Aviva chairman John Macfarlane took on the mantle of temporary chief executive on 1 July and has lost little time in announcing a strategic review of the beleaguered life assurer. In an attempt to rebuild confidence after a shareholder revolt prompted the resignation of Andrew Moss as chief executive, the new strategic plan has three major objectives.
The first priority is to narrow the focus onto fewer business segments where Aviva believes it can produce attractive returns. Of the 58 individual business segments, 15 - including UK life protection and Singapore Life - have been identified as high return. A further 27 segments will need to improve to meet the group's required return, while 16 have been deemed non-core. These include South Korea, UK large-scale bulk annuities and small Italian partnerships.
The second objective is to improve the group's financial strength, and a new target of 160-175 per cent of minimum capital requirements has been set, which will require the release of additional capital tied up in non-core segments.
Thirdly, Aviva will work to improve its financial performance, lower its cost-to-income ratio and generate a higher return on capital.
