Aviva to announce turnaround plan
Embattled insurance giant Aviva is this week expected to announce proposals to shut or sell a raft of divisions as part of a major turnaround plan.
Chairman John McFarlane will reportedly reveal that as many as 10 or 15 businesses out of 58 have been put on the list to wind down or offload – with the US arm thought to be among those at risk.
The group is understood to have already made a number of senior managers redundant under a restructure being led by Mr McFarlane, who took over as executive chairman when chief executive Andrew Moss quit in May after a shareholder revolt over pay and performance.
Mr McFarlane will outline his overhaul on Thursday amid a tumultuous period for the group, which was thrown into turmoil when Mr Moss was forced to resign.
His departure came after 59% of votes failed to back Aviva’s pay report in one of the biggest protest votes of the current so-called “shareholder spring”.
Around 10% of shareholders went against or withheld their votes on the re-election of Mr Moss.
Aviva’s share price had declined around 60% since Mr Moss took the helm in July 2007.
Mr McFarlane tasked Aviva’s chief financial officer Patrick Regan to oversee the strategy review, with support from Boston Consulting Group.
Aviva already said on announcing Mr Moss’s departure in May that it would run a slide rule over its divisions to identify the good and bad performers with aims to slimdown operations.
The firm declined to comment on specific details ahead of Thursday’s announcement.
But the firm is reportedly looking to cut head office costs, integrate technology across various divisions and slash management layers from 11 to five.
Mr McFarlane has also forgone any increase in remuneration package despite taking on executive duties, according to The Sunday Telegraph.
The controversial pay package at the heart of investor anger in May saw Mr Moss awarded a £1.2 million bonus, equal to 120% of salary, while Trevor Matthews, Aviva UK chief executive, was awarded a £45,000 bonus despite just joining the board on December 2.
This came in spite of slipping performance, with recent figures showing a 5% drop in long-term savings sales and flat general insurance and health premiums in the first three months of 2012.
Aviva’s £1.3bn exposure to the troubled eurozone economies of Portugal, Italy, Ireland, Greece and Spain also continued to hit the group, as life and pension sales in Italy and Spain tumbled 23%.
