Aviva ready to sell Asian arm worth over £1.7bn in major overhaul as it seeks to raise value for shareholders
Insurer Aviva is considering selling its Asian business amid a major overhaul of the group.
Chief executive Maurice Tulloch, who took over in March, also said Aviva has cut costs by an average of £2.7 million per week.
The Asian arm, which comprises operations in China, Hong Kong, India, Indonesia, Singapore and Vietnam, could be worth more than £1.7 billion, according to reports.
Mark Tulloch, who took over as chief executive in March has reduced costs by an average of £2.7 million per week. One analyst said Aviva lacked the scale to make an impact in Asia
A sale would follow in the footsteps of rival Prudential, which is splitting off its UK arm to focus on operations in Asia and the US.
Aviva will reveal more details at an investor day in November. Tulloch said: ‘Our Asian operations are strategically and financially attractive.
‘However, we are evaluating a range of options to enhance the value of the businesses to shareholders. I’ve taken this role to change Aviva. I want Aviva to be a simpler company. Work has started apace.’
Analysts said that while Asia was a profitable market, many rivals were better equipped to make their mark there. Russ Mould, at AJ Bell, said: ‘While Asia has significant potential as far fewer people already have insurance and savings products, Aviva likely lacks the scale to thrive in what is also a highly competitive market.’
Richard Hunter, head of markets at Interactive Investor, said: ‘The Asian business, which should be an exciting source of opportunity, remains insufficiently tapped and exploited.’
Unveiling Aviva’s latest results yesterday, Tulloch said it had axed £25 million of costs since June 6. He wants to reduce overheads by £300 million, which will be partly supported by 1,800 job cuts.
Profits rose to £1.5 billion for the first six months of the year, 1 per cent up from the same period of 2018. Earnings at the general insurance arm leapt 29 per cent, while its life insurance division fell 8 per cent and fund management business Aviva Investors tumbled 18 per cent.
The dividend rose 3 per cent to 9.5p a share, and stock rose 1.8 per cent, or 6.8p, to 388.8p.