Aviva has stressed its fund management arm needs to make “significant” improvements following the hire of a new chief executive to oversee the business’ overhaul.
In its half-year results, published today, Aviva warns operating profit in some parts of its organisation is “far from satisfactory” and highlighted Aviva Investors, along with its operations in Ireland, Spain and Italy, as needing to improve.
Aviva Investors made an operating profit of £31m in the six months to 30 June 2013, up from £17m one year earlier. The firm attributes the profit gain to positive market movements and performance fees, as well as cost saving initiatives undertaken over the past year.
However, it adds: “It is essential we see a significant improvement in operating performance over time. Although some progress has been made reshaping these turnaround businesses and cutting expenses, there is some way to go before product mix and efficiency levels are adequate.”
Last month, Aviva Investors appointed Standard Life Investments global head of multi-asset investing and fixed income Euan Munro as chief executive. Munro, who oversaw the flagship SLI Global Absolute Return Strategy, will take up his new role in January 2014.
Aviva’s half-year results say: “Aviva Investors has underperformed from a shareholder perspective and we expect it to play a more prominent role in the group going forward.
“We have recently appointed Euan Munro who will play a pivotal role helping Aviva Investors, a core part of the group, improve its profitability and contribution to Aviva.”
Aviva Investors’ total funds under management stood at £244.8bn on 30 June, up from the £236.3bn seen at the start of the year. The firm witnessed a net outflow of £2.2bn over the period but benefited from positive market and foreign exchange movements of £10.7bn.