Aviva chief executive Amanda Blanc has no easy strategic path in solving the Aviva problem
Briefing by Saxon East
New Aviva chief executive Amanda Blanc has taken one of the toughest jobs in insurance.
Aviva is a complex business, with no easy strategic path. The biggest problem facing Aviva is shareholder returns.
Aviva’s total shareholder returns have been a disaster, as this graph below shows
It shows that over the last five years, Aviva shareholders would have lost more than 40% on their investment.
Meanwhile, rivals have enjoyed significantly better results.
If we go back ten years, an Aviva shareholder would have taken total returns of 12%.
Better, but a poor return considering AXA returned more than 100% and Zurich and Allianz above 200%.
Fuelled by low interest rates, cheap central bank money and a bounce from the last financial crisis, the world’s stock market has been on the longest bull run in its history - yet, incredibly, Aviva is losing money for its shareholders.
At the heart of Aviva’s problem is that the company is viewed by investors as a low growth business.
No wonder there are calls for far more radical action, such as breaking up Aviva or selling off large parts of the business.
But as my analysis will show in the coming days, and having spoken off the record to a wide selection of industry experts who have tracked Aviva for many years, Blanc will find there is no easy solution to solving the Aviva conundrum.
Blanc has considerable talents: clarity of vision, galvanising her staff and a passion, drive and determination to do the very best for the customers.
But she will find that every strategic path is fraught with either difficulty or high execution risk.
It’s why her predecessor chief executives Moss, Wilson and Tulloch ended up being so conservative.
Clive Cowdrey, founder of Resolution, spent many hours with his teams poring over solutions to the Aviva problem.
He couldn’t find one. Let’s hope Blanc can finally crack it.
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