SILVER BULLETS - Espirito Santo Investment Bank incorporating ...
SILVER BULLETS - Espirito Santo Investment Bank incorporating ...
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THIRD QUARTER 2010<br />
Aviva<br />
Valuation Metrics 2008 2009 2010E 2011E<br />
Recommendation: BUY Reported P/E -8.3 8.1 5.3 4.5<br />
Fair Value: GBp 525 Operating P/E 5.3 6.8 6.1 5.4<br />
P/NTA 1.1 1.1 0.9 0.7<br />
Share Price: GBp 305 RONTA -13.1% 14.2% 17.0% 15.9%<br />
Upside / Downside 72.1% Op. RONTA 17.6% 16.4% 16.6% 14.8%<br />
Dividend yield 10.8% 7.9% 8.2% 9.0%<br />
Bloomberg: AV/ LN Buy back yield<br />
Model Published On: 1st April 2010<br />
Key ratios 2008 2009 2010E 2011E<br />
Shares In Issue 2,767 Loss ratio 62.6% 66.7% 66.2% 66.8%<br />
Market Cap 8,439 Expense ratio 35.4% 32.3% 31.8% 31.0%<br />
Free Float 100% Combined ratio 98.2% 99.1% 98.0% 97.8%<br />
Accident year combined ratio 105.7% 102.2% 101.4% 100.5%<br />
Net Tangible Assets 7,399 Running yield on investments 4.9% 4.8% 4.6% 4.6%<br />
NTA per share GBp 267 Reported ROI 1.0% 4.0% 4.5% 4.6%<br />
Investable asset base/NTA 14.2 14.2 11.6 9.5<br />
Dividend payout ratio -90% 63% 44% 40%<br />
Forthcoming Catalysts Ceded Reinsurance ratio 5.1% 5.2% 5.2% 5.2%<br />
Tax rate 21.2% 27.1% 22.0% 22.0%<br />
AGM April 28th 2010 Minority -2.3% 12.7% 15.0% 18.0%<br />
1Q 2010 New Business May 11th 2010<br />
Q2 2010 Results August 5th 2010<br />
Q3 new business 4th November 2010 P&L Summary (GBP m) 2008 2009 2010E 2011E<br />
Gross Written Premium 36,206 36,594 36,123 36,200<br />
Net Written Premium 34,365 34,685 34,241 34,309<br />
Execution Noble Analysts Net Earned Premium 34,642 34,755 34,261 34,319<br />
Joy Ferneyhough Net claims incurred -29,353 -27,890 -28,516 -29,111<br />
(44) 20 7456 1670 Underwriting expenses -8,095 -6,942 -7,073 -7,355<br />
joy.ferneyhough@execution-noble.com Underwriting Result<br />
<strong>Investment</strong> income<br />
Rakshit Ranjan Realised and Unrealised gains<br />
(44) 20 3364 6787 Other income<br />
rakshit.ranjan@execution-noble.com Other expenses<br />
Finance charges -436 -697 -691 -692<br />
Revenue Breakdown Pre Tax Profit -1,300 1,805 2,296 2,734<br />
Income Tax Expense 415 -490 -506 -606<br />
Net Income -885 1,315 1,790 2,128<br />
Diluted EPS -37 38 57 68<br />
Operating EPS 58 45 50 57<br />
DPS 33.0 24.0 25.0 27.5<br />
Growth rates 2008 2009 2010E 2011E<br />
Gross Written Premium 1% -1% 0%<br />
Net Written Premium 1% -1% 0%<br />
Net Earned Premium 0% -1% 0%<br />
<strong>Investment</strong>s Breakdown Net Tangible Assets -1% 25% 28%<br />
Cost of capital, Combined ratio, RONTA trend<br />
Margin<br />
Life<br />
51%<br />
ST<br />
investments<br />
3%<br />
20%<br />
18%<br />
16%<br />
14%<br />
12%<br />
10%<br />
8%<br />
6%<br />
4%<br />
2%<br />
0%<br />
Cash<br />
6%<br />
Loans<br />
19%<br />
Asset<br />
managament<br />
4%<br />
ABS/MBS<br />
7%<br />
Other<br />
8%<br />
P&C<br />
45%<br />
Governments<br />
28%<br />
Corporates<br />
29%<br />
2007 2008 2009 2010E 2011E<br />
Underwriting margin Cost of capital RONTA<br />
EPS -203% 51% 20%<br />
DPS -27% 4% 10%<br />
Balance Sheet Summary (GBPm) 2008 2009 2010E 2011E<br />
Investable asset base 106,035 105,069 107,452 112,905<br />
Goodwill & Intangibles -3,578 -3,381 -3,381 -3,381<br />
Shareholders' Equity 11,052 10,356 12,242 14,837<br />
Net Tangible Assets 7,474 7,399 9,285 11,880<br />
NTA per share 281 267 336 429<br />
Interest Bearing Debt 6,715 6,782 6,782 6,782<br />
Preference shares 200 200 200 200<br />
http://www.execution-noble.com<br />
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