Insurance giant Aviva are set to announce a string of austerity measures on Thursday that could see 10 to 15 divisions shut down or be sold, amid an overhaul of the business being led by interim executive chairman John McFarlane. Among those at risk is Aviva’s US business reportedly worth £1bn.
Mr McFarlane, who took over as executive chairman after the resignation of Andrew Moss amid shareholder anger over a controversial bonus, has enlisted the help of chief financial officer Patrick Regan and Boston Consulting Group to conduct a strategy review that has identified Aviva’s strong and bad performers.
It has been reported that the firm has reviewed its divisions and categorised them into 50 units of core, in need of improvement, and for sale. Reports suggest that Mr McFarlane has made several senior managers redundant, stripped management layers from 11 to five, and has refused to increase his own pay package despite having undertaken executive duties. The interim executive chairman is looking at ways to reduce head office costs and integrate technology across divisions as part of a major strategy presentation to analysts in Thursday.
There are also talks of the insurance giant selling down its stake in Dutch insurer Delta Lloyd.
The shareholder rebellion earlier this year, also known as the ‘shareholder spring’, saw a staggering 59% refuse to back Aviva’s remuneration package with 10% of shareholders refusing or withholding their votes for the re-election of Andrew Moss. His controversial £1.2bn bonus package, equal to 120% of salary, despite the firm’s slipping performance cost the former chief executive his job. Mr resigned in May 2012.
During Mr Moss’ term as chief executive at the firm, Aviva saw its shares slide around 60%, a factor that did not influence his £1.2bn bonus. Mr McFarlane’s restructure at the insurer is aimed to reshape and rebuild the company in cost-efficient ways.