Who will take on Aviva?

The question on everybody’s lips is now: who will replace Aviva chief executive Andrew Moss?

The front-runner is Andy Haste. Haste has a great record, turning RSA around from basket case to rock-solid insurer in the space of a few years.

He’s loved by the City, and his arrival would automatically pump up the share price, pleasing those disgruntled shareholders holding onto a depressed stock.

The problem is that Haste might not want to join Aviva. He loves the big deals, if one remembers the RSA bid for Aviva’s general insurance arm in August 2010.

The problem for Haste is that Aviva doesn’t have the firepower for a big deal.

Its capital surplus has been eroded by the eurozone crisis, and with the rigours of Solvency II bearing heavily, the company is in no position to make a large acquisition.

A share issue to fund a large acquisition would be out of the question at a time when it is traded so heavily at a discount.

Perhaps what might lure Haste into the Aviva job is the thought of breaking off the insurance arm and using those funds to transform the life business.

The outsiders

There is another big contender for the throne, albeit an outside bet, and that is former Aviva golden boy Mark Hodges.

Hodges always pined for the top job at Aviva and, privately, it is thought that he believed Moss had an unclear and ill-defined strategy. That was probably one of the reasons he jumped ship for Towergate.

Hodges seems enthusiastic in his new role as Towergate chief executive, and with the vast personal rewards on offer if Towergate successfully floats, it would take some persuading from Aviva to unseat him.

Of course, there’s Pat Regan, the chief financial officer, who is seen as a real stalwart.

Finally, UK general insurance chief executive David McMillan has put himself in a good position as a candidate, although he may be a bit green for such a large role.

Avoiding a break-up

Whoever gets the top job, Aviva will need to make an appointment soon. Already the analysts are talking about the insurer being broken up or taken over.

If the share price languishes massively below net tangible asset value per share for too much longer, and there’s indecision over the leadership role, then disgruntled shareholders may push for the business to be broken up.

Shareholders have already flexed their muscles by revolting over directors’ pay, and it was understood that this was a covert protest vote against Moss.

If the shareholders were to get aggressive again, then it could be curtains for Aviva and its cherished composite model.