McFarlane: Aviva will keep composite model

Aviva will remain a composite life and general insurer despite speculation that its forthcoming strategic review will lead to a break-up of the firm, according to new executive deputy chairman John McFarlane.

Speaking at a conference call for Aviva’s first-quarter interim management statement, McFarlane pointed out that companies running both life and non-life businesses receive diversification benefits under Solvency II.

However he added that this does not necessarily mean the company aims to be a composite insurer in all of the countries where it does business.
“We want to be in great businesses,” he said. “In some countries that will be life and related areas and in others that will be general insurance and related areas.”

McFarlane revealed in the conference call that Aviva’s strategic review, which will be conducted in June, will involve examining 45 profit centres group wide. He explained that the review differed from the one initiated by predecessor Andrew Moss in 2010 because it was focusing on individual business units rather than countries.

McFarlane said he expected to find a range of performance levels in the review, from those units exceeding expectations to those failing to hit targets.
Those not living up to expectations would either be fixed or, if it became clear they were not part of the company’s future, exited, McFarlane said.

McFarlane has taken over the running of Aviva in the interim following last week’s departure of chief executive Andrew Moss.

He said the search for a new chief executive, which is being conducted internally and externally, would take the rest of the year “as we need to appoint the best person in the world available to us”.

McFarlane also vowed to explain his plans clearly to shareholders, something that shareholders had criticised Moss for failing to do.
“I can promise frank and open communication with shareholders,” McFarlane said.