Aviva to reduce costs by £400m
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Aviva says it is looking to make £200m of cost savings and £200m of efficiency savings as it announced an increase in UK sales.
In its results for the first nine months of 2010, Aviva revealed it was looking to make the cost savings and efficiencies across the group with £100m of cost savings coming from the UK.
Half of the UK cost savings will come from the closure of the firm’s final salary scheme. The insurer says much of the rest of the cuts will come from economies of scale due to its enhanced e-commerce capabilities.
In a conference call this morning, Aviva UK chief executive Mark Hodges (pictured) said there would be no job cuts in the UK, although there would be job losses in the US and Canada where £50m of costs will be cut.
In the UK, total sales increased 16 per cent, from £10.61bn to 12.28bn. Long-term saving sales increased 22 per cent, from £7.3bn to £8.9bn while life and pension sales increased 15 per cent, from £6.7bn to £7.6bn. Worldwide, sales were £35.9bn, a 5 per cent increase on 2009 figures.
Hodges said the outlook in the UK is positive as the firm looks to take advantage of the current raft of pension reforms.
Aviva group chief executive Andrew Moss says: “As we look to the next phase of our growth, Aviva will sharpen its geographic focus and deepen its position in its key markets through its strengths in both life and general insurance. Our UK business is an excellent example of how this strategy is delivering value for our shareholders and customers.”
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Readers' comments (6)
Anonymous | 2 Nov 2010 11:06 am
It is always slightly worrying when global businesses state that they are making more profits in the UK, than say in the US or Canada. My first question is always why? However, I am pleased to learn that there will be no loss of jobs in the UK.
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Pro RDR AVIVA | 2 Nov 2010 11:45 am
Well it couldn't be funded by a reduction in client services!
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Julian Stevens | 2 Nov 2010 11:55 am
Aviva has also made quite clear that their future aspirations are based on increasing the strength of their relationships with the banks, whom they love and, because Aviva pays them 6, 7 or even 8% commission for shifting their products by the boatload, the banks love them back.
The IFA sector, on the other hand, is more trouble than it's worth for Aviva, not least because we ask so many tiresomely inconvenient questions.
I saw this coming ten years ago and stopped using Norwich Union, as it then was, as of 6th April 2001.
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Lesley | 2 Nov 2010 2:38 pm
When is this company together with its rivals going to reduce their pension charges ,for their long suffering customers.Our US and European counterparts are paying far less in charges.Time to give your investors something back as opposed to take take take all the time.
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9 out of 10 IFAs’ would prefer not to use AVIVA | 2 Nov 2010 3:54 pm
9 out of 10 IFAs’ would prefer not to place business through AVIVA!*
When you can't acquire distribution from those who have independence of choice you buy it through restricted advice tied advice such as Tescos and the banks.
Interesting that AVIVA have been so welcoming towards RDR! Now we know why! Why would a provider support an independent sector that no long has use of its substandard products? Best thing is to buy your distribution and support a policy that will destroy consumer choice!
* As bias a survey as the FSA RDR!
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Anonymous | 12 Nov 2010 8:43 pm
The adviser market is slowly committing suicide. It chases reduced earning periods, constantly churning business at the end of the clawback period, and every case is standard rates in an adviser's eye.
There is better disclosure when an adviser is not involved in the process, REP has a higher claims rate, and persistency problems abound.
Little wonder AVIVA would rather smooth experience with deals that guarantee volume business.
Business is placed on the basis of price or the number of illnesses. Insurers cant compete on a value basis any more, consolidation of the market was inevitable, but a lot of the problems have been caused by market behaviour.
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