UK insurer Aviva has announced that it plans to cut approximately 1,800 jobs across the group over the next three years as part of a new expense saving push.
This would represent a 6% reduction in the company’s total workforce of 30,000, although Aviva claimed that redundancies will be kept to a minimum where possible, for example through natural turnover.
The move is intended to help Aviva reduce expenses by £300 million per annum by 2022, with further savings to be achieved through lower central costs, savings in contractor and consultant spend, and a reduction in project expenditure and other efficiencies.
The insurer also announced that its life and general insurance businesses in the UK will be managed separately, with the digital direct business integrated into UK General insurance.
The split will enable stronger accountability and greater management focus on each business, Aviva said.
Accordingly, Angela Darlington has been appointed as interim Chief Executive Officer (CEO) of UK Life, while Colm Holmes has been appointed as CEO of General Insurance.
Aviva also reiterated its commitment to a progressive dividend policy and debt reduction of at least £1.5 billion.
“Today is the first step in our plan to make Aviva simpler, more competitive and more commercial,” said Maurice Tulloch, CEO of Aviva. “We have strong foundations: excellent distribution, world class insurance expertise, and our balance sheet is robust.”
“But there are also clear opportunities to improve,” he continued. “Reducing Aviva’s costs is essential to remain competitive and this means tough decisions and job losses which I do not take lightly. We will do all we can to minimise redundancies and support our people through this.”
“I am also determined to crack Aviva’s complexity, an issue which has held back our performance for too long,” Tulloch added.
“Today’s changes will begin to reduce complexity, cost, and duplication, enabling Aviva to be better at serving our customers and delivering stronger results for our shareholders.”
AVP and analyst at financial services ratings agency Moody’s, Helena Kingsley-Tomkins, commented: “Moody’s views favourably the group’s continued commitment to deleveraging, via a debt reduction of at least £1.5 billion, and announcement of a £300 million per annum cost saving target by 2022.
“Cost reduction, driven by more focused capex spending and through the streamlining of central functions, including a 1,800 head count reduction, should support operating profits. Moody’s expects the cost reduction will be focused, and won’t impinge on Aviva’s future growth.”