Aviva CEO seeks opportunities for M&A activity

Mark Wilson says insurance giant’s large war chest can fuel purchase of ‘tactical bolt-ons’

Aviva managers across 15 countries have been asked to find deals as the group looks to spend excess capital.

Aviva managers across 15 countries have been asked to find deals as the group looks to spend excess capital.

 

UK-based insurance giant Aviva’s chief executive, Mark Wilson, has told managers in the 15 countries in which it operates to bring him deals as the group looks for ways to spend excess capital.

Speaking in an interview with The Irish Times this week, the New Zealand insurance executive, who has led Aviva through sweeping restructuring over the past five years, said: “We had all the CEOs in just before Christmas and said that we’ve a very large ‘war chest’. I’m not going to do big jumbo deals, but I like tactical bolt-ons.”

Having cut the number of countries in which Aviva operates to 15 from 28 over the past half-decade, selling businesses from the US to Russia and Spain, Mr Wilson flagged in November that he is on the hunt for mergers and acquisitions (M&A), plans to boost shareholder dividends and redeem expensive debt as Aviva generates an extra £3 billion (€3.4 billion) in cash between 2018 and 2019.

The executive said he doesn’t have a “specific figure in mind” for deals, but name-checked “Poland or Turkey or Canada” as markets where he’d like to carry out purchases.

Friends First

The directive to managers comes after Aviva’s Irish unit agreed two months’ ago to buy Friends First for €130 million in a transaction that will boost its share of the country’s life and pensions market to 15 per cent. That will also match its slice of the general insurance market. That takeover is expected to close by the end of March and lead to a limited voluntary redundancy scheme amid duplications of roles among the combined 1,530 staff.

Mr Wilson signalled the Friends First deal would add to company earnings in the first year. He added the original price Dutch financial services group Achmea was looking for the business did not allow Aviva to pass through the key hurdle of a deal being immediately earnings “accretive”.

“We’re ruthless on M&A,” he said. “It only works if we can get it for the right price.”

John Quinlan, Aviva Ireland’s chief executive, said the purchase plays into Ireland’s fast-growing economy and the fact the State currently has one of the widest gaps in Europe between pension savings and what’s needed by people for an adequate standard of living.

Aviva, whose largest deal under Mr Wilson was the £5.6 billion purchase of Friends Life in the UK in 2015, is also interested in expanding in financial technology – or fintech – and artificial intelligence. Last year, the company entered an online insurance joint venture last year with Chinese tech group Tencent and bought a majority stake in Welsh automated, or robo, investment adviser Wealthify.