AVIVA COULD LOSE 10 TO 15 OF ITS 58 DIVISIONS

UK-based composite Aviva faces the closure or sale of 10 to 15 of its 58 divisions, executive chairman John McFarlane is expected to tell analysts in a presentation this week. A further 25 to 30 divisions will be identified as needing close attention. Some sales would be part of a general tidying-up, with ventures in Malaysia, Taiwan, Indonesia, Singapore, South Korea and Sri Lanka all earmarked for disposal, albeit for relatively small sums. On the capital strengthening side, many expect an announcement that Aviva's now minority stake in Delta Lloyd could be sold for in the region of £1bn ($1.57bn), if it could fetch the same price as the £380m it obtained for the sale of a 16% stake last year ( IIN 24, April 12 2011). Mr McFarlane has expressed concern that Aviva's capital adequacy ratio could be forced down to near 100%, leading some to speculate that Aviva might put on the block its US life assurance division – a major contributor to Aviva's balance sheet volatility. Reports yesterday said that chief financial officer Patrick Regan's strategy review has identified many operating units as "mediocre" in performance terms. Mr McFarlane is believed to be looking at cutting the number of management layers from 11 to five, integrating technology, and reviewing the company's property portfolio. The Sunday Telegraph said that Mr McFarlane had waived any increase in his salary package as chairman, despite taking on the additional responsibilities of CEO after Andrew Moss's departure. Meanwhile, Patrick Snowball, who left Aviva after being beaten to the top job by Andrew Moss, and who now runs Suncorp in Australia, confirmed that he had been approached by headhunters and had held exploratory talks, but said that "I have a great job in a great country, so why change anything?"