Troubled insurance group Aviva to announce turnaround plan

Chairman John McFarlane will reveal that as many as 10 or 15 businesses out of 58 have been put on the list to wind down or offload – with the US arm thought to be among those at risk.

The group is understood to have already made a number of senior managers redundant under a restructure being led by Mr McFarlane, who took over as executive chairman when chief executive Andrew Moss quit in May after a shareholder revolt over pay and performance.

Mr McFarlane will outline his overhaul on Thursday amid a tumultuous period for the group, which was thrown into turmoil when Mr Moss was forced to resign.

His departure came after 59 per cent of votes failed to back Aviva’s pay report in one of the biggest protest votes of the current so-called “shareholder spring”.

Around 10 per cent of shareholders went against or withheld their votes on the re-election of Mr Moss.

Aviva’s share price had declined around 60 per cent since Mr Moss took the helm in July 2007.

Mr McFarlane tasked Aviva’s chief financial officer Patrick Regan to oversee the strategy review, with support from Boston Consulting Group.

Aviva already said on announcing Mr Moss’s departure in May that it would run a slide rule over its divisions to identify the good and bad performers with aims to slim down operations.

The firm declined to comment on specific details ahead of Thursday’s announcement.

But the firm is reportedly looking to cut head office costs, integrate technology across various divisions and slash management layers from 11 to five.

Mr McFarlane has also forgone any increase in remuneration package despite taking on executive duties.

The controversial pay package at the heart of investor anger in May saw Mr Moss awarded a £1.2m bonus, equal to 120 per cent of his salary, while Trevor Matthews, Aviva UK chief executive, was awarded a £45,000 bonus despite just joining the board on December 2.

This came in spite of slipping performance, with recent figures showing a five per cent drop in long-term savings sales and flat general insurance and health premiums in the first three months of 2012.

Aviva’s £1.3bn exposure to the troubled eurozone economies of Portugal, Italy, Ireland, Greece and Spain also continued to hit the group, as life and pension sales in Italy and Spain tumbled 23 per cent.

Aviva has 4,500 staff in Yorkshire, including 1,700 in Sheffield. Its life business is headquartered in York.