May 22 2013 Latest news:
Shaun Lowthorpe, Business editor
Thursday, July 5, 2012
Insurance giant Aviva is to carry out a cull of senior managers including staff at his Norwich headquarters in a bid to save £400m it announced today.
New chairman John McFarlane said the group was looking to streamline the company worldwide and was doubling the amount it was looking to save through cost cutting from the previous £200m figure it had announced last year.
It also plans to sell-off a number of poor performing businesses across the world though it gave no hint on whether it would exit the US market.
The management changes will see a “de-layering programme” stripping out four management tiers between the chief executive and operational staff from from nine to five, which will affect staff across Aviva.
Aviva declined to put a precise figure on the number of job losses, but said it would not impact on the vast majority of its customer-facing staff in Norwich.
Mr McFarlane said the aim of the new strategic plan was threefold; to focus on fewer businesses which can achieve a high probability of success and produce attractive returns; build financial strength; and improve financial performance and deliver higher revenue growth.
He said a drive to boost revenues would not mean higher premiums for customers suggesting that savings made within the business could even be passed on to policyholders.
“This is about reducing the number of intervening layers between operating staff and the CEO, it’s not about reducing customer facing staff or reducing people handling calls or dealing with customer queries,” Mr McFarlane said. “We are looking at Aviva to be much more efficient where there are fewer businesses that are more effective where we can be financially strong and performing highly.”
As part of a number of senior executive changes David McMillan, current chief executive of the Norwich-based UK and Ireland general insurance business is to take up a new role as director of group transformation to oversee the efficiency drive while Aviva Canada boss Robin Spencer will replace him.
Globally the company had reviewed the performance of 58 individual businesses and said of those 15 or 25pc, showed unusuually high return on growth in including the UK general insurance and life insurance businesses based in Norwich and York.
A further 27 including the Ireland General Insurance business were performing close to its required returnlevls but would need “significant improvement” while 16 poor performing business including South Korea, UK Large Scale Bulk Purchase Annuities and small Italian partnerships could be sold off.
The move follows a strategic review of the business ordered by Mr McFarlance following the departure of chief executive Andrew Moss in the wake of a shareholder revolt at executive and criticisms of Aviva’s poor dividend performance.