Aviva to slash debt as Europe chief quits

SPECULATION over the exit of Aviva’s European head Andrea Moneta overshadowed a promising update on the insurer’s strategy and finances yesterday.

The world’s sixth-largest insurer told investors it planned to cut the hybrid debt on its balance sheet by at least £700m over the next three years, using internal cash to fund repayments of about £250m per year.

UBS analyst James Pearce said the presentation held “few major surprises but the decision was helpful ahead of the introduction of new capital requirements for insurance companies in European Solvency II regulation.

“Debt reduction is clearly welcome given Aviva’s above average gearing, and tidies up the balance sheet ahead of Solvency II, which has a bias in favour of Tier 1 capital over Tier 2,” he said.

But the surprise decision to replace Aviva’s European chief executive Moneta, after just 18 months, with its North American head Igal Mayer left the market scrambling for an explanation yesterday.

Moneta, a board director at Aviva, will leave in February by “mutual consent to pursue new challenges in the industry,” the firm said. Analysts suggested the exit could be linked to problems with the pace of change Moneta was implementing in Europe. Other reports said the move would clear the way for current UK chief executive Mark Hodges to eventually replace group head Andrew Moss.