May 25 2013 Latest news:
By shaun Lowthorpe Business editor
Friday, March 8, 2013
Aviva yesterday waived bonuses for its top bosses for 2012 and froze their pay for 2013 as it unveiled losses after tax of £3bn.
Dividends were also cut by 44pc to 9p a share after the loss announcement, which was put down to costs incurred by the sale of its US division last year – part of a firesale of underperforming centres underpinning the group’s turn-around strategy to focus on its core businesses.
The results saw shares slump by as much as 15pc yesterday, wiping £1.5bn off its market value.
However, there was better news for the Norwich-based general insurance division which saw a 3pc increase in operating profits from £860m to £893m.
Robin Spencer, UK and Ireland general insurance chief executive, said Norwich had a crucial role to play in restoring the fortunes of the group. And he insisted that the results would not see customers forced to pay higher premiums to help Aviva get back into the black.
“It’s really put us on a much more stable position,” he said. “At the end of the day we have got millions of customers that rely on us.
“Going forward it’s about making sure that we are not paying out more dividend than we can afford.
“Norwich is the largest centre in the UK – it plays an enormously important part in terms of the day-to -day operations of the business.
“I’ve set out a very clear strategy for the general insurance business –one of the things is changing the culture. We need to be more comm-ercially agile and entrepreneurial, and the guys in Norwich are going to have to go through these things. This is about us doing more to run our business more efficiently and more profitably.”
The crucial importance of Aviva’s Norwich-based general insurance division to the health of the group was also underscored as it emerged that the business was supporting the loss-making parent company to the tune of £5.8bn.
Aviva announced yesterday that as part of moves to simplify the struc-ture of the company this “interdiv-isional balance” would be replaced by a loan to the general insurance division of which it plans to repay £600m over the next three years.
Aviva has been focusing on its bottom line and improving the strength of its balance sheet as part of a turnaround strategy brought about by chairman John McFarlene, following the departure of chief executive Andrew Moss in the wake of last year’s shareholder revolt over pay and performance.
That strategy has seen it boosting its capital position and its level of retained profits, cash it keeps in the business, and cutting debt, moves which underscored yesterday’s results.
Aviva chief executive Mark Wilson, who joined the company in January, said last year was one of transition for Aviva.
The New Zealander previously led a turnaround strategy during four years at Asian insurer AIA.
He said: “Our capital strength has improved materially and we have completed the vast proportion of the disposal programme. We have made progress reducing costs and we also have a strong new management team in place.”
COMMENT – Page 32
Norfolk turkey giant Bernard Matthews is in talks to sell a stake in the business.