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Aviva to shed 1,800 staff as drive to cut costs gains pace


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Aviva, Britain’s largest insurer, will cut up to 1,800 jobs over the next two years in the latest phase of a global restructuring plan announced nine months ago.


The group said that it had to simplify the structure of its Norwich Union general insurance business, which provides cover to one in seven motorists, to save money and to provide better customer service.


Zurich Financial Services also said it will reduce the headcount of its general insurance business in the UK by between 700 and 900 people. The group’s UK general insurance operation employs 5,400 people. The group said the reduction in staff numbers are part of a programme aimed at achieving a 10 per cent reduction in costs by the end of the year.


“The move was prompted by increasingly competitive market conditions in the general insurance business in the United Kingdom,” a spokes-woman for Zurich said.


Aviva will create seven “centres of excellence” before 2010 in Norwich, Stretford, Manchester, Leicester, Southend-on-Sea, and Perth and Bishopbriggs in Scotland.


However, staff in up to 22 other towns and cities including Glasgow and Sheffield are expected to lose their jobs as Aviva reduces the amount of general insurance work.


Officials at Unite, the union, said the cuts were devastating and “made a joke” of the restructuring push unveiled by Aviva last October under the banner: “One Aviva, twice the value”.


Analysts said Aviva was facing up to the growing threat posed by internet rivals such as Admiral and Direct Line, which have far lower cost bases. One said: “As more insurance business goes down the internet route, they have to find ways of becoming more efficient to keep pace.”


Aviva refused to divulge the expected savings from the job cuts but said they would be in addition to those announced by Andrew Moss, the chief executive, when he launched the restructuring plan. At the time, Mr Moss said he expected to save £300 million over two years.


Igal Mayer, chief executive of Norwich Union General Insurance, said the business was still “too complex” despite the amount of integration since Norwich Union merged with CGU in 2000 to create what became Aviva. He said: “What we are announcing represents significant operational change but I am convinced we are on the right course.”


Although Aviva insisted that the cuts were not linked to the credit crunch, experts said the move would do little to calm fears of further cost-cutting in the financial services sector.


Graham Goddard, general secretary of Unite, said: “The union will now be meeting the management to discuss the implications of this news and ensure that staff are fully supported throughout this distressing process.”


Aviva, which announced in April that it intends to drop the Norwich Union name, employs 32,000 across the UK and has 45 million customers worldwide after expanding into emerging markets such as India.


Change of policy


— The job cuts will see general insurance work withdrawn from offices in Dundee, Glasgow, Leeds, Sheffield, Liverpool, Cheadle, Birmingham, Bolton, Southampton, Basildon, Ipswich, Exeter and Worthing. Nine other sites will also be affected


— Norwich Union provides insurance cover to one in seven motorists across the UK as well as one in five homeowners


— Aviva's general insurance profits fell 39 per cent to £1billion in 2007. Aviva was hit with a £475 million claims bill from the floods last June and July


— Andrew Moss, Aviva chief executive, received £2.1million in pay and bonuses in 2007, a 32 per cent rise, after he replaced Richard Harvey last July


— Aviva announced in April that it would phase out the 211-year-old Norwich Union brand by 2010



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