Aviva Plc, the U.K.’s No. 2 insurer by market value, will eliminate 2,000 jobs as new Chief Executive Officer Mark Wilson ramps up cost reduction efforts.
The jobs cuts, equivalent to 6 percent of the global workforce, will stretch over the next six months across the U.K., Europe and Asia, London-based Aviva said in an e-mailed statement today. The firm is also reducing severance pay from December, when the cuts are planned to be complete.
Wilson, 46, who took over the helm at the beginning of the year, is selling assets, cutting jobs and rebuilding capital buffers depleted by the European sovereign debt crisis as he attempts to reverse the 60 percent share price decline under his predecessor Andrew Moss. He scrapped directors’ bonuses for 2012 and froze pay for the firm’s top 400 managers in March after cutting the dividend by 44 percent and posting a full-year loss.
“Once again finance staff are being forced to pay the price for boardroom failure,” Dominic Hook, a national officer for trade union Unite, said in an emailed statement. “To cut redundancy pay so drastically when there is deep uncertainty over job security is a callous and disgraceful act.”
The stock climbed 0.4 percent to 296.20 pence at 2:02 p.m. in London trading, valuing the firm at about 8.7 billion pounds.
The insurer, which employs 31,200 people worldwide, said it will pay two weeks pay for every year of service, down from four weeks currently. This will be capped at 78 weeks, it said.
The cost-cutting plan has already delivered 275 million pounds ($420 million) of annual savings and the reductions will contribute toward reaching an annual target of 400 million pounds, Aviva said.
“I know this is difficult news for our employees but these changes are essential if we are to remain competitive,” Wilson said in the statement. “Aviva needs to become a more efficient and agile organisation to unlock its potential.”
The company posted a 2012 net loss of 3.05 billion pounds, following a 3.3 billion-pound writedown on the U.S. business it agreed to sell to Leon Black’s Apollo Global Management LLC in December. Operating pretax profit dropped 15 percent from a year earlier to 2.13 billion pounds.