Aviva’s new boss offered some encouragement for beleaguered investors today after seeing a solid start to the insurer’s new financial year.
Mark Wilson said the quarterly update, which included an 18% rise in the value of new life and pensions business in the UK was an early step in Aviva’s turnaround.
However, he added: “I am conscious of the challenges and do not want to set expectations at an unrealistic level. Progress so far has been satisfactory and there is a great deal more we need to do for our shareholders.”
In a blow to many of Britain’s pension funds, Aviva stunned the City in March by announcing a 44% cut in its full-year dividend after a long period of under-performance and a fall in underlying profits.
Mr Wilson said at the time that the reduction would put the Norwich-based company in a sound position while it works through a turnaround strategy that will see it cut costs and focus on core operations.
Under the cost plans, Aviva said in April that it intended to axe around 2,000 jobs, equivalent to 6% of its global workforce.
Shares rose 4% in the FTSE 100 Index today and have recovered ground in recent weeks to near the level seen before the dividend cut.
However, Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, added: “Respectable though these numbers are, investors are likely to continue to look elsewhere in the sector for racier prospects.”
Mr Wilson was appointed chief executive in January after the departure of Andrew Moss following last year’s humiliation when the bulk of investors voted down a controversial pay deal.
The New Zealander previously led a turnaround strategy during four years at Asian insurer AIA.
Today’s figures showed that the value of new business in life and pensions in the UK jumped by a third to £108 million. However, the performance in several other markets was disappointing, with the value of new business in Spain and Italy down.
Investec analyst Kevin Ryan said: “There are signs of improvement in the first quarter numbers, but progress in one area is matched by difficulties in another.
“Fixing Aviva is likely to take time and until there is clear, sustainable progress across its various businesses there is no reason to own the stock, in our view.”