Aviva under pressure to reveal plans for Asian business in half-year results

Investors and analysts are putting pressure on Aviva, the UK multi-line insurer, to provide confirmation during its quarterly results statement on 8 August that it is planning to sell its Asian business.

The insurer has allegedly valued the business at more than $2bn, according to news agency Reuters.

Aviva has six Asian businesses – based in China, Hong Kong, India, Indonesia, Singapore and Vietnam. Collectively, they posted a 26% increase in operating profits in 2018 to contribute £284m to the group result.

Of the six operations, only Singapore and Vietnam are wholly-owned businesses. Singapore contributes nearly half of the Asia unit’s operating profit.

Anonymous sources reportedly told Reuters last week that Aviva has hired a financial adviser to help work on the sale and the formal process will commence in the fourth quarter.

Whether or not the sale goes ahead will depend upon the findings of a review of the business that will be completed in the coming weeks, the sources reportedly said. Aviva declined to comment.

The sale of the Asian business would make sense as Aviva’s senior management team is carrying out another major strategic review under CEO Maurice Tulloch, who was appointed in March this year.

He replaced Mark Wilson, who spent six years turning around the UK insurer but was deemed not to be the man to take the group onto the next phase. His departure was announced in October last year.

Six months later, Mr Tulloch, a 26-year Aviva veteran, was appointed and vowed to “re-energise” the group.

“We have strong foundations but we are only scratching the surface of our full potential. There’s a huge opportunity here. At the heart of it, it’s all about insurance fundamentals, delivering excellent customer experience, tackling complexity and injecting a different pace of change into Aviva. And that will be just the start. I am determined to re-energise Aviva and deliver long-term growth for our shareholders,” he said when his appointment was revealed.

Soon after, Aviva announced its 2018 results and some big changes. Aviva’s life and general insurance businesses in the UK would now be managed separately, with the digital direct business integrated into UK general insurance – providing “stronger accountability” and “greater management focus”, according to the insurer.

Mr Tulloch also revealed plans to slash expenses by £300m per annum by 2022, net of inflation, at constant currency. He said cost savings will be achieved through lower central costs, savings on contractor and consultant spend, reduction in project expenditure and other efficiencies.

This cost-cutting drive will involve about 1,800 job losses across the group during the next three years, out of a total workforce of about 30,000. The new CEO also promised a debt reduction of at least £1.5bn. The sale of the Asian business would presumably help achieve that goal.

Mr Tulloch said Aviva will host a capital markets day on 20 November, which will provide an update on its future strategy and targets. No doubt some information will be provided later this week when the half-year results are announced.

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