So let’s get right down to it, let’s start with the Q3 numbers. I suppose the story is pretty simple. It’s just one of continuing strong delivery building on the 21% increase in profitability however you measure it in the first half of 2010. So just looking at headlines, long-term savings sales up 6%, a 2 percentage point increase in internal rates of return on new business, so writing profitable business across our markets. As I go through, one of the points I want to make to you is, there is no doubt in my mind that in our life markets, in places, we are operating in a hard market right now and taking advantage of that.In the general insurance and house business, very pleasing to see volumes going up in the business now, really reestablishing that growth path, and the profitability of the business at 97% across the business, 96% in the UK. And if you want to just look at Q3 in the UK, 93% combined operating ratios. I will have to say that the prospects for our general insurance business because of the actions that we’ve taken across our markets in the last couple of years are better than anytime for the last five years. And that doesn’t underpin some of the targets which we have given you for the short term into 2011 today. And capital generation, which clearly has been a focus from an investor perspective over the course of the last nine months or so, good turnouts today, we’re right on track to hit that increased guidance at 1.5 billion that we announced at the half year. Going a little bit deeper into it on the life side, the UK 15% growth year-on-year in the business at a 15% internal rates of return. That’s I think an impressive story for any life business. And when Mark talks to you later, we’ll be pointing out I think just the sustainability and strength of the business that has been created here in the UK life market.
In Europe, sales moderated a little bit in the third quarter intentionally. You know that we were writing a little bit more slightly lower margin with profits, guaranteeing business in Italy, for example that we wanted to in the first half. We have pulled back a little bit on that, but still 9% growth across those markets and sustaining an internal rate of return at our target level of 12%.North America, basically flat year-on-year in terms of volumes, but that doubling of IRR that we saw in the first half sustained in the third quarter, we continue to reduce crediting rates to customers, we continue to reduce commissions, our competitors are following. And when I talk about hard market conditions in some of our markets, so we’re seeing that the US is a fantastic example of that. And that fueled over a 250% increase in profitability in the first half and we’ve seen that sustained through the third quarter, and I think more to come. In Asia Pacific, sales up 46%, and as we spread that business over what is essentially a fixed cost base at the moment in Asia Pacific, you can see the internal rate of return going up. And so margins and IRRs going up across the Asia Pacific business, up to 10%, heading towards that 12% target. In Delta Lloyd, sales in PVNBP terms down a little, market conditions remain relatively difficult, and the profitability of the new business as has been the case for sometime in the Benelux markets, still challenged relative to the returns that we earn elsewhere. Now, I’m sure you’ve already noted the positive comments that I’ve made about general insurance, and I do think that this is a compelling and exciting picture, actually as we move forward. The graph at the bottom, maybe just starting there, we did take action to move away from unprofitable business particularly in the UK, in the course of the last couple of years. But that period’s over, and we’re growing back into that market.
So we’re really winning, I think, particularly in the direct space, particularly on aggregators in the motor book, for example, and growing into what is becoming a more profitable market in that part of our business. So you can see a 3% growth in the UK. I talked about the 96% combined operating ratio in the UK and the third quarter performance of 93%.So we are encouraged that that performance is sustainable certainly for this year, and the guidance that we’re giving in terms of targets for next year at 97% or better as a target, I think underlines our confidence in the business as we go forward. In terms of the balance sheet, pleasing also to see in the third quarter, a significant improvement in net asset value whether you measure it on the IFRS spaces or on the MCEV basis. That’s really because of the earnings in the third quarter, a little bit of help in financial markets, but also the financial effect quantified for the first time of the closure of the UK final salary pension scheme. So a 275 million pound uplift to net asset value because of that change. So it’s pleasing to be able to actually put some numbers around that, we talked about the action earlier in the year. And on the MCEV NAV, MCEV NAV coming up close to 5 pounds, and we talked earlier in the year about getting you a more of what we call real world MCEV, or plus net asset value, perhaps still planning to do that as we go into the yearend, and that will primarily take into account the effect of our credit earnings capitalized into the embedded value as we go forward. It’s a good progress on that score as well. So, the third quarter as I said, I guess is the bedrock of what we’re announcing today, but what we wanted to do was spend more time talking to you both about the strategy work that we did in the first half of the year, as well as then focus on that UK business.
To introduce the strategy piece, I think it's just worth taking stock and looking at where we are today, and what we’ve achieved in the course of the last two or three years. And I think by any measure it has been a very significant transformation over the course of the last couple of years.All of it, I supposed headlined by uniting the group under one brand. And the power of that particularly in the markets where we’ve actually changed the brand and that’s driven sales and revenues and earnings, and Mark will talk about that later in the UK, I think is not going to be underestimated. But I guess there are two ways to think about what we’ve done. The first is to think about structural and portfolio changes that we’ve made to Aviva, and the second is to talk business-by-business about the operational transformation that we’ve actually seen in the last two years. We have made simple changes in the course of the last couple of years. Read the rest of this transcript for free on seekingalpha.com