Aviva to review Asia unit as new CEO rethinks strategy amid 'mixed' H1 2019 results

UK's life and general insurer Aviva has said that the company is "considering a range of options" to enhance its Asian business as new CEO Maurice Tulloch looks to re-energise the business with a fresh growth strategy.

"I am working with the Board to refresh Aviva’s strategy and we have decided to review the strategic options for our Asian businesses," said Tulloch. "Aviva’s businesses in Asia have excellent growth and earnings potential and we are considering a range of options to help these businesses reach their potential.

In his first interim results since being appointed chief executive officer in March, Tulloch exuded confidence that the company is well positioned for future growth, backed by "excellent insurance skills, a strong balance sheet and world class distribution and partners."

"Our financial position remains strong with a capital surplus of £11.8 billion and £2.3 billion of cash at group. Maintaining such a healthy capital surplus is important as we continue to reduce our debt levels and safely navigate uncertain market conditions."

"Aviva is ready and resilient," he added.

For the first half of 2019, the insurer posted an operating profit of £1.45 billion, only slightly higher from £1.44 billion a year ago.

However, uncertain investment market environment led to a fall in its core business. Life business saw its operating profit decline 8 percent to £1.28 billion from £1.39 billion in the previous year.

"Our performance is mixed, with operating earnings per share up 2%. We have delivered strong general insurance results with a combined ratio of 95.9%. In life insurance and asset management, operating profits declined due to challenging market conditions and the absence of a longevity reserve release."

Tulloch continued: "In June we announced a plan to improve Aviva’s performance and deliver an excellent experience for our customers. We have made a quick start; separating management of our life and general insurance businesses in the UK and bringing together UK Digital and UK General Insurance."

"Despite these bright spots, there were challenges during the first half. We were adversely affected by market headwinds in savings and asset management. We also encountered intense competition in individual protection and personal lines general insurance where we chose to maintain pricing discipline rather than chase volume growth at unattractive margins."

"Aviva has strong foundations to build upon but there is much to do to improve our performance."

The insurer further stated that its priority is to maintain capital strength and balance sheet prudence, while further reducing debt leverage.

Earlier in June, Aviva announced that is expecting approximately 1,800 role reductions across the group over the next three years as part of its efforts to reduce expenses by £300 million per annum by 2022.

Full results report: aviva-hy2019-analyst-pack.pdf (pdf)

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