The Aviva Plc logo inside the offices containing their headquarters at 80 Fenchurch Street in the City of London, UK, on Tuesday, March, 5, 2024.
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The dispatch
Few turnarounds in corporate Britain this century match the one achieved in the last six years at Aviva.
The U.K.’s second-largest insurer by stock market value — Prudential is at No. 1 — had been a serial disappointment since its creation in May 2000.
That partly reflects Aviva’s history. It was formed by the merger of Norwich Union, a 203-year-old life company that until 1997 was owned by its members, with that of CGU, a business formed in 1998 from the combination of General Accident and Commercial Union, two more insurers each dating back more than a century. That combination, of essentially three entities, brought complexity and sprawl.
Richard Harvey, the CEO who oversaw the merger, left in 2007 to undertake charity work in Africa. His successor, Andrew Moss, focused initially on offloading peripheral activities — which, bizarrely, included the British School of Motoring and the Auto Windscreens car repair business — to concentrate on insurance. He left after five years amid investor frustration at sub-par earnings growth and a shareholder revolt over executive pay.
His successor, Mark Wilson, stayed longer but, when he left, it was amid continued grumpiness among shareholders. Maurice Tulloch, his successor, exited after 15 months citing family health reasons.
Blanc to the rescue?
That brought Amanda Blanc, former CEO of French insurance giant Axa’s U.K. arm, to Aviva in July 2020.
It is reasonable to say, six years on, that she has accomplished a smart turnaround.
A major criticism during the Moss and Wilson years was that, in contrast to Prudential, Aviva deployed capital in Europe’s sluggish economies rather than fast-growing Asia.
Blanc took note.
She swiftly raised around £8 billion ($10.8 billion) with the disposal of eight businesses, exiting markets such as France, Italy and Poland in the process.
Most of that was returned to investors — part of a £10 billion return of capital to investors, including dividends, since she took the helm.
That left Aviva largely focused on three core markets: the U.K., where it is the leading provider of life and general insurance; Canada, where it is the second-largest player in general insurance and Ireland, where it is the third-largest.
Rationalization complete, growth became the priority, both organically and via acquisitions, the most eye-catching of which saw Aviva pounce on its struggling rival Direct Line in December 2024, giving it — for £3.7 billion — a fifth of the U.K. motor insurance market.
Less eye-catching, but nonetheless intriguing, was the £242 million acquisition of Probitas in March 2024, which took Aviva back into the Lloyd’s of London market for the first time in two decades and which was complementary to growing the general and commercial insurance business.
The heavy lifting on growth, though, may soon come from U.K. wealth, a market currently worth £2.7 trillion, but predicted by Aviva to top £4 trillion by 2030 and in which the company claims to be the leading player by assets and net flows.
Blanc identified early on that some £6 billion worth of pension and heritage assets left Aviva annually to be invested with rivals.
She reasoned that, by bolstering advice capabilities, more of that could be retained. Accordingly, she acquired Succession Wealth, a financial advisory business, in 2022 for £385 million. Wealth is soon expected to account for one-tenth of earnings.
An update will come when, this Friday, Aviva publishes half-year results. Analysts expect first-half operating profits of around £1.3 billion — up 17.5% on the same period last year — with growth strongest in the U.K. & Ireland general insurance arm, thanks partly to Direct Line. Shareholders still have questions.
Some Aviva Investors funds, such as its UK Listed Equity Unconstrained Fund and its Global Equity Endurance Fund, are delivering patchy performance. Longer term, there are concerns over what autonomous vehicles may mean for motor insurers.
Aviva shares
And, in some quarters, there are even concerns that Aviva now more resembles a European composite insurer, like Allianz or Axa, than a traditional U.K. life company — recalling memories of the conglomerate discount that haunted Blanc’s predecessors.
But those are arguably questions for a later date. Aviva shares are up around 150% since Blanc took over — music to the ears of 500,000 retail investors who own the stock as a legacy of the Norwich Union days.
Not only is this one of the most widely owned companies on the U.K. market. Aviva, with nearly 22 million U.K. customers, now has the second-largest customer base of any bank or insurer in the country after Lloyds Banking Group.
So expect rather more interest in this particular insurer’s results than would otherwise be the case on a sleepy August Friday.
— Ian King
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AUG 13: U.K. GDP (Q2)
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