Aviva unveils simplified operating divisions

Aviva has been simplified into five operating divisions, the company announced at its Capital Markets Day today. The divisions are investments, savings and retirement; UK life; general insurance; Europe life; and Asia Life. The move follows a review of its group strategy and businesses.

Aviva said it will now work to enhance performance through three priorities: delivering great customer outcomes via a simple, reliable, rewarding customer experience for businesses and individuals; excelling at the fundamentals with a focus on underwriting, claims, investment performance and cost efficiency to enhance business performance; and
investing £1.3 billion over the next three years in sustainable growth.

For 2019, management expects operating profit to be broadly in line with their expectations. Consistent with the operating trends reported in its 2019 interim results, Aviva has seen continued progress in Canada and stronger sales in bulk purchase annuities, offset by weaker results in Aviva Investors and UK personal lines insurance.

With respect to future operating profit, Aviva said that in 2019, it estimates a contribution of £300-£400 million from management actions, reflecting favourable development of longevity reserves and other items. In the longer-term it is signalling an expected range of £0 to £200 million per annum.

Maurice Tulloch, chief executive officer, said: “Aviva is a business with ambition. We are investing in new services, new products and new technology. We expect growth, especially in higher return businesses such as general insurance and Asia and also, from our new investment, savings and retirement business.

“Aviva’s focus is delivering sustainable growing returns to shareholders. Our forecast cash flows are more than sufficient to sustain our dividend, reduce debt and grow Aviva. Our return on equity target of 12 percent underpins our progressive dividend for the long-term.

“Our strategic review has been rigorous and thorough. I am committed to running Aviva better. We will be more commercially focused, manage costs rigorously and be more disciplined in how we invest. We will excel at the basics, giving customers a simpler, faster and more convenient service. Getting these fundamentals right will result in a simpler, stronger, better Aviva, while also improving returns for shareholders.”

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