Insurer Aviva said it would sell or close 16 underperforming businesses as part of a strategic shake-up aimed at bolstering its finances and reinvigorating its flagging share price, Reuters reported.
The businesses earmarked for disposal include its South Korean arm and its British large-scale bulk purchase annuity unit, that contribute 300 million pounds to after-tax profit, Aviva said on Thursday.
“16 segments that are currently producing or will prospectively produce returns below the group’s required return that will be exited, involves £6 billion capital, £300 million operating profit after tax, and 5% return on capital. Examples of these include: South Korea; UK Large-Scale Bulk Purchase Annuities; and small Italian partnerships,” Aviva’s Chairman John McFarlane said in a statement.
The insurer, whose weak stock market performance led to the removal of chief executive Andrew Moss in May, said it had identified a further 27 businesses which “require significant improvement”, including its Irish general insurance arm.The disposal plan is the culmination of a twomonth scrutiny of Aviva’s 58 businesses launched by executive chairman John McFarlane, who took day-to-day control of the group after Moss quit on May 8.“Things are tough and the environment is challenging. However, I am confident we will be successful,” McFarlane was quoted as saying.
It is widely believed that Sri Lankan operation of Aviva, which is a joint operation with NDB is also among the business units that are to be disposed, though Aviva in its statement did not mention the names of all the entities that it will get rid of.