The UK’s biggest insurer Aviva on Thursday unveiled plans to break up UK management and cut hundreds of jobs under a radical plan to revive growth at the misfiring firm.
New chief executive Maurice Tulloch will slash 1800 roles, around 6% of Aviva’s 30,000 workforce, via redundancies, axing contractors and freezing some new hires over the next three years.
Tulloch, who replaced former chief executive Mark Wilson in March, has been under pressure to improve Aviva, which has seen its shares stumble 20% over the past five years.
On Thursday he said he wants to make the FTSE 100 composite insurer “more competitive” after specialist rivals, who only sell car insurance or life products for example, stole a march on the company. “I want Aviva to compete against the best of the mono-lines,” he said.
“These life companies and general insurance companies are incredibly focused on their customers and growing and winning.
“I’m not pulling away from the composite [model]... but bringing the whole thing together for me didn’t facilitate that.”
The UK life insurance and general insurance business, which hold number one positions by market share, will be managed separately to take on the specialists. The company has named chief risk officer Angela Darlington as head of the UK life unit, replacing Andy Briggs, and Colm Holmes to run general insurance.
Shore Capital analyst Paul De’Ath said running the divisions separately “makes sense”. “The ability to cross-sell to retail customers has proved difficult to achieve for Aviva, and many more before them.”
The shares rose 1.8%, 7.4p, to 418p.
Aviva will cut costs by £300 million in three years through the job losses, taking the costs bill to £3.7 billion from £4 billion. Spending had spiralled under Wilson, with a much-heralded drive into digital with a well-publicised “digital garage” founded in Hoxton.
Now, that business will rolled into the rest of the UK general insurance business, with a tighter grip on spending in the division.
“Quite frankly, over the last four years our costs had moved in the wrong direction. I can’t be competitive unless I’m running an efficient business,” said Tulloch.
“We are moving to a lean group centre. We’ve talked about it for the better part of a decade and today that starts.”