Aviva has reduced its expenses by 10 per cent, or £83m, in the first three months of the year compared to the first quarter of 2012, but it has spent £54m on restructuring costs in this period, with the company warning this will increase throughout the remainder of 2013.
In its Q1 results, Aviva said this quarterly restructuring cost will increase during 2013 as a result of the ongoing redundancy and restructuring programme. Aviva said in future years it will ensure it has “more modest restructuring costs”.
It also said it is taking the “necessary actions” to reduce expenses. As previously announced, over the next six months there will be a reduction of approximately 2,000 roles across the group, equating to 6 per cent of the global workforce.
Aviva said that while it realises this is “very difficult” for its employees, this decision - together with non-people savings - will help it achieve its cost savings target.
Over the three months Aviva saw the value of new business increase 18 per cent to £191m. In UK life the value of new business increased by 33 per cent, or £27m, to £108m. The UK result was “positively impacted” by actions on pricing and expenses, Aviva said.
Mark Wilson, group chief executive, said: “This is essential for Aviva to become more efficient and agile. I expect Aviva to move through this phase of its transformation as quickly as possible.
Mr Wilson said: “In the first quarter we have taken steps to deliver our investment thesis of cash flow and growth.
“Our operating expenses are now 10 per cent lower and we are on track to deliver our cost savings target of £400m.
“Net asset value has increased by 9 per cent to 302p and our internal debt level has reduced by £300m.
“Today’s results demonstrate the first steps towards delivery. I am conscious of the challenges and do not want to set expectations at an unrealistic level. Progress so far has been satisfactory and there is a great deal more we need to do for our shareholders.”
