Aviva’s share price (LON:AV) has climbed higher in London in today’s session as the blue-chip insurer unveiled plans to shake up its business and shed jobs as it targets costs savings of £300 million per year. The news comes hot on the heels of the company’s announcement that it will part ways with its finance chief.
As of 08:56 BST, Aviva’s share price had added 1.63 percent to 417.30p. The group’s shares are outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.51 percent higher at 7,256.98 points.
Aviva unveils shake-up
Aviva announced in a statement today that its life and general insurance businesses in the UK will be managed separately, with the digital direct business integrated into UK General Insurance. The company further unveiled plans to reduce expenses by £300 million per annum by 2022, net of inflation, at constant currency. The costs savings will include about 1,800 role reductions across the group over the next three years.
“Today is the first step in our plan to make Aviva simpler, more competitive and more commercial,” Aviva’s chief executive Maurice Tulloch commented in the statement, adding that reducing the insurer’s costs was “essential to remain competitive and this means tough decisions and job losses which I do not take lightly”.
Tulloch, who took the top job at the company earlier this year, further pointed out that he “was determined to crack Aviva’s complexity, an issue which has held back our performance for too long”.
He, however, reassured investors that the security of the group’s dividend was ‘paramount’.
Analyst ratings update
Shore Capital reaffirmed the company as a ‘hold’ today, without specifying a target on the Aviva share price. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 492p.