14th Sep 2006 07:03
Aviva PLC14 September 2006 News release 14 September 2006 AVIVA'S UK OPERATION, NORWICH UNION, PLANS £250 MILLION COST SAVINGS Aviva plc ("Aviva") announces that its UK business Norwich Union plans to reduceduplication and improve efficiency to deliver annual cost savings of £250million in 2008 at a cost of £250 million by the end of 2007. The savings and costs will be evenly spread between the Life and GeneralInsurance businesses and in the Life business, our expectation is that it willprincipally benefit shareholders. These initiatives will further strengthen thegroup's ability to meet its current financial objectives and deliver growth forshareholders. The savings are in addition to the planned RAC integration savingsof £130 million per annum by 2008. Aviva's headcount in the UK of 36,000 will reduce by 4,000 by 2008 with up to1,000 roles being offshored to India (in line with previous announcements that7,800 roles will be located offshore by the end of 2007) and a further 500 rolesbeing outsourced to third party IT suppliers. The company will seek to minimisethe number of compulsory redundancies through natural staff turnover andvoluntary measures. The savings primarily arise from cost efficiencies andreducing duplication in marketing, human resources, finance, and informationtechnology, as well as applying a single approach to procurement and suppliermanagement. Continuous improvement in service standards and maintenance of strong financialdisciplines will remain key objectives throughout the process. The announcement follows a review of the Norwich Union insurance businesses andis in response to a combination of changing distribution dynamics in theinsurance industry and changes in the use of technology. An update on NorwichUnion's UK Life strategy will be presented on 26 October to analysts andinvestors. Patrick Snowball, Norwich Union executive chairman, commented: "We have to ensure that Norwich Union remains a highly efficient and effectivecompany in what is an increasingly competitive and dynamic environment.Customers' buying habits are changing rapidly as technology becomes moreaccessible. Already half our new direct motor insurance policies are purchasedover the internet. Consumers, IFAs and brokers are increasingly operating in aself-service world. "Norwich Union, with its strong and trusted UK market brand will continue tolead the industry by adapting to these shifting dynamics. We will do this byleveraging the scale of our Life and General Insurance businesses and we have aproven record of delivering change. "The integration and efficiency measures we are announcing today are part of aprogramme which will result in an increase in customer focus across our UKbusinesses along with better and more efficient use of technology." - ends - Enquiries: Analysts: Charles Barrows, investor relations director, Aviva plc +44 (0)20 7662 8115Jessie Burrows, head of investor relations, Aviva plc +44 (0)20 7662 2111 Media: Hayley Stimpson, director of external affairs, Aviva plc +44 (0)20 7662 7544Sue Winston, head of group media relations, Aviva plc +44 (0)20 7662 8221Rob Bailhache, Financial Dynamics +44 (0)20 7269 7200 Notes to editors: • The £250 million of annualised cost savings representsapproximately 10% of our current operating cost base on continuing operations,after adjusting for the planned cost savings from integrating the operations ofRAC with those of Norwich Union Insurance. It is anticipated that approximately£200 million of these savings will be reported in the 2007 income statement withthe full £250 million being reported to profits in 2008. • Aviva plc is the world's fifth-largest insurance groupand the UK's largest insurance services provider (based on gross worldwidepremiums at 31 December 2005), and is one of the leading providers of life andpension products to Europe, with substantial positions in other markets aroundthe world. • Aviva's principal business activities are long-termsavings, fund management and general insurance, with worldwide total sales of£36 billion and assets under management of £322 billion at 31 December 2005. • The Aviva media centre at www.aviva.com/media includesimages, logos, company and product information and a news release archive. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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