New Aviva boss Mark Wilson: analysts give their view

Analysts have welcomed the appointment of an outsider to the chief executive’s job at Aviva, but have questioned Mark Wilson’s experience of the key UK and European markets.

Shore Capital analyst Eamonn Flanagan said Wilson’s credentials spoke for themselves, having led AIA through a period of economic and market turmoil and prepared the firm for its $36bn flotation.

Flanagan said that while Wilson had a lot of experience in the Asian markets, those were regions Aviva was exiting or scaling back in.

“Indeed, once Aviva’s current strategy is completed, it will have considerably increased its proportional exposure to the so-called developed economies of the UK and Europe…regions that Wilson appears to have little, if any, experience in,” he wrote in a research note.

Flanagan said that Wilson needed to listen to Aviva’s shareholders and seemed to have no problem in executing executive chairman John McFarlane’s strategy.

“Let’s see what he decides on the dividend,” said Flanagan.

Flanagan said Aviva might also be on the lookout for a new finance director after Pat Regan was overlooked for the top job.

Panmure Gordon analyst Barrie Cornes said: “We believe that his experience gained in the reshaping of AIA will help reduce the execution risk at Aviva as it improves or exits its underperforming businesses. The valuation of Aviva implies that the market is wary that it can deliver on its new strategy but we believe that this is a turn-round story that will surprise on the upside.”

Investec analyst Kevin Ryan said: “I don’t know him at all and I suspect I’m not alone. I suspect that within Aviva he wouldn’t be known either by very many people. It is an advantage because he comes without any assumed baggage. It is a brilliant fresh start for both the new CEO and the company.

“They have been through a process that has taken a while so I guess they have got their man.”

Canaccord Genuity analyst Ming Zhu said Wilson’s obvious strength was in Asia, but that he may have his hands tied in that respect with Aviva’s strategy there.

“With his background he has got quite a good relationship with Asian regulators,” he said. “With Aviva it is a small positive because now they have got that leadership. But with Aviva, the company itself has already set out its plans, so it is more for him to get on with the job, stick with the plan and deliver.”

He continued: “Product wise, Asia has a lot of savings, protections and with-profits products. In terms of the products, his knowledge is compatible but his more Asian background is why we are saying it is a very small positive. It is not a negative for AIA and his track record is very good, but we think it is only a small positive.

“We expect he will follow the template (set by McFarlane), although there may be very small changes and tweaks to the main route.”

An unnamed Aviva shareholder said: “My sense is that it is a good thing to go for an outsider.

“They tried the insider route with Andrew Moss and it clearly didn’t work.

“I think the big task for the new man is to understand whether he has an opportunity to create his own strategy for the business or whether it is simply a job that involves him finishing off the job that McFarlane started as a bag carrier for the chairman.”

He also said that having come from AIA, an Asia-focused business, he may look to halt Aviva’s strategy of selling off its Asian assets.

McFarlane said that the RSA bid for Aviva’s general insurance business was still not off the table and could still be a consideration for Wilson.

He said that shareholders who had held onto their stock for a long time were open to the idea of a break-up of the composite business, which a new man from the outside could deliver on.

“The opportunity for someone from the outside who doesn’t have the baggage to look at the break-up is much more compelling than an insider who may not have the ruthlessness to go down that route,” he said.

“One of two major investors were holding back on putting money into the business unless an outsider was appointed.”

The shareholder said one of the main criticisms of Aviva was the quality of its executive team, with the likes of Mark Hodges and Patrick Snowball having departed, and Wilson may be looking to bring in his own team.

“There is the argument that Mark Wilson could be looking around for some new talent,” he said.