Aviva's UK operation, Norwich Union, plans £250 million cost savings

Article date: 14 September 2006

Aviva plc (Aviva) announces that its UK business Norwich Unionplans to reduce duplication and improve efficiency to deliverannual cost savings of £250 million in 2008 at a cost of £250million by the end of 2007.

The savings and costs will be evenly spread between the life andgeneral Insurance businesses and in the life business, ourexpectation is that it will principally benefit shareholders. Theseinitiatives will further strengthen the group’s ability tomeet its current financial objectives and deliver growth forshareholders. The savings are in addition to the planned RACintegration savings of £130 million per annum by 2008.

Aviva’s headcount in the UK of 36,000 will reduce by 4,000 by2008 with up to 1,000 roles being offshored to India (in line withprevious announcements that 7,800 roles will be located offshore bythe end of 2007) and a further 500 roles being outsourced to thirdparty IT suppliers. The company will seek to minimise the number ofcompulsory redundancies through natural staff turnover andvoluntary measures. The savings primarily arise from costefficiencies and reducing duplication in marketing, humanresources, finance, and information technology, as well as applyinga single approach to procurement and supplier management.

Continuous improvement in service standards and maintenance ofstrong financial disciplines will remain key objectives throughoutthe process.

The announcement follows a review of the Norwich Union insurancebusinesses and is in response to a combination of changingdistribution dynamics in the insurance industry and changes in theuse of technology. An update on Norwich Union’s UK lifestrategy 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 highlyefficient and effective company in what is an increasinglycompetitive and dynamic environment. Customers’ buying habitsare changing rapidly as technology becomes more accessible. Alreadyhalf our new direct motor insurance policies are purchased over theinternet. Consumers, IFAs and brokers are increasingly operating ina self-service world.

“Norwich Union, with its strong and trusted UK market brandwill continue to lead the industry by adapting to these shiftingdynamics. We will do this by leveraging the scale of our life andgeneral insurance businesses and we have a proven record ofdelivering change.

“The integration and efficiency measures we are announcingtoday are part of a programme which will result in an increase incustomer focus across our UK businesses along with better and moreefficient use of technology.”



Charles Barrows, investor relationsdirector, Aviva plc
Telephone: +44 (0)20 7662 8115

Jessie Burrows, head of investor relations, Aviva plc
Telephone: +44 (0)20 7662 2111

Hayley Stimpson, director of externalaffairs, Aviva plc
Telephone: +44 (0)20 7662 7544

Sue Winston, head of group media relations, Aviva plc
Telephone: +44 (0)20 7662 8221

Rob Bailhache, Financial Dynamics
Telephone: +44 (0)20 7269 7200

Notes to editors:

  • The £250 million of annualised cost savings representsapproximately 10% of our current operating cost base on continuingoperations, after adjusting for the planned cost savings fromintegrating the operations of RAC with those of Norwich UnionInsurance. It is anticipated that approximately £200 million ofthese 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 ongross worldwide premiums at 31 December 2005), and is one of theleading providers of life and pension products to Europe, withsubstantial positions in other markets around the world.
  • Aviva’s principal business activities are long-termsavings, fund management and general insurance, with worldwidetotal sales of £36 billion and assets under management of £322billion at 31 December 2005.
  • The Aviva media centre at www.aviva.com/media includes images, logos, company andproduct information and a news release archive.
  • To read the Norwich Union announcement please go to:

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