INSURANCE giant Aviva yesterday said it will sell its struggling US business at a substantial discount in order to ensure its radical turnaround plan remains on track.
Executive chairman John MacFarlane confirmed that the sale of the Iowa-based business is on the horizon and said it is set to fetch far less than its £2.4bn book value. Aviva says this is justified because it will release reserve capital to support other divisions. The firm also confirmed that advisers have been appointed to work on the sale of eight other units.
MacFarlane took over in May after irate investors forced out former chief executive Andrew Moss following years of share price declines. He immediately set about trying to revitalise the British firm by announcing plans to withdraw from at least 16 of the firm’s 58 businesses and removing layers of middle management.
In yesterday’s announcement he said that in the process he had encountered a culture that was “more used to collective decision making” and had “more bureaucracy than desirable”. Meanwhile the search for a new chief executive is now “well advanced” with the final interviews underway.
Barrie Cornes, an analyst at Panmure Gordon, called Aviva a “work in progress” but said it is “compelling” at the current valuation. This is despite the firm announcing a five per cent drop in sales so far in 2012.