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Aviva's new CEO to split firm, cut 1,800 jobs

Maurice Tulloch's strategy seems to be working, with shares up 12% this year, recouping half of last year's losses

London

AVIVA PLC'S new chief executive officer, Maurice Tulloch, kicked off his overhaul of the company with a plan to cut costs and jobs and streamline its UK business.

Mr Tulloch, who took over in March, said he would reduce Aviva's expenses by £300 million (S$519.7 million) a year and shed 1,800 jobs by 2022, according to a statement on Thursday. He also split the management of Aviva's UK life and general insurance units. The CEO is trying to restore Aviva's fortunes after years of stagnation. The company's shares have plunged since Mr Tulloch's predecessor, Mark Wilson, bought Friends Life Group Ltd in 2015.

Aviva employs 30,000 people and its international markets include Canada, France, Ireland and Asia.

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British union Unite reacted angrily to the global job cuts, saying they had arranged "urgent discussions" with management.

But Aviva's shares responded positively to the strategy changes, rising 1.7 per cent to make them the second biggest gainer in the FTSE 100. The shares have risen 12 per cent this year, recouping half of last year's losses. Rival UK insurers Prudential Plc and Legal & General Group Plc, Britain's biggest asset manager, have both done better by concentrating on life and pensions rather than on general insurance.

Aviva is also facing increased competition from German insurance giant Allianz, which last week did two deals potentially valued at over £800 million to cement its position as the country's second biggest general insurer.

"Reducing Aviva's costs is essential to remain competitive, and this means tough decisions and job losses which I do not take lightly," Mr Tulloch said in the statement. "I am also determined to crack Aviva's complexity, an issue which has held back our performance for too long."

Colm Holmes will run Aviva's UK general insurance business, while Angela Darlington takes over as interim CEO of the life insurance division. Aviva's digital direct business will be integrated into UK general insurance.

Aviva announced this week that Tom Stoddard will stand down as the firm's chief financial officer.

Mr Stoddard, who was appointed by Mr Wilson in 2014, will be replaced on an interim basis by Jason Windsor, the CFO of Aviva's UK unit.

Speaking at Aviva's annual general meeting last month, Mr Tulloch acknowledged that the company has struggled.

"There are parts of the business that could be doing better - should be doing better," he said at the time. "We're not as efficient as we could be. We've not lived up to our potential; I don't think we've even scratched the surface. And we've lacked a proper commercial focus to take full advantage of our opportunities."

The UK digital business, housed in a former garage in the City's tech district, will be incorporated into the UK general insurance business. Aviva said trading had been in line with 2018 and reiterated its commitment to a progressive dividend policy.

Mr Tulloch, a 50-year-old with joint British and Canadian nationalities, will unveil the rest of his strategy in November. Before becoming CEO, he ran Aviva's international insurance business, the unit with the greatest potential for growth. BLOOMBERG/REUTERS