Aviva to boost share price by offloading weaker businesses
AVIVA will sell undeperforming businesses in a strategic overhaul after irate investors forced out its chief executive last week, the British company said yesterday.
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 eurozone than rivals and to boost a share price which is down by more than a third 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 chief executive 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 Moss, who quit on May 8 and had led the group since 2007.
Calls to Aviva in Dublin about the future of the company's Irish operation were not returned yesterday.
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.
"As far as you're concerned, I'm the CEO. What we have to do is improve shareholder value as quickly as we can," he said, adding that he had been approached by some "very interesting" applicants.
McFarlane's shake-up comes barely 18 months after Aviva began a plan to sell off smaller businesses and cut the number of countries where it operates from 30 to 21.
Aviva, which generated 40pc of its operating profit in mainland Europe last year, has been hit harder than its main British rivals by the eurozone's woes.
"With uncertainty over the European landscape and the management situation, we expect Aviva shares will continue to flounder in the very near term," Espirito Santo analyst Joy Ferneyhough wrote in a note.
Aviva also said its total worldwide sales for the first three months of 2012 fell 3pc to £9.7bn (€12.1bn) because of weaker demand for life insurance in recession-struck Italy and Spain.