INSURANCE giant Aviva said it aims to double the amount of excess cash it generates during the next stage of a turnaround plan.
Aviva, which has 2,000 staff at its life headquarters in York and 1,500 in Sheffield, has recently laid-off staff, spun-off some businesses and shaken up its asset management arm.
The company is trying to satisfy income-hunting investors who are an important part of its shareholder base by promising bigger returns from these measures.
It said the changes would have no effect on its Yorkshire operations
Aviva aims to double annual excess cashflow to £800m by the end of 2016 and lower its ratio of operating expenses to operating income to below 50 per cent over the same period, from 54 per cent at the end of 2013.
It wants to accelerate growth at fund arm Aviva Investors, where it is launching several investment products, manage its back book of life insurance business better, cut debt repayments and reduce restructuring costs, among other measures.
The changes are chief executive Mark Wilson’s answer to disgruntled investors who rebelled against previous management after a run of poor returns, forcing out the company’s former CEO and chairman.
Eamonn Flanagan, an analyst at Shore Capital, said that while the targets were “good”, they were not “overly challenging”, especially when compared with those of Aviva’s rival Prudential over recent years.
“We sense the market may well be expecting a much more ambitious delivery, whilst the de-leveraging targets exclude a date for the achievement of the external leverage, which is disappointing,” he added.
Aviva said it was sticking to plans to cut debt to £2.2bn by the end of 2015 from £4.1bn at the end of February and reduce its gross external leverage ratio to below 40 per cent of tangible capital over “the medium term”.