Aviva to slash £200m costs from sprawling business

Aviva set out aggressive cost cutting plans today, enough to make staff who are used to seeing the axe wielded gulp for breath.

The insurer says British job losses will not be needed to meet the £400 million target, which features £200 million of cost savings and £200 million in "efficiency gains".

Aviva boss Andrew Moss is still working on integrating a sprawling business born from several messy mergers. His "One Aviva, Twice the Value" strategy has not yet reaped rewards for investors. The shares, more than £8 each five years ago, today gained 11.26p to 403.96p, valuing the business at £11.3 billion.

Today he was able to report a sales bump — up 5% to £35.9 billion for the first nine months of 2010.

Aviva recently fobbed off a bid by RSA for its general insurance arm. It insists that the composite model — selling both general and life insurance — eases the strain on the balance sheet. Aviva has surplus capital of £3.6 billion, down from £3.8 billion a few months ago.

Oriel Securities analyst Marcus Barnard said the figures were "solid" and expects that "most analysts will have to upgrade their numbers" on the insurer.

Moss offered some encouragement to RSA to return with a fresh bid. "Of course there's a price at which we on the board of Aviva would entertain an offer for any of our businesses, just to be clear," he said.