British insurer Aviva will cut 1,800 jobs globally as its new chief executive seeks to make the group more competitive by restructuring its British business and reducing costs across the business.
Insider Maurice Tulloch took over as CEO in March, amid investor concern that the insurer, which provides pensions as well as car and home insurance, was failing to cross-sell its products successfully.
Aviva is also facing increased competition from German insurance giant Allianz, which last week did two deals potentially valued at over 800 million pounds ($1 billion) to cement its position as Britain's second-biggest general insurer.
Aviva will cut costs by 300 million pounds a year over the next three years, it said in a statement on Thursday ahead of its first investor day under Tulloch.
"We haven't got everything right, in fact I don't even think we are close to reaching our potential," Tulloch told the investor day, adding that the firm's existing management structure "has not allowed leaders to be held accountable."
Aviva has split its UK life business away from general insurance, it said on Thursday, after a review of the combined business following the departure in April of UK head Andy Briggs, a contender for CEO.
Angela Darlington has been appointed interim Chief Executive Officer of UK life and Colm Holmes CEO of general insurance across the group, including Britain.
The changes reverse a management structure introduced by former CEO Mark Wilson two years ago.
The UK digital business, housed in a former garage in the City of London's tech district, will be incorporated into the UK general insurance business, it said.
Aviva employs 30,000 people and its international markets include Canada, France, Ireland and Asia.
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 1.3% to 416.1 pence at 1038 GMT, outperforming London's FTSE 100 index. The shares have risen 12% this year, recouping half of last year's losses.
Panmure analyst Barrie Cornes said Aviva's shares were "fundamentally undervalued," reiterating the firm's buy recommendation on the stock.
Aviva said it would focus on cutting central costs, as well as consultants and project expenditure.
The cost base in 2018 was 4 billion pounds, an Aviva spokeswoman said, making a planned annual cost reduction by 2022 of 7.5%.
Aviva said trading to date had been in line with 2018, with a stronger performance in Canada, and reiterated its commitment to a progressive dividend policy. (Reuters)