East Anglia: Aviva boss seeks shift in culture
AVIVA chairman John McFarlane admitted today the company had moved more slowly because of a culture of collective decision-making at the insurer.
Mr McFarlane, who is spearheading a �400 million cost-cutting programme at the Norwich-based home, motor and life insurance business, said that although it would take time to change the company was beginning to make progress.
The restructuring, which will see hundreds of staff lose their jobs across the business, follows the departure of chief executive Andrew Moss in May amid discontent over a poor share price performance.
Mr McFarlane said Aviva was “blessed with a terrific brand and really professional front-line staff”.
However, he added: “On the other hand, culturally the organisation has been more used to collective decision making and has moved more slowly as a result.”
As part of the plans announced in July, Mr McFarlane is working towards the sale or scaling back of 16 underperforming businesses.
In a trading update today, Mr McFarlane said Aviva was actively pursuing the sale of its US life and annuities business and he was hopeful of a resolution soon.
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The insurer saw its UK sales fall slightly to �8 billion in the first nine months of 2012, while its general insurance operating ratio, the measure of the profitability of its insurance premiums, remained flat at 97%.
Aviva’s UK motor insurance business has seen its net written premiums grow 8% in 2012 and it has taken on more than 250,000 net new customers since the beginning of the year.
The insurer said this had been driven by new initiatives including its Quotemehappy website and Multicar initiative.
Aviva said trading conditions remained subdued across continental Europe in its life insurance and pensions business. Sales in Spain tumbled from �1.4 billion in 2011 to �934 million in the first nine months of 2012 while in Italy it was a similar picture as sales fell from �2.5 billion to �1.6 billion.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said that while operating conditions remained difficult, the bigger picture looked bright.
He said: “Aviva’s exposure to the likes of Spain, Italy and to some extent Ireland take the sheen off the performance, whilst the US business is tepid ahead of a likely sale.”
But he said that there were other pockets of strength, such as the UK, Canada and France and the longer term story of an ageing population needing to provide for its own pension provision remained intact.