends. We reshaped the group. We'll be taking that down. And third, repayment of the internal loan. At the moment, we're paying off 50 million a year. And that comes out of that. If we make a significant for repayment following the French transaction, we wouldn't have to do that. So that would be a sort of 50 million upside to those, to those outflows. So I think that's what I would say on that. In terms of, I didn't quite get the question on PNC reserve. Sorry, can you say that one again?

Yeah, I mean, if I understand correctly, I think your second half PNC reserve in UK was pretty strong. compared to first half. Obviously first half was more impacted by Covid reserving but what was the driving factor of second half? Is it like just frequency benefit without any Covid losses or was there anything other major positive as well like reserve releases?

I mean yes I think in the second half the business continues to grow so there's good rates increased in there. There is more benefits from frequency and obviously no Covid claims coming in the second half of the year. But we also saw the impact of, as Jason mentioned earlier, the distribution, some of the banking distribution not being open, which has depressed the revenue in personal lines. Okay, thank you. The JDs that we currently have are India, China, and obviously we have a 25% stake in Singapore, which we announced back in September.

Okay, very clear. Thank you.

Thank you. Thank you. Your next question comes from the line of Gordon Aiken of RBC. Please ask your question.

Good morning. Thank you very much. Three questions for me, please. First on post-Brexit Solvency II reform. So if the ABI published their response last week, what would you do differently if the risk margin reduces? Secondly, on illiquid assets backing annuity liabilities, If you just tell us a bit about what illiquid assets you're keen on and less keen on, and maybe particularly mention infrastructure in particular. It seems that the UK government is very keen for help in ticking its climate change box. And finally, on cross-selling, on slide 34 you talked about cross-selling and somewhere else in the presentation you mentioned scepticism and we've heard the cross-selling opportunity from your predecessors and indeed other UK insurance CEOs for at least 20 years now. So if I think about one of the things you showed in the slide, I mean, Balkan U is very, very price driven in terms of sales in that market. Is it feasible that you would win deals purely because maybe you had a relationship on Workplace DC? And maybe what metric will you point to in the future so that we know that cross selling is actually working? Thank you.

Right, okay, thank you. I'll pick up the question around the ABI and Jason can pick up the most specific one around illiquid assets and then come back to me on the cost setting. So as far as the ABI stance and Brexit and quality to review, obviously we're completely aligned with the ABI on that. Our priority is that the rules absolutely reflect the specific characteristics in the UK market which will allow us to provide style projects for customers and Thank you for joining us today. On the cross-selling, what's different? Well, quite a number of things are different. I know people have talked about this for the last 20 years, but in the last 20 years, we did not have the digital capability that we have today. We did not have the data capabilities that we have today. And so I think that makes it a lot easier for us to know and understand our customers and understand what are the most relevant products for them at the time of life that they're at. that is unique to Aviva because we will be able to have that information across a number of product ranges. In terms of what you said about what will we measure this on, it will be on the multi-product holdings and that will be something that we will be holding ourselves to account to. So whether you say it would be feasible to win a BPA deal on the back of getting more customers, I think the example I used was around workplace pension and what we do know for a fact is those customers and that have workplace pensions with us, and that is the corporate customers. They are extremely keen for their employees to have access to other products, whether they be personal lines or health or protection products. And we've also, you know, we know from our own numbers that those customers are more likely to buy an Aviva product than not. So, you know, we are really quite excited about that. And, you know, those conversations, they're more dynamic. 10 years ago, we would not have been having those conversations and today that we are.

On the liquids, 2020 was very different to 2019 as you might imagine. We saw a much harder for projects to get completed and the funding did slow down. We filled up the gap with some significant purchases of corporate bonds in 2020. But we expect 2021 and 2022 to return to the levels of infrastructure and GFI type of origination that we've seen historically. that's quite UK and we sort of dipped our toe in the water from the balance sheet perspective in Europe and in North America we started to diversify that you know that as a capability for Viva investors you know is a key focus both for the balance sheet of the insurance business but also for third-party clients and we continue to see you know good growth across real assets in terms of the The new announced infrastructure bank, I think we are not totally clear what that is. It feels, although it wasn't said yesterday, that's a bit of a replacement for EIB in the UK. EIB was obviously a big participant in a number of these fundings. That's sort of step one. Step two, maybe it can produce more funds for equity type investments in projects. We tend to have much higher appetite on the debt side. They can come in and do that. I think that would be helpful.

Thanks. If I just follow up on the first question, would you reduce the amount of longevity reinsurance on your business if the risk margin comes down?

Possibly, but it has to come down a lot. It would be the simple answer. I've answered this before. It will come down if rates go up, so that will make a difference, but it would have to be it's so disproportionate at least the levels of interest rates and the level of reinsurance is attractive it gives us capital benefits and obviously helps us manage the risk so I sort of await developments but I'm not expecting it to come down enough that it would fundamentally change our reinsurance strategy.

So ABI saying they're basically 75% reduction Do you think that's optimistic?

Well, that's sort of the consultation that's gone in. I actually don't know, to be honest, what it could be. That would be a big reduction. The regulator has said that they expect capital overall not to change dramatically, so if they took away Thank you very much and good morning.

On the 800 million tender for the debt instruments, can you tell me whether you were considering a fair price market tender for the preference shares or not, or if these are sort of off the table now and can't be redeemed? Secondly, can you give an update on the potential disposals and the Italian disposal for the amount of asset management that may disappear from Aviva from Italy and Poland and also you know where are we where we're standing now on the Polish bank assurance agreement with Santander and then finally from the we obviously saw a big uptick in the management actions at the end of 2020 from the previous guidance do you have any I'll pick up the press on the preference share. I think as Jason has said previously on this, this is not a file that we have or are planning to reopen.

and we won't say any more on that. I mean Jason do you want to pick up there?

Yes, I mean perhaps just to be clear, I'm not part of the debt tender, right? We were tendered for institutional bondholders, that's supporting the press, somewhat by institutions, somewhat by retail. This is not part of that transaction. In terms of the disposal as you call them, Italy I don't think very much of the assets is managed by Viva Investors at all and what is managed by Viva Investors is in the Viva Investors France just sort of being incorporated in that AUM figure and that profit figure that we provided you as well Viva Investors Poland has got a subsidiary actually in the Polish business it's not very big but it does manage a lot of the assets itself I mean I'm not going to comment on Thanks for us, you know, we stand in doubt other than to say we have very strong agreements and we have a very strong relationship with them. In 2021, I don't have anything further to say at this point other than the general 200 million guidance that I gave, which is an average. you know I can't predict sitting here in March you know what we'll do on things like longevity which we tend to look at annually and we tend to do that in Q4 so but across the board you know we don't embark on the year with lots of prudence you know we do try and keep up with events but we also expect to find some opportunities. Thank you very much.

Thank you. and our final question comes from the line of Larissa Van Deventer of Barclays. Please ask your question.

Thank you. Two quick questions from my side. The first one on bulk annuities. You did have a very strong showing in 2020. Do you have any targets either related to volumes or margins that you would like to write in the bulk annuity space? Basically, are you going to make a strong play in bulk? And the second question is on cost reduction. On slide 17, you detail some of what you've done and some of what you're likely to do. The first question is, does that include the lower debt? And the second question is, where else should we expect the remaining 120 to come from? Is it mainly IT or are there other aspects we should consider?

Yeah, okay. So on BPA, I think, as I said, we do see the BPA market as an important market for us and one that we will seek to grow in. We won't be giving specific targets on that. As I also said, we're not going to give line of business targets today. In terms of the cost reduction, it doesn't include the lower debt costs. The 300 million includes the operational improvements across the business and they come from areas, as we've spoken about, more simplification, more digitization, legacy platform reductions, product simplification, and also opening the doors as we grow the savings and retirement business, improving the expense ratios. So, you know, to reach the upper portal target that we mentioned.

Thank you.

Okay. Thank you very much, everyone.