(Reuters) – Shares in Aviva (AV.L) jumped more than 7% on Thursday as new CEO Amanda Blanc said the British life, motor and home insurer would reduce its focus on Asia and Europe, a strategy change welcomed by analysts.
FILE PHOTO: An Aviva logo sits on the window of the company head office in the city of London, Britain March 7, 2019. REUTERS/Simon Dawson/File Photo
Blanc took over last month, becoming the firm’s third chief executive in less than two years. Analysts say the insurer is operating in too many countries and sectors, and its share performance has lagged.
Aviva will instead focus on Britain, Ireland and Canada, the firm said.
“We are going to shake up the organisation,” Blanc said on a media call, adding that for some of the firm’s Asian and European units, “there may be better owners…in the long term”.
Aviva’s European operations include France, Italy and Poland.
Aviva said last year it was selling its stake in its Hong Kong business. Its other Asian operations include Singapore and a joint venture in China.
Aviva posted a 12% drop in first-half operating profit to 1.2 billion pounds, though this was above expectations of 1.1 billion pounds, according to a company-supplied consensus forecast, helped by strong results in UK annuities.
The value of new business in its UK life business rose 60% in the first half to 323 million pounds, but Europe life and Asia life fell by 21% and 6% respectively, to 188 and 90 million.
Former CEO Maurice Tulloch carried out a strategic review of the Asian businesses last year but sources said he was unable to secure a high enough price to sell the insurer’s Singapore unit.
Aviva said at the time it was also looking at strategic options for Vietnam and Indonesia.
JP Morgan analysts said management under Blanc was “moving fast on strategy”, though it reiterated its “neutral” rating on the stock.
KBW said the strategic changes were “positive”, reiterating its “market perform” rating.
Aviva shares were up 7.5% at 304 pence at 0732 GMT, the top performer in the FTSE 100 .FTSE.
The company set aside 165 million pounds in its general insurance business for COVID-19 related claims, in line with a previous estimate.
Aviva, which like several other insurers suspended its final dividend for 2019 earlier this year, said it would pay a 2019 second interim dividend of six pence and would review the final dividend and its dividend policy later in the year.