Aviva searches for new chief executive after Moss quits following AGM

Aviva’s search for a new group chief executive has begun after Andrew Moss quit his post on Monday.

Moss exited this week following a row over directors’ pay in which shareholders rejected Aviva’s remuneration report at the company AGM last Thursday.

And the clamour has now started for the insurer to sell its UK general insurance arm, valued at £3.2bn by one analyst, amid hopes that Moss’s successor will split the life and general insurance businesses.

RSA tried to buy the general insurance arm in a £5bn bid in September 2010, but was knocked back by Aviva. Since then the eurozone debt crisis has struck and Aviva’s share price has tanked.

Despite RSA’s chief executive Simon Lee dismissing the idea of a large takeover, a deal to buy Aviva’s UK general insurance arm would greatly enhance shareholder value, said Jefferies analyst James Shuck.

Shuck said: “We estimate a valuation of £1.5bn for Canada and £3.2bn for UK non-life. RSA approached Aviva in 2010 only for a complicated forced break-up to fall over. The
situation is now very different. We estimate potential present value synergies of £1.5bn to RSA, equivalent to around 30% of the combined valuation of the two entities.”

Shore Capital analyst Eamonn Flanagan agreed that Aviva was now vulnerable to a “corporate predator”. He said: “This hiatus in CEO leadership could, in our view, put Aviva ‘into play’. Aviva retains a number of powerful assets which, especially given the current undervaluation, could prove hugely attractive to a corporate predator.”

Chairman-elect John McFarlane will take over at Aviva until a replacement is found. Names linked to the job include former RSA chief executive Andy Haste, Aviva’s chief financial officer Patrick Regan and UK chief executive Trevor Matthews, and Towergate chief executive Mark Hodges.

McFarlane said: “My first priorities are to regain the respect of our shareholders by eliminating the discount in our share price and to find the very best leader to be our future chief executive.”

Shuck said that Moss’s ultimate replacement was unclear, especially with Igal Mayer, former chief executive of Europe, having recently gone. “Andy Haste, previous CEO of RSA, would be a popular choice,” he added.

Current Aviva chairman Lord Colin Sharman said in a statement that Moss had approached him with the decision to step down, deeming it in the best interests of the company.

Moss joined Aviva as group finance director in May 2004 and became chief executive in July 2007.

Aviva’s share price rose 5% in early morning trading following the announcement.