Aviva to boost share price through sell off

Published:  6 Jul at 9 AM

Insurance firm Aviva has announced that it is to increase its target for cost saving and implement a broad disposal plan in an effort to turn its share price around. According to executive chairman Jon McFarlane the moves should mean that the company will not have to reduce its dividend or issue new shares.

Aviva recently embarked on a review of 58 of its business segments and concluded that there were 16 weak performers. Among the segments the company will now look at off-loading are its 41 per cent stake in Dutch insurer Delta Lloyd, its bulk purchase annuities business in the UK, its South Korean business and partnerships with a number of Italian banks.

The company has drawn up a list of territories in which its business is performing well. These include Canada, France, the UK and Ireland. An obvious omission is the US, but Aviva is still to make a comment on how it intends to deal with its American arm.

Analysts agree that Aviva’s increased focus is a good thing but have questioned just how easy it will be for the insurer to sell off segments of its business in the current weak economic climate.

The company has replaced a savings target of £200 million by the end of this year with a fresh target of £400 million by the beginning of 2014. Aviva has not yet confirmed how many jobs are likely to be lost through the disposal and cost saving plans, but it is believed that redundancies will focus on middle management.