Aviva to sell 'underperforming' units

Insurer Aviva will sell underperforming businesses in a strategic overhaul after irate investors forced out its chief executive last week, it said today.

Aviva's new strategy, to be set out in full in July, aims to shore up its capital base against its greater exposure to the troubled euro zone than rivals and to boost a share price which is down over 36 per cent in the past year.

Aviva will get rid of those of its 45 units "where the prognosis for the future is not ideal," said executive deputy chairman John McFarlane, in charge since CEO Andrew Moss became the most prominent victim of a "Shareholder Spring".

Britain's second-biggest insurer said it expected to take the rest of the year to find a replacement for Mr Moss, who quit on May 8th and had led the group since 2007.

Mr McFarlane, formerly chief executive of Australia and New Zealand Banking Group, rejected suggestions that his strategic review could pre-empt changes a new chief executive might want to make, deterring some potential candidates

Aviva today reported a 5 per cent drop in life insurance sales, reflecting tough conditions in its key European markets.

The insurer had long-term savings sales of £7.5 billion (€9.3 billion) in the three months to March, it said today.

Aviva's total worldwide sales for the first three months, including general insurance premiums, were £9.7 billion, down 3 per cent.

Life and pension sales in recession-struck Italy and Spain were down 23 per cent as consumers there saved and invested less.

Aviva, which generated 40 per cent of its operating profit in mainland Europe last year, has been hit harder than its main British rivals by the euro zone debt crisis.

The company last year said it planned to reduce staff numbers in Ireland by 950, including 180 employees of Aviva Europe based in Ireland, who have already left and 770 Aviva Ireland staff.

However, the company last week said it had altered its plans, with the number of redundancies at Aviva Ireland to be reduced to between 500 and 540. It is also planning to create 220 additional posts in Galway in claims insurance and direct sales.

Reuters