AVIVA yesterday confirmed the worst fears of its shareholders and slashed its final dividend by 44 per cent as it tumbled to a £3.1bn loss.
Shares in the restructuring insurance giant plummeted by 13 per cent as analysts pointed the blame at former chief executive Andrew Moss, who left the business last May following an investor revolt over pay and performance.
“Aviva’s results – in particular the dividend – is a legacy of the last five or even ten years. It’s a build-up of the debt not being addressed and the capital position,” said Barrie Cornes, an analyst at Panmure Gordon.
The current board appears to have learned from past mistakes and yesterday scrapped bonuses for the top 400 executives, while freezing pay for the year ahead.
Chief executive Mark Wilson, who took control at the start of December, said the company could not afford to maintain the historic dividend level after disposing of a number of cash-generating units over the past year.
“It’s like walking up an escalator that’s going down. It’s possible to climb up but eventually the escalator wins,” he explained.
The hefty losses were driven by Aviva’s sale of its US business for less than book value, triggering a £3.3bn write-down. The disposal was part of a programme to release capital from less-profitable businesses, enabling the insurer to shore up its financial health and focus on its core European operations.
Operating profit, excluding one-off items, fell to £2.13bn, down from £2.5bn a year ago.