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(Alliance News) - Aviva PLC unveiled its new "simplification" strategy on Wednesday, saying it is going to begin operating with five divisions.
The five divisions are: Investments, Savings & Retirement; UK Life; General Insurance; Europe Life; and Asia Life.
The "simplification" is expected to result in GBP300 million in net savings by 2022, Aviva said, with a GBP1.5 billion reduction of debt.
"Aviva's focus is delivering sustainable growing returns to shareholders. Our forecast cash flows are more than sufficient to sustain our dividend, reduce debt and grow Aviva," Chief Executive Maurice Tulloch said.
Aviva's IS&R business will focus on retirement products for UK customers, which the insurer described as the "biggest financial challenge globally". UK Life, the company said, will focus on generating "significant" levels of cash flows, which will fund Aviva's dividend. UK Life will look to reinvest any company profits in new businesses.
General Insurance's first job will be to "strengthen" the company's personal lines and seek out "attractive" margins in commercial lines. Aviva said the business will focus on "speed, simplicity and efficiency".
Europe Life and Asia Life will run the Aviva's operations in their respective regions.
Aviva said it is keeping its Singapore and China businesses, believing they are "profitable businesses, delivering attractive growth and generating positive cash-flow".
The insurer continued: "We have agreed the sale of our stake in our Hong Kong joint venture, Blue, to our partner Hillhouse Capital, and we are in discussions with our partners in relation to our business in Vietnam and joint venture in Indonesia."
The FSTE 100-listed insurer said the overall strategy will allow it to "excel at fundamentals" and invest in sustainable growth. Over the next three years, Aviva is looking to invest GBP1.3 billion in the company.
Aviva added: "At the same time, we remain committed to our progressive dividend policy, our deleveraging plan and maintaining the financial strength of the group."
Turning to medium term financial targets, Aviva is guiding for a solvency II return on equity by 2022 of 12%. From 2019 to 2022, operating capital generation is expected to be GBP7.5 billion, with cash flows between GBP8.5 billion and GBP9.0 billion.
For 2019, the insurer's operating profit is expected to be "broadly" in line with management expectations. In 2018, Aviva reported an operating profit of GBP3.12 billion.
"Consistent with the operating trends reported in our 2019 interim results, we have seen continued progress in Canada and stronger sales in bulk purchase annuities, offset by weaker results in Aviva Investors and UK personal lines insurance," said Aviva.
Chief Executive Maurice Tulloch added: "Aviva is a business with ambition. We are investing in new services, new products and new technology. We expect growth, especially in higher return businesses such as General Insurance and Asia and also, from our new Investment, Savings & Retirement business.
"Our strategic review has been rigorous and thorough. I am committed to running Aviva better. We will be more commercially focused, manage costs rigorously and be more disciplined in how we invest. We will excel at the basics, giving customers a simpler, faster and more convenient service. Getting these fundamentals right will result in a simpler, stronger, better Aviva, while also improving returns for shareholders."
Shares in Aviva were 3.6% lower in London in early trading on Wednesday at 403.20 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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