Aviva feels the heat as revival plan falls flat

THE new boss of Aviva has admitted that the company is failing investors as shares fell again amid doubts over his plan to revive the ailing insurance titan.

Maurice Tulloch, who stepped up as chief executive in March, said it had not been performing well enough, including for its 500,000 small shareholders.

As he announced the sale of Aviva’s Hong Kong business, the 50-year-old promised to increase accountability and simplify its structure, insisting the sluggish performance would pick up.

But the shares, which were more than 550p each last year, fell 3.5pc, or 14.8p, to 403.5p.

Paul De’Ath, an analyst at Shore Capital, said Aviva ‘must try harder’. He added: ‘We can’t help but feel that investors may be a little underwhelmed by the strategic review.’

Outlining his vision, Tulloch said: ‘The hard truth is that performance needs to be better, and it will be. I’m insistent on accountability, commercial rigour and the robustness of business plans. This is how I’m going to run Aviva.’

The company will now be split into five units – investment, savings and retirement, UK life insurance, general insurance, Europe life insurance and Asia life insurance.

Tulloch, who has both British and Canadian nationality, and joined Aviva in 1992, has come under pressure since he took over from Mark Wilson to clarify Aviva’s strategy and boost its flagging share price.

Over the past five years its stock has slipped more than 24pc. But while Aviva has floundered, rivals such as Legal & General and Prudential have stacked up gains.

Tulloch said: ‘I’ve been pretty active with engaging with investors since I took this job eight months ago. As part of my strategic review, I left no stone unturned.’

Aviva had already laid out plans to cut debt by £1.5bn, and slash costs by £300m per year by axing 1,800 jobs. Its boss added it would generate between £8.5bn and £9bn of cash flow by 2022, focusing on high-growth businesses such as general insurance and its investment, savings and retirement arm. However, even though he vowed to maintain its dividend, and even increase it, investors remained unimpressed.

Following the sale of its stake in Hong Kong business Blue, Aviva is still considering options for its branches in Vietnam and Indonesia.