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Aviva Plc (AV/), the second-largest U.K. insurer, said it may cut as many as 800 jobs in the country as Chairman John McFarlane scales back operations to limit the impact of further turmoil in the euro region.
“The vast majority of our employees will be placed into roles with little change” as part of the reorganization, Andrew Reid, a spokesman for the London-based insurer, said yesterday in an e-mailed statement. “Up to 800 roles could be at risk, although in practice it will be fewer than this because of natural turnover” and because some staff will take new positions with the company.
Financial firms including banks and insurers may eliminate about 3,000 jobs across greater London as Europe’s sovereign- debt crisis pressures results, researcher Oxford Economics Ltd. said this month. McFarlane, 65, announced plans on July 5 to exit 16 divisions including U.K. bulk-purchase annuities, its South Korean unit and some partnerships in Italy.
The insurer briefed staff yesterday about new “team structures” and its plans to make the company more “efficient and agile,” steps that are related to the previous announcements, Reid said. The insurer had about 40,800 employees worldwide as of Dec. 31, according to data compiled by Bloomberg. The cuts were previously reported by the Telegraph.
McFarlane began a strategic review of Aviva on May 8, the same day that Chief Executive Officer Andrew Moss stepped down following a shareholder protest over pay. The insurer’s new leader inherited a company with 18 billion pounds ($28.6 billion) of European government debt, more than any other U.K. insurer, lower and more volatile capital reserves than competitors, and a share price that plunged about 60 percent during Moss’s five-year tenure.
“Our members face being asked to pay the price of boardroom failure and Unite is dismayed that what started out as a shareholders’ revolt on executive pay will result in a jobs cull,” David Fleming, national officer for Unite, a labor union. “This is totally unacceptable.”
The insurer declined 0.5 percent to 325.3 pence at 10:28 a.m. in London today and has gained 8.1 percent this year.
Aviva said last month it will reduce 2011 expenses by 400 million pounds by cutting management layers within the organization to five from nine. The cost-cutting program may be complete by 2014, Aviva said.
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