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Aviva restructure could see 15 divisions axed

by Dylan Lobo on Jul 02, 2012 at 08:13

Aviva restructure could see 15 divisions axed

According to reports Aviva could close or sell up to 15 divisions as part of its turnaround strategy.

Chairman John McFarlane (pictured) is expected to reveal that between 10 to 15 businesses will be shut or sold when he unveils the results of the firm’s strategic review on Thursday. Reports suggest the firm’s US business, which is said to be worth £1 billion, will be among those culled.

McFarlane became executive chairman at Aviva following the departure of chief executive Andrew Moss, who was forced out during the ‘shareholder spring’ as investors rebelled over pay and performance at the firm. A total of 59% shareholders refused to back Aviva’s remuneration package.

According to the Sunday Times, McFarlane has stripped out four layers of management at the firm's London headquarters and has split Aviva's operations into more than 50 units, which he has classified as either core, in need of improvement, or for sale.

The restructure at Aviva has already seen it close a number of units at its asset management subsidiary, Aviva Investors, resulting in a number of redundancies.

Aviva chairman Colin Sharman has also officially retired from the life company in line with plans announced last year.

Sharman stepped down from his position as chairman, as well as chairman of Aviva’s nomination committee and corporate responsibility committee on 30 June.

Sharman was appointed the Aviva board in 2005, becoming chairman in 2006.

McFarlane said: ‘Colin chaired the board of Aviva successfully, mainly during a period of economic uncertainty ….Under his leadership of the board, the company also developed into a single strong brand, easily recognisable in the markets where it operates. On behalf of the board, I would like to thank Colin for his service to the company and we all wish him well for the future.’

7 comments so far. Why not have your say?

Chartered Mark

Jul 02, 2012 at 10:09

Is this not just another example of the cycle that providers go through again and again.

When things are on the up, usually due to outside reasons and nothing to do with the Co own efforts, the Co will expand and move into business areas that are not core. Empires will be built. Then as the economic cycle turns, the costs and expansion fail to produce, the boss is culled, and the new boss comes in. The Co does a "Root and Branch" review, layers of people are culled, the Co returns to it's core business and consolidates.

Just waiting for the next upturn in business that is driven by the economy, not the Co strategy, and the whole cycle begins again.

When will they ever learn?

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Julian Stevens

Jul 02, 2012 at 12:03

Apart from the occasional item of purely cost-driven business, we have no dealings with Aviva, haven't for over a decade now. The last case we placed with them they totally screwed up, offered a paltry amount of compensation, rejected a request for rather more, we referred it to the FOS and the FOS has just ordered them to pay douible their original offer.

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Morley Boy

Jul 02, 2012 at 13:46

I'm amazed Aviva Life are still open to new business,. In my time there in the 00's, the broker sales force were contributing not very much (net), because as fast as the business was (bought) in, it walked out of the back door. Pinning hopes on a semi-WRAP is clutching at straws.

Then again, I'm even more amazed Aegon Life are still around!

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Julian Stevens

Jul 02, 2012 at 14:29

I'd be surprised if any of the old traditional life offices are taking on board anything substantial in the way of new business, though I imagine that with NEST coming down the pike, a number of them will be trying to compete in the alternative-to-NEST corporate market ~ but, in this new age of excessively zealous cost analyses, on what margins?

Having screwed both themselves and the once supportive IFA community by unilaterally stakeholdering all the personal pensions written with them over the ten or twenty years prior to April 2001, they'll find it difficult to market their wares on anything approaching profitable terms. Onshore investment Bonds, particularly With Profits, are now deeply unfashionable, endowments are dead, protection and annuity business is savagely competitive, Income DrawDown has gone horribly bad, LTC insurance is a dead duck because the government refuses to do anything to stimulate demand ~ there isn't a great deal left for them, is there?

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Morley Boy

Jul 02, 2012 at 14:39

NEST certainly appears to be the only real target for them. However I agree, at what cost?

SWIDS were in last week discussing NEST, they claim to have just put a scheme in place on a 0.22% AMC.

When asked how can you make money on that basis??? - Shoulders were shrugged.

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Julian Stevens

Jul 02, 2012 at 15:18

Suicidal. Apart from the fact that they'll probably be losing money just to set up a scheme on that basis, how can that kind of AMC possibly support anything in the way of decent service? Obviously it can't, which is why over the past 15 years we've seen everything computerised, which is just about okay until anything goes wrong and needs the involvement of an actual person to sort it out.

I recall some years ago a presentation (at one of our network training days) from some 25 year old kid who worked for Friends Provident, who was actually trying to persuade the audience that if we, rather than they, loaded all the member data onto their system in return for stakeholder commission, then group business could be profitable! Go figure. If the presenter hadn't (wisely) made a swift exit without waiting for questions, I'd have stood up and given her a piece of everyone's mind in no uncertain terms.

And don't get me going about broker consultants.........

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Morley Boy

Jul 02, 2012 at 15:33

Luckily I realised the job was 'pointless' and became a young business owner IFA in 2008!

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