Insurance giant Aviva has restructured its business strategy into five operating divisions following a review of the company.
This comes after the insurer said it was keeping hold of its Singapore and China businesses.
It has structured the company into the following operations:
- Investments, savings and retirement;
- UK life;
- General insurance;
- Europe life; and
- Asia life.
The firm said this was a simplification exercise and it will “drive higher returns” for its shareholders.
Asian operation
The Singapore and China operations are “profitable businesses, delivering attractive growth and generating positive cash-flow”.
It will increase penetration of financial adviser market in Singapore and work with joint venture partner in China to expand distribution,
The firm has agreed the sale of its stake in Hong Kong joint venture, digital life insurer Blue, to partner Hillhouse Capital.
Tencent Holdings, China’s biggest gaming and social media company, also has a stake in Blue.
Aviva also said it was in discussions with its partners in relation to its business in Vietnam and joint venture in Indonesia.
FPI
One business that was not mentioned during Aviva’s capital markets day was Friends Provident International (FPI).
Aviva was looking to sell FPI in March 2017 and agreed to sell the business to RL360° for £340m ($439m, €396m) later that year.
However, the deal has stalled and has not been completed.
The biggest stumbling block to closing the deal has reportedly been the Hong Kong regulator, which International Adviser understands had concerns about the leveraged nature of the acquisition.
IA reported on Aviva’s half-year results in August 2019, which said “the transaction is subject to regulatory approvals and is expected to complete in the second half of 2019”.
This publication contacted Aviva, RL360 and the Hong Kong Insurance Authority (HKIA) for an update.
RL360 and Aviva declined to comment on the deal, and HKIA did not reply before publication.
Segments
Investment, savings and retirement will develop savings and retirement solutions, maintain growth through savings platforms and become “go-to provider for active solutions”.
UK life will look to “capitalise on our capabilities and leading market positions to generate significant levels of cash-flow to fund a sustainable group dividend” and will reinvest in “profitable new business to increase cash-flows over the long-term”.
Europe life will develop multi-channel distribution, evolving savings mix towards unit linked and hybrid products and increase penetration of protection products into life customer base.
Improve the business
“I am committed to running Aviva better,” said Aviva chief executive Maurice Tulloch, who took over the role in March.
“We will be more commercially focussed, manage costs rigorously and be more disciplined in how we invest.”
Aviva set out several three-year targets, including a 12% return on equity and a £300m net cost saving by 2022.
It said it was committed to its dividend policy and saw 2019 operating profit in line with expectations, following around £300-400m in management actions.
