The turnaround is being led by Aviva’s chairman John McFarlane who is running the business until a new chief executive is appointed early next year, following the departure of Andrew Moss in May. Moss left following a shareholder revolt over his bonus package, with investors saying it did not reflect the company’s performance.
McFarlane has formed a 10-strong group executive to ensure the senior management of the company has a “single purpose”, to speed up decision making and to emphasise individual accountability. This group includes Mackenzie and it will meet bi-monthly.
Above that group, an office of the chairman has also been created, which consists of the five most senior group level executives, who will meet weekly.
McFarlane says: “It is essential that we have the right people in place to implement the strategic plan and to achieve higher financial strength and performance. I am aware of past concerns regarding the frequency of management changes at Aviva; nevertheless I judge these new appointments to be essential.”
Aviva is undergoing a radical overhaul of its business, which will involve the closure of 16 of its underperforming businesses and a series of job cuts as it looks to focus on the divisions that will produce the “most attractive returns”.
Some of the segments set aside for disposal include its UK large scale bulk purchase annuities business, partnerships with Italian banks and its South Korean arm.
The UK-based insurer hopes to cut costs by £400m by 2014, with the business exits and by reducing the number of management layers within the organisation from nine to five. It has new capital level targets of 160% to 175% of reserves in that period, compared to 140% currently.