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Aviva in £5.1bn turnaround – “Progress? Yes, some…”

Aviva Group CEO Mark Wilson was modest after announcing a £2.2bn profit after last year’s £2.9bn loss.

“Although we have made progress in 2013, I want to guard against complacency. Aviva still has issues to address. Have we made progress? Yes, some. Is it a little faster than anticipated? Probably. Have we unlocked the full potential at Aviva? Not yet.”

So, shares yesterday up just the 9.2%, then.

The secret of this turnaround is a refocusing of the business via a ‘cash flow plus growth’ strategy. Group cash flows are up 40%, operating expenses down 7%, operating profit is up 6% and new business value is up 13%.

By streamlining the operation and walking away from certain low margin, non-strategic or underperforming businesses, Wilson is satisfied that Aviva is simpler, more focused and better managed with much improved capital surplus, liquidity and leadership.

However, Wilson isn’t hanging out the bunting just yet.

“Turnarounds are rarely linear and the improving results should be tempered by the realism that the business still has issues to address and is performing nowhere near its full potential.”

Which rather makes Aviva a company worth keeping an eye on for the next year or so…

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