Aviva reveals turnaround battle
THE performance that prompted Aviva shareholders to oust chief executive Andrew Moss was laid bare in figures today.
With its shares nearly 40pc lower than a year ago, Britain's biggest insurer revealed a 5pc drop in long-term savings sales and flat general insurance and health premiums in the first three months of the year.
Aviva's £1.3 billion exposure to the troubled eurozone economies of Portugal, Italy, Ireland, Greece and Spain also continued to hit the group, as life and pension sales in Italy and Spain tumbled 23pc.
The soft performance comes despite a series of TV adverts starring actor Paul Whitehouse, known for his work with comedian Harry Enfield, in which he plays a variety of characters promoting a range of insurance products.
Stand-in boss John McFarlane repeated his pledge to lift the group's financial performance as he prepares to conduct a strategic review of all its businesses.
Mr McFarlane stepped in as executive deputy chairman following the abrupt exit of Mr Moss, who stood down after investors staged a massive protest vote against Aviva's annual pay report.
Mr McFarlane described the first quarter performance as "solid" and said profitability in both Aviva's life and general insurance businesses was in line with targets.
He said: "My first task is to make an improvement in the capital and financial strength in the group as well as an improvement in our financial performance.
"While not underestimating the significance of the challenge I am optimistic of the outcome."
Mr McFarlane said the process of identifying a new chief executive for the group had started but expects this will take the remainder of this year.
Operating profits for the quarter were marginally down compared to the same period last year due to the sale of breakdown service RAC.
Long-term savings sales were £7.5 billion, compared to £7.8 billion in the first quarter of 2011, while general insurance and health net written premiums were level with last year at £2.2 billion.
The UK life business saw long-term sales increase 1pc to £2.9 billion, while life and pension sales, excluding bulk purchase annuities, increased 6pc.
UK annuity sales were slightly lower at £641 million, compared to £645 million last year.
Mr Moss's departure came after 59pc of votes failed to back Aviva's pay report in one of the City's biggest-ever shareholder protest votes. Around 10pc of votes went against or withheld their votes on the re-election of Mr Moss.
Under the pay scheme, Mr Moss was also awarded a £1.2 million bonus, equal to 120pc of salary, while Trevor Matthews, Aviva UK chief executive, was awarded a £45,000 bonus despite just joining the board on December 2.
Aviva's share price has declined around 60pc since Mr Moss took the helm in July 2007.