Aviva plotting to cut 1,800 jobs globally
Too early to comment on 1,580 jobs in Republic of Ireland, insurer says
Aviva said it would focus on cutting central costs, as well as consultants and project expenditure. Photograph: Simon Dawson/File Photo/Reuters
Insurer Aviva will restructure its business and cut costs across the company with the loss of 1,800 jobs globally as it new chief executive seeks to make the business more competitive.
Insider Maurice Tulloch took over as chief executive in March, amid investor concern that the insurer, which provides pensions as well as car and home insurance, was failing to cross-sell its products successfully.
A spokesman for the company’s Irish arm, which employs 1,580 staff, said the group would look to ensure that redundancies are kept to a minimum wherever possible.
“Aviva have not yet finalised where the reductions will take place and therefore it is too early to comment on the impact on Aviva Ireland, ” the spokesman added.
Aviva is also facing increased competition from German insurance giant Allianz, which last week did two deals potentially valued at more than £800 million (€903 million) to cement its position as the UK’s second biggest general insurer.
Aviva said it would bring costs down by £300 million (€337 million) a year over the next three years, in a statement on Thursday ahead of its first investor day under Mr Tulloch.
“Today is the first step in our plan to make Aviva simpler, more competitive and more commercial,” Mr Tulloch said in the statement. “Reducing Aviva’s costs is essential.”
Trade union Unite reacted angrily to the global job cuts, saying they had arranged “urgent discussions” with management.
But Aviva’s shares responded positively to the strategy changes, rising 1.7 per cent to make them the second-biggest gainer in the Ftse 100. The shares have risen 12 per cent this year, recouping half of last year’s losses.
Panmure analyst Barrie Cornes said Aviva’s shares were “fundamentally undervalued”, reiterating the firm’s buy recommendation on the stock.
Aviva said it would focus on cutting central costs, as well as consultants and project expenditure.
The cost base in 2018 was £4 billion (€4.5 billion), an Aviva spokeswoman said, making a planned annual cost reduction by 2022 of 7.5 per cent.
Following the departure in April of Andy Briggs, head of the life and general insurer’s UK business and a contender for the top job, Aviva had said it would review that business.
It has split the UK life business away from general insurance, it said on Thursday.
The UK digital business, housed in a former garage in the City’s tech district, will be incorporated into the UK general insurance business, it said.
Aviva said trading to date had been in line with 2018 and reiterated its commitment to a progressive dividend policy.