March 4, 2019
By Pamela Barbaglia and Carolyn Cohn
LONDON (Reuters) – Aviva Plc on Monday appointed internal candidate Maurice Tulloch as its new chief executive officer after a lengthy selection process, a choice which analysts say could herald change at Britain’s second biggest insurer.
Tulloch, who will take over with immediate effect, is expected to sharpen Aviva’s focus on the home market and some analysts say he may decide to put some overseas units under review, including some of its Asian businesses.
Other possible changes include the sale of some of its portfolio of life insurance policies closed to new customers, they added.
Aviva, which traces its roots back to 1696, sells everything from life to car insurance, an unwieldy and expensive model which has failed to deliver the same results as more focused rivals like Prudential and Legal and General.
“We must focus on the fundamentals of insurance and giving our customers the best possible experience,” Tulloch, who joined Aviva in 1992, said in a statement, adding that there was “more to do to improve returns for shareholders”.
Most recently based in Canada, where he headed Aviva’s international business, Tulloch was seen as one of the front runners for the post along with fellow internal candidate Andy Briggs, head of the firm’s UK business, its biggest revenue earner.
Aviva’s shares were up one percent at 436.6 pence at 1020 GMT, outperforming the broader FTSE 100 index.
Chairman Adrian Montague, who had temporarily stepped in as CEO following Mark Wilson’s ouster last October amid concerns about a struggling share price, will revert to his role as non-executive chairman.
Montague said in a statement that the decision, which an Aviva spokesman said was taken by the board on Sunday night, was unanimous. External and internal candidates were considered, he added.
Possible external candidates included former Old Mutual CEO Bruce Hemphill and ex-Lloyd’s of London CEO Inga Beale, Reuters reported last month.
“We believe the protracted process of bringing in a new CEO and the rumors of external candidates shows the board’s desire to see change within the group,” Barclays analysts said in a note, reiterating their overweight rating on the stock.
Meanwhile, Panmure Gordon analyst Barrie Cornes said Tulloch “will make changes where needed and shouldn’t be underestimated”.
However, one Aviva shareholder said the choice of an internal candidate was unlikely to signal “a radical plan – with more upheaval”.
Under Wilson’s leadership, Aviva clinched one of the biggest insurance takeovers in a decade by buying Friends Life in 2015.
But despite improving profitability, Wilson failed to turn Aviva’s share price performance around, with the company’s stock up 25 percent during his tenure against a 61 percent return for the insurance sector within the FTSE-100.
In attempts to stay nimble and competitive, former Anglo-South African financial services business Old Mutual split its business in four last year, while Prudential is preparing to list its UK business separately.
(Additional reporting by Sumeet Chatterjee; editing by Jason Neely, Emelia Sithole-Matarise and Kirsten Donovan)