It has avoided a power vacuum in its speedy top-tier but such changes cannot fail to unsettle the insurer’s recent period of stability
Hot on the heels of Mark Hodges’ departure for Towergate came this weekend’s news that Aviva has found a new chairman. John McFarlane, former chief executive of Australia and New Zealand Banking Group, is the top tip to replace Lord Sharman at the helm of the group, subject to FSA approval.
With McFarlane in at the top and Trevor Matthews replacing Mark Hodges, further change can be expected at the UK’s largest insurer. It did well to appoint Matthews so quickly, ensuring his succession was announced at the same time as Hodges’ departure, and so avoiding a damaging power vacuum. But many suspect that there will be further developments – particularly on the general insurance side of the business, given Matthews’ background in life insurance.
Moreover, group chief executive Andrew Moss has been running the insurer since 2007. That’s a long time in the life of a chief executive, and he’s had a rough ride by anyone’s standards: including his personal life becoming very public in 2009, and a surprise takeover bid by rival RSA in 2010. If Moss or his new chairman decides that enough is enough, there are eager successors in the wings. Prominent among these is financial director Pat Regan.
Since Hodges took the reins 18 months ago, with his GI team of David McMillan and Janice Deakin on the ground, Aviva has done remarkably well in the regional market. It has rebuilt the relationships damaged under Igal Mayer, but also reaped the benefits of his tough policies. This has played out in the figures, with the most recent results (Q1) showing a 98% combined operating ratio, up six points year on year, and net written premiums up 20% to £1.1bn.
All good things must come to an end, and the period of stability that Aviva has enjoyed stops here. That’s not to say any changes will necessarily be for the worse, but Hodges will be a tough act to follow.
Moreover, UK GI cannot stand isolated from events at the top of the group. A new chairman – and potentially even a new chief executive – could have very different priorities and want to implement new strategies. (It’s interesting, for example, to note that McFarlane is currently a board director of RBS and, together with his background at ANZ, this gives him a clear focus on retail finance.)
Meanwhile, any change at the top provides a potential opportunity for aggressors – let’s not forget RSA’s bid for Aviva’s GI business last year. It was rejected, but somehow, that story has never felt finished.
Ellen Bennett is editor-in-chief of Insurance Times
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