Aviva's Turnaround Expert CEO to Step Down

Morningstar analysts thinks the FTSE 100 insurer needs a different set of skills now that Mark Wilson has announced his departure

Morningstar Analysts 9 October, 2018 | 12:34AM
Facebook Twitter LinkedIn

Mark Wilson AVIVA CEO

Aviva (AV.) has announced that CEO Mark Wilson will step down as CEO with immediate effect and will leave the company on April 9, 2019. We maintain our fair value estimate of 575p, which is above the current share price of around 465p.

The announcement does come as a surprise, particularly, in our view, the short transition period to find a suitable replacement. Still, we think there have been small tell-tale signs that Wilson has been looking elsewhere, namely his appointment to the board of BlackRock in March 2018.

However, Wilson is a turnaround specialist and we think Aviva is through the worst of this. For the next stage of its development, the business needs a different set of skills; more of a steady hand on the tiller than a rescue mission.

Our most preferred candidate to replace Wilson is Tom Stoddard, and we think he would meet the above principles. However, we anticipate it would be very difficult to replace Stoddard and his current skill set within the position of CFO. In the absence of this transition, we think Maurice Tulloch, CEO of International Insurance, would be the next best fit.

Aviva Now on a Stronger Footing

Aviva is a midmarket insurer that has historically had its fair share of problems. It has been overleveraged and previously had substandard processes and controls. Largely an undifferentiated composite insurer, it missed opportunities to expand its asset management arm and establish a competitive advantage. However, the business is now on a stronger financial footing, and there is operational momentum within asset management and digital.

Aviva’s retail platform is fairly small, but the business has the largest auto-enrolment offering in the United Kingdom. The second addressable area within digital is quality and the control environment. Aviva has had a poor track record on process controls and customer service, which was exemplified by the 2015 technical errors and 2007-12 fixed-income trade allocation failings. Digital is helping to resolve these issues. Within customer service, the reliance on digital lowers the risk of incorrect or incomplete advice. 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Aviva PLC488.10 GBX1.08Rating

About Author

Morningstar Analysts   -

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures