Blanc slate: new Aviva chief en­ters the bat­tle to keep in­surer rel­e­vant

Tough talk alone will not be enough to win over scep­ti­cal share­hold­ers, writes Michael O’Dwyer

The Daily Telegraph - Business - - Business -

Aviva’s new boss Amanda Blanc says she hasn’t a day to waste in her mission to breathe fresh life into the FTSE 100 in­surer. “Aviva once set the tone for the in­dus­try,” she says. “It was in­no­va­tive, it was dis­tinct, it had en­ergy and am­bi­tion. We need to be the leader in our in­dus­try again.”

If de­part­ing boss Mau­rice Tul­loch un­der­whelmed in­vestors with a steady-as-she-goes ap­proach of tweaks and cost-cut­ting, his 52-year-old suc­ces­sor is leav­ing no doubt that the com­pany has fallen from its perch and im­prove­ment is needed quickly.

Ac­quain­tances de­scribe Blanc, whose ap­point­ment brings to seven the num­ber of fe­male FTSE 100 chiefs, as a hard worker.

She has said she prefers 5am starts to work­ing late into the evening and cred­its her hus­band, who gave up his ca­reer so she could plough ahead with hers, as the big­gest in­flu­ence on her suc­cess. Her “mag­nif­i­cent peo­ple skills” mean col­leagues will know ex­actly where they stand, says Ashwin Mistry, ex­ec­u­tive chair­man of bro­ker Bro­ker­bil­ity, who first met Blanc when they worked at sep­a­rate in­sur­ers in Le­ices­ter 30 years ago.

From that job in Com­mer­cial Union, the Univer­sity of Liver­pool his­tory grad­u­ate rose through the ranks to be­come deputy chief at bro­ker Tow­er­gate In­sur­ance be­fore lead­ing Axa’s UK and Ire­land busi­ness and then Zurich’s Euro­pean op­er­a­tions.

She joined the Aviva board as a non-ex­ec­u­tive in Jan­uary, just months be­fore Ge­orge Cul­mer be­came chair.

Her straight-talk­ing style will be put to the test at Aviva, which has strug­gled to ex­plain its core mission to in­vestors. One se­nior in­sider ad­mit­ted in re­cent months that he en­vied Lloyds Bank­ing Group’s abil­ity to en­cap­su­late its strat­egy in just three words: “Help­ing Bri­tain pros­per.”

Blanc, who has spent her en­tire ca­reer in in­sur­ance save for one un­happy year as a man­age­ment con­sul­tant in the Nineties, takes over a sprawl­ing op­er­a­tion with both gen­eral and life in­sur­ance di­vi­sions, and a pres­ence across Europe and Canada, as well as Asia.

Some an­a­lysts and in­vestors be­lieve a nar­rower focus could un­lock value.

The mar­ket’s lack­lus­tre re­sponse to Tul­loch’s con­ser­va­tive plan means Blanc is un­der pres­sure to launch a rad­i­cal over­haul.

The firm could be sep­a­rated into life and non-life di­vi­sions, or UK and in­ter­na­tional, for ex­am­ple. Sig­nif­i­cant di­vest­ments could of­fer a so­lu­tion with­out a for­mal break-up.

Blanc says she will con­sider all op­tions. A split may not be the panacea that some in­vestors wish. Tul­loch spent eight months pre­par­ing his strat­egy af­ter his ap­point­ment in March last year only to opt against any ma­jor sales, feel­ing the of­fers received for the Sin­ga­porean busi­ness did not re­flect its prof­itabil­ity.

“As we have seen with Pru­den­tial plc’s split with M&G, busi­ness splits may sound ex­cit­ing in the­ory but in prac­tice they are very hard and com­pli­cated, and if they were go­ing to cre­ate sig­nif­i­cant value would likely have been done years ago,” says Alan Devlin, an an­a­lyst at Shore Cap­i­tal.

The ben­e­fit of Aviva’s cur­rent di­ver­si­fied model could off­set any ad­van­tages that may be pro­duced by a split, he says. The hefty div­i­dend – cur­rently on hold due to pan­demicin­duced un­cer­tainty – will also be un­der the spot­light.

Tul­loch opted not to fol­low his three pre­de­ces­sors, who all cut the pay­out upon ar­rival.

The yield is about 12pc based on its 2021 fi­nan­cial fore­casts – far higher than Le­gal & Gen­eral’s 8pc or Phoenix Group’s 7.4pc – im­ply­ing that in­vestors may tol­er­ate a cut.

Blanc, who once stacked VHS tapes at her lo­cal video store, will need to build bridges with cus­tomers and also con­tend with an eco­nomic slow­down and other Covid-19 chal­lenges.

Aviva is un­der pres­sure over its re­fusal to pay out on busi­ness in­ter­rup­tion claims by some of its cus­tomers and is one of 16 in­sur­ers whose poli­cies will be ex­am­ined in a case be­ing brought to the High Court by the City reg­u­la­tor next month.

It is also be­ing threat­ened with le­gal ac­tion by strug­gling pubs, ho­tels and restau­rants for its re­fusal to com­pen­sate them.

Blanc, who is jet­ti­son­ing all her other jobs ex­cept a vol­un­tary po­si­tion as chair of the Welsh Pro­fes­sional Rugby Board, in­tends to meet her daunt­ing in-tray head on.

Aviva’s share price closed up nearly 4pc yes­ter­day, sug­gest­ing that in­vestors are en­thused by Blanc’s fight­ing talk. They will de­mand that she backs it up with ac­tion in the com­ing weeks.

Amanda Blanc has been named Aviva’s chief ex­ec­u­tive fol­low­ing Mau­rice Tul­loch’s exit

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