Insurance giant Aviva yesterday said it had slashed its costs by more than £80 million in the first quarter as it progressed plans to lay off 2,000 staff.
The company, which has a major base employing more than 1,400 staff at Pitheavlis in Perth, said it spent £54m on implementing its restructuring plan in the first three months of this year and expected those costs to spiral in the months ahead.
In an update to the markets chief executive Mark Wilson said group expenses from continuing operations had reduced by 10% the equivalent of £83m during the first quarter of the year.
He said reducing the group’s costs base further was a “prerequisite” of the company’s turnaround plan, and reducing employee headcount was necessary to achieve the firm’s long-term aims.
Aviva again refused to say how the cuts would affect its Perth-based workforce, the majority of whom are in commercial underwriting and household insurance roles, despite the fact that jobs are to be shed imminently.
Mr Wilson said: “Over the next six months there will be a reduction of approximately 2,000 roles across the group, equating to 6% of the global workforce.
“While I realise this is very difficult for our employees this decision, together with non-people savings, will help us achieve our cost savings target. This is essential for Aviva to become more efficient and agile.
“I expect Aviva to move through this phase of its transformation as quickly as possible.
“Restructuring costs in the quarter were £54m, and this quarterly number will increase during 2013 as a result of the ongoing redundancy and restructuring programme.”
In Q1 the group generated operating capital of £500m, the same figure as in the first quarter last year.
However, there was a £100m reduction from the UK and Ireland life insurance operation in the period which was offset by new business gains in Asia.
Total group operating costs fell 9% from £980m a year ago to £887m, while the value of new business across the group increased by 18% to £191m.
Mr Wilson said: “Today’s results demonstrate the first steps towards delivery. I am conscious of the challenges and do not want to set expectations at an unrealistic level. Progress has so far been satisfactory and there is a great deal more we need to do for our shareholders.”
The Courier yesterday made several approaches to employee representatives Unite for comment on the redundancy situation at Aviva but none was forthcoming.