Aviva expects 1,800 job cuts to save £300m annually as new CEO vows to crack complexity

UK insurer Aviva is expecting approximately 1,800 role reductions across the group over the next three years as part of its efforts to reduce expenses by £300 million per annum by 2022, according to its  new CEO Maurice Tulloch.

The move follows a series of recent senior management changes at the insurer, which includes the departure of its CFO  Tom Stoddard, UK insurance CEO Andy Briggs, and the appointment of a new group chief executive officer.

According to the statement, Aviva intends to reduce its expenses by cost savings in contractor and consultant spend, reduction in project expenditure and other efficiencies. This will involve approximately 1,800 role reductions across the group over the next three years, out of a total workforce of around 30,000.

The insurer has engaged with employee representative bodies for consultation on specific proposals, and stated that it will look to ensure that redundancies are kept to a minimum wherever possible, for example through natural turnover.

Additionally, the company plans to manage its life and general insurance businesses in the UK separately, with the digital direct business integrated into UK general insurance. This intends to enable stronger accountability and greater management focus on the UK’s life and general insurance businesses.

Angela Darlington is appointed interim chief executive officer of UK life, and Colm Holmes is appointed chief executive officer of general insurance.

Aviva reiterated that it is committed to a progressive dividend policy and debt reduction of at least £1.5 billion.

“Today is the first step in our plan to make Aviva simpler, more competitive and more commercial. We have strong foundations: excellent distribution, world class insurance expertise, and our balance sheet is robust," said Tulloch. “But there are also clear opportunities to improve. Reducing Aviva’s costs is essential to remain competitive and this means tough decisions and job losses which I do not take lightly. We will do all we can to minimise redundancies and support our people through this."

Tulloch added: “I am also determined to crack Aviva’s complexity, an issue which has held back our performance for too long. Today’s changes will begin to reduce complexity, cost, and duplication, enabling Aviva to be better at serving our customers and delivering stronger results for our shareholders.

“The sustainability and security of our dividend is paramount. We are focused on improving our performance to grow capital generation and cash-flow.

“On 20 November, we will host a capital markets day that will update on our future strategy and targets.”