Aviva’s new man

In two weeks, Richard Harvey, chief executive of Aviva, is disappearing into the jungles of Africa. His replacement at the UK’s biggest insurer will be the current finance man, Andrew Moss. Once the maps of Malawi have been tidied off his new desk, what should investors expect Aviva’s new leader to do?

Although he is not yet in a position to sing his plans from the rooftops, there are already some clues. Mr Moss has been gradually taking the reins since his appointment was announced in February and Aviva has done a handful of small deals which point to the possible direction for the company. Those hoping for radical change look set to be disappointed.

No bad thing, perhaps, as the transactions make good sense. For example, in Turkey, Aviva is getting together with a couple of domestic banks to create the country’s largest pension provider, while in Spain it has entered a new distribution partnership. The first move underlines Aviva’s commitment to faster-growing markets; the second shows an understanding that when selling insurance and savings products, distribution is everything. The problem, however, is that gradual expansion may not be enough to capture the imagination of investors.

Since Aviva’s abortive attempt to buy Prudential last year, ambivalence seems to have crept in. Over the past 12 months, Aviva’s share price has underperformed the sector – and the broader UK market – by more than 10 per cent. More gallingly, Prudential’s shares have done better than Aviva’s by 25 per cent over the period. This is partly because Prudential remains a bid target, but low-hanging operational improvements also suggest that Aviva was probably right to go after its UK rival after all. That there now appears to be nothing anywhere near as exciting on Aviva’s horizon may, unjustifiably, continue to weigh on the stock.