Aviva seeks to avoid redundancies

The move to put profit before growth has resulted in Aviva Australia avoiding redundancies, according to chief executive officer Allan Griffiths.

The Australian operation of the global insurer has reported an after tax profit of $61 million for the 2008 year. This compares to $96 million for 2007.

“We have [responded quickly to] the current crisis by adjusting our costs to suit the revenue stream,” he told Money Management. “As a result, all of our businesses have held up, although we continue to look for efficiencies.”

Griffiths said there had been a staff freeze since early last year and all salaries had also been frozen.

“We can’t rule out redundancies in the future, but I am trying to protect the culture here,” he said.

The Australian company has also benefited from having two businesses here – risk and platforms.

Griffiths said the risk business had performed well in 2008, which offset the poorer results from the platform business.

“Platform sales are lower and the revenue from fund flows is down,” he said.

“In 2007 we managed $27 billion through the platform and last year it was down to $19.3 billion.”

Despite a lower profit, Griffiths has not ruled out opportunistic acquisitions.

“We continue to look at acquisitions, but they would have to pay back the purchase price in 12 months and those are rare,” he said.

“But we keep our eyes open looking for opportunities at a reasonable price and payback.”

Meanwhile, the Australian company’s UK parent has reported a loss of $1.93 billion after tax.

However, Aviva reported an operating profit of $5 billion and increased its solvency surplus to $4.3 billion.

Aviva chief executive Andrew Moss said the company was financially strong and maintaining capital strength was a priority.

“Investment markets have predictably created significant unrealised losses during the year,” he said.

“As markets recover, to some degree at some point, these unrealised losses will begin to reverse.”