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These comments from Aviva’s chief executive Maurice Tulloch (pictured), delivered during the company’s half-year results media call, come after he described the company as “too complex” in June, with reports of restructuring following shortly after. The 1,800 role reductions that will be considered across the Aviva group over a period of three years remain in the works, though no further details were divulged by Tulloch on August 08.
“I’m not going to get ahead of ourselves at this point. We’ve said we’re reviewing the business and ultimately will do this with a focus on enhancing the shareholder value,” said Tulloch, adding that he’s following a framework, and plans to “look at all components of Aviva and leave no stone unturned.”
The results for the first half of the year were mixed for the insurer, with operating profit edging upwards by only 1% to £1.4 billion (around CA$2.24 billion), and while operating profit in general insurance and health was up 29%, life business and fund management were down 8% and 18% respectively.
“In general insurance, we’ve set what is now a lengthy track record of attractive underwriting results with a combined operating ratio of 95.9%. In the first half, we’ve benefited from benign weather, our strength and recovery in Canada accelerated, and we grew in profitable commercial lines segments,” said Tulloch, adding that Aviva has consistently landed in the 94-97% range for the metric, in spite of challenges from weather and market cycles. “This consistency is a mark of the quality of our underwriting, the strength of our partners, and our excellence in claims, looking after customers when it matters most.”
In Canada, the company credited its employees and partners as well as brokers, for the success of Aviva’s remediation plans, with the Canadian operations reporting a combined operating ratio of 97.5% in the first half of 2019, compared to 104.6% in the first half of 2018 and 100.2% in the second half of 2018. The operating profit has meanwhile risen from the ashes of 2018’s first half results, when the company reported a loss of $22 million, to $171 million.
Claims from severe weather took a toll on Aviva in the first six months of 2018, though Tulloch explained that the balance sheet is currently positioned “for all seasons.”
“We are ready and resilient,” he said, pointing to the Solvency II capital surplus of £11.8 billion (around CA$18.9 billion) and cash liquidity of £2.3 billion (around CA$3.68 billion). “These are strong foundations to give us resiliency in the short-term and the ability to fund our deleveraging plans in the coming years.”
For its broker partners and insureds, a key message was Aviva’s focus on “making insurance easier for customers, whether they’re buying a product from us or making a claim,” explained Tulloch, though he admitted there was more work to be done.
“I still think we can do much better and, frankly, that’s why I took the job in the first place. Looking beyond the headlines, we’ve delivered resilient results in a challenging market, [but] headline growth is subdued and I want it to be much more ambitious.”
