Aviva chief hacks away at costs and flags potential sale of Asian arm
New Aviva chief Maurice Tulloch showed the rapid pace of change at the insurer on Thursday, cutting costs by an average of £2.7 million per week and flagging a possible Asian sale.
Tulloch, who took over in March, gave people a taste of what’s to come by highlighting cost cuts of £25 million since June 6. He aims to axe £300 million over three years, including 1800 job reductions previously revealed.
The Asian business, which serves places like Vietnam and Singapore, has also under been put under review to “enhance shareholder value”, which means it could be sold.
More details will be revealed in a November 20 update, which will be closely watched by investors.
Hastings' profit hit
Motor insurer Hastings saw interim profits hit the skids after a radical government shake-up of injury compensation rates and higher costs to fix increasingly digital-equipped motors.
Operating profits fell 34% to £59.7 million from £90.5 million.
It was hit by £8.4 million after changes to the rate used to calculate how much people should receive if they are hurt in an accident, known as the Ogden Rate.
The government stunned the industry last month by drastically changing the rate, costing insurers a fortune.
The cost of fixing cars, known as claims inflation, is outpacing the price customers pay for insurance premiums, leading to thinner profits. Car insurance prices have been falling since 2017. Claims costs have risen 6%-7%
“This is how I will run Aviva, delivering what we said we would. I want Aviva to be a simpler company. Work has started at pace,” said Tulloch.
He was elevated to chief executive, tasked with trying to revive the UK’s largest insurer’s flagging share price and simplify the company.
Aviva, which has 30,000 staff, has already reduced the number of outside contractors by 7% and cut spending plans for large-scale projects.
Half-year results were mixed, with strong general insurance profits, up 29%, dragged by lower profits in fund management, off 18%, and life insurance down 8%. Operating profit rose 1% to £1.45 billion
