Aviva, the UK’s biggest insurance firm, is cutting 1,800 jobs over the next three years in an effort to cut costs.
The firm’s new chief executive, Maurice Tulloch, who replaced Mark Wilson in March, said the company needed to be “ruthless” as it attempts to lower annual costs by £300m by 2022.
Savings will also come from scaling back its London headquarters, lower spending on contractors and consultants and reduced digital project spending. Aviva said it had not decided exactly where the job cuts would fall, and that businesses around the world would be asked to reduce costs. The company employs 30,000 people worldwide.
More than half the insurer’s total employees – 16,500 people – work in the UK. Norwich is its biggest site, with 5,200 staff. Other locations include London, York, Sheffield and sites across Scotland.
Tulloch said the changes were the first step in his plan to make Aviva “simpler, more competitive and more commercial”.
He said Aviva had not taken the decision to cut jobs “lightly,” but added in a presentation to investors and analysts in London: “We need to be ruthless in ensuring that we eradicate duplication.”
Aviva has 33 million customers and is the biggest general insurer in the UK, serving one in four households. Its international operations, which Tulloch ran before being promoted to the top job, include France, Italy, Ireland, Poland, Turkey, Canada, India and China.
The firm has started consulting the Unite union in the UK and and its own staff representative body. Aviva said it would try to keep compulsory redundancies to a minimum by not filling vacancies and seeking voluntary redundancies.
Andy Case at Unite said Aviva staff in the UK would be shocked and that the union would fight compulsory redundancies. “The scale of this role reduction will be met with disbelief across the company,” he said. “Unite have arranged urgent discussions with Aviva management in order to ascertain the rationale for cutting an already extremely stretched workforce.”
Tulloch has also split the management of Aviva’s UK life and general insurance units, and reiterated a target to cut the company’s £8.9bn debts by at least £1.5bn over three years.
Panmure Gordon, an analyst Barrie Cornes, said: “This [decision to split the roles] gives Aviva an option to sell its general insurance business in future.”
The new Aviva boss is trying to revive the business after years of stagnation and poor share price performance, after the £5.6bn acquisition of Friends Life in 2015.
Aviva’s domestic rivals – Prudential and Legal & General – have fared better in recent years by focusing on life cover and pensions rather than general insurance.
In another change at the top of the company, Aviva’s finance chief, Tom Stoddard, stepped down on Wednesday.
Tulloch’s predecessor Wilson quit last October after Aviva decided it was time for new leadership. The company was run by its non-executive chair, Sir Adrian Montague, until Tulloch took the helm in March.