The sale of Groupama’s UK broking arm grows more crowded by the day, while Aviva looks to trim yet more fat
Gallagher has emerged as the latest bidder for Groupama UK’s broking assets. The broker joins four others interested in the broking arm and 10 interested in the underwriting other parts of Groupama.
Throw in the possibility of management buyouts for Groupama brokers and a separate group of investors interested in bidding for other parts of Groupama, and you have a bidding process described aptly as “messy” by one source.
Clearly this process is still fluid, and Groupama must want to get a sale sooner rather than later. While Groupama UK chief executive François-Xavier Boisseau has already said that the process won’t be rushed, the sale was prompted by the need for the insurer to shore up its capital base, and there must be some urgency there.
Aviva’s latest diet plan
The big changes at Aviva this morning are designed to help the insurer concentrate on its two core markets and cut costs, according to a statement from the company.
The statement said that the insurer wants to “increase profits and cash generation through a combination of operational efficiencies and scale advantages” for its developed markets in France, Italy, Spain, the USA and Canada.
But how much more fat can Aviva cut, considering its general insurance expense ratio is already a market-beating 10.4%? The problem the insurer has is balancing customer service against shareholder happiness.
The insurer has already made tough cost-cutting decisions by making extensive job cuts in Ireland. It is also keen to continue offshoring other services to cut costs.
One offshoring example last year showed the difficulty of balancing service against savings. The insurer moved some of its call centre operation from Norwich to India, only to have to move back again when customers complained about communication problems.
On the plus side, at least the analysts are happy, stressing that today’s move to cut out the regional structures will result in significant cost-savings. That might be a fillip for underwhelmed shareholders, disgruntled at their company trading well-below book.
Meanwhile, today’s announcement states that McMillan’s will have direct access to Andrew Moss and has been appointed to the general executive committee. It’s a big boost to McMillan’s personal standing, and surely, he’s being groomed for even bigger things at the world’s sixth largest insurer.
HomeServe gets the silent treatment
Ofcom has fined HomeServe £750,000 for making an excessive number of silent and abandoned calls to UK customers as part of the watchdog’s investigation into the practice.
Silent calls happen when companies use automatic dialling software to spray out phone calls. These companies normally make more calls than their staff can answer at any one time, on the assumption that a lot of people receiving the calls will hang up. But if all the company’s staff are on the phone then the firm may decide to automatically abandon calls when they are picked up, creating a silent call.
This is fairly common practice in the UK, where there is no law preventing it. But, if the calls are judged to be worrying or very annoying then Ofcom may decide to act.
This HomeServe fine is the first sign that Ofcom is prepared to act on customer complaints on silent calls in the insurance sector. This begs the question: who will the watchdog look at next?