File photo dated 09/09/2011 of the Aviva building in Norwich, Norfolk as the insurance giant Aviva announced today that it has frozen or cut annual bonus rates for its 1.5 million with-profits investors. PRESS ASSOCIATION Photo. Issue date: Friday February 8, 2013. The group said that annual bonus rates for new business are being held at 2.5% for bonds, 3% for pensions and 2.75% for stakeholder pensions. Annual bonus rates also remain the same for most existing unitised life and pension business. See PA story MONEY WithProfits. Photo credit should read: Chris Radburn/PA Wire

The new boss of insurance giant Aviva stunned the City today by slashing the embattled company's dividend payment to shareholders.

Mark Wilson said the 44pc cut in the full-year dividend to 9p a share would put the Norwich-based company in a "sound position for the future".

However it is a big blow to many of Britain's major pension funds, who hold the blue-chip firm's shares because of its attractive dividend yield.

Shares slumped by as much as 15% today, wiping £1.5 billion off its market value.

Aviva is undergoing a major restructuring which last year saw £275 million of annual cost savings and a £1.1 billion deal to exit US life and pensions.

That disposal, overseen by chairman John McFarlane, meant the company recorded a loss after tax of £3 billion in full-year results today.

Mr Wilson, who joined the company in January after predecessor Andrew Moss quit following a shareholder rebellion over pay and performance, 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."

Fellow insurer RSA also shocked the market recently with an unexpected cut in its shareholder payout.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said the dividend cut from Aviva was a major disappointment.

However, he added: "On calm reflection, this may prove to be a pivotal point for Aviva. Expectations have now been set at a lower level, including dividend prospects - indeed, some may see today's price drop as a potential entry point for what is now a recovery play."