Aviva's big restructuring includes job cuts

(Bloomberg) -- Aviva Plc’s new chief executive officer, Maurice Tulloch, kicked off his overhaul of the company with a plan to cut costs and jobs and streamline its U.K. business.

Tulloch, who took over in March, said he would reduce Aviva’s expenses by 300 million pounds ($380 million) a year and shed 1,800 jobs by 2022, according to a statement on Thursday. He also split the management of Aviva’s U.K. life and general insurance units.

Aviva’s shares were up 1.7% at 8:22 a.m. in London.

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Pedestrians walk by an Aviva Plc logo on a sign near to the insurance company's headquarters in London, U.K., on Monday, Aug. 1, 2016. Aviva will release their half-year results on Aug 4. Photographer: Jason Alden/Bloomberg

The CEO is trying to restore Aviva’s fortunes after years of stagnation. The company’s shares have plunged since Tulloch’s predecessor, Mark Wilson, bought Friends Life Group Ltd. in 2015. Rival U.K. insurers Prudential Plc and Legal & General Group Plc, Britain’s biggest asset manager, have both done better by concentrating on life and pensions rather than on general insurance.

“Reducing Aviva’s costs is essential to remain competitive, and this means tough decisions and job losses which I do not take lightly,” Tulloch said in the statement. “I am also determined to crack Aviva’s complexity, an issue which has held back our performance for too long.”

C-Suite Reshuffle

Colm Holmes will run Aviva’s U.K. general insurance business, while Angela Darlington takes over as interim CEO of the life insurance division. Aviva’s digital direct business will be integrated into U.K. general insurance.

Aviva announced this week that Tom Stoddard will stand down as the firm’s chief financial officer. Stoddard, who was appointed by Wilson in 2014, will be replaced on an interim basis by Jason Windsor, the CFO of Aviva’s U.K. unit.

Speaking at Aviva’s annual general meeting last month, Tulloch acknowledged that the company has struggled.

“There are parts of the business that could be doing better -- should be doing better,” Tulloch said at the time. “We’re not as efficient as we could be. We’ve not lived up to our potential; I don’t think we’ve even scratched the surface. And we’ve lacked a proper commercial focus to take full advantage of our opportunities.”

Tulloch, a 50-year-old with joint British and Canadian nationalities, will unveil the rest of his strategy in November. Before becoming CEO, he ran Aviva’s international insurance business, the unit with the greatest potential for growth.