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Aviva halts bonuses as 2012 losses hit £2.7bn

Aviva’s executive directors will not be paid a bonus for 2012 as the insurer reported a pre-tax loss of £2.7bn following the disposal of its US insurance business.

Aviva sign 480

Aviva sold its US life and annuities arm for £1.1bn in December. The sale resulted in a £3.3bn write down on the insurer’s 2012 balance sheet.

The £2.7bn pre-tax loss in 2012 compares to a pre-tax profit of £87m 2011.

The provider also initiated a £400m cost-cutting exercise as part of global restructuring efforts last year. This included 800 job cuts across its UK operation.

Pre-tax profits in Aviva’s UK life business were down 3 per cent, from £917m to £887m.

On the back of the results, Aviva has reduced its full year dividend by 27 per cent, from 26p to 19p.

Aviva chairman John McFarlane says: “While we appreciate the considerable progress that has been made on a number of fronts, we do not believe the overall situation of the group warrants bonuses for executive directors for 2012 or pay rises for 2013.”

Aviva chief executive Mark Wilson says: “It is clear to me that Aviva has not articulated why investors should buy or hold Aviva shares which is what investors should expect of us.

“I believe there is a clear space in the market for a simple proposition: a diversified insurer that can provide sustainable and growing cashflows and that has good options for growth.

“Following the progress made on the disposal programme, we are now a more focused portfolio of businesses. Some are cash generators, such as the UK, France and Canada, with upside potential whilst others provide opportunities for growth such as Poland, Turkey, and Singapore.

“Put simply, our investment thesis is about progressive cashflow and growth, in that order.”

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