Aviva share price: what’s the outlook as new boss begins radical shake-up plan?
Earlier this month, the British insurer unveiled a radical break-up plan that see thousands of jobs cut as the ailing business tries to revive growth.
Aviva CEO Maurice Tulloch took the helm in March and tasked with turning the ailing insurer around, with its share price tumbling more than 20% over the last five years.
Earlier this month, the new CEO unveiled his turnaround strategy which involved a separating its UK life and general insurance businesses, as well as implementing cost-cutting measures that aim to reduce expenses by £300 million per annum by 2022.
‘Today is the first step in our plan to make Aviva simpler, more competitive and more commercial,’ Tulloch said. ‘We have strong foundations: excellent distribution, world class insurance expertise, and our balance sheet is robust.’
‘But there are also clear opportunities to improve,’ he added.
Aviva turnaround plans will see thousands of jobs lost
To achieve its cost-cutting target, Aviva plans to cut 1,800 jobs across the group over the next three years, out of a total 30,000 employees - representing a 6% reduction in staff.
‘Reducing Aviva’s costs is essential to remain competitive and this means tough decisions and job losses which I do not take lightly,’ Tulloch said. ‘We will do all we can to minimise redundancies and support our people through this.’
Despite the commitment to reduce expenses, Aviva pledged to keep its progressive dividend policy, while reducing debt on its balance sheet by at least £1.5 billion.
Simplifying Aviva is the key to reviving growth
A major component of the turnaround plan involves simplifying the overall structure at Aviva, with complexity being a major issue holding back the insurers performance, according to Tulloch.
Moving forward, the company will focus on reducing complexity, cost and duplication to improve customer satisfaction and deliver value for Aviva’s shareholders.
Year-to-date trading has remained broadly consistent with 2018, though the insurer has seen its performance in savings and asset management weaken due to lower investment markets being partly offset by growth in Europe and Asia.
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