the times | Friday March 6 2020 1GM 47
Business
Maurice Tulloch, chief executive
of Aviva, made progress against his
critics with moderately better than
expected profits at the UK insurer.
The shares edged up 1½p, or
0.4 per cent, to 351½p after the
company announced an operating
profit for 2019 of £3.2 billion, up
6 per cent. Aviva stuck to its pro-
gressive dividend policy, paying
30.9p for the full year, up 3 per cent.
Mr Tulloch, who was appointed
a year ago, released a strategic
update in November that dis-
appointed investors. Yesterday
Aviva said the UK life part of the
group had an operating profit of
£1.86 billion, down from £1.89 bil-
lion a year earlier. Mr Tulloch said
there was “still much to do”.
Mr Tulloch has set out to simpli-
fy Aviva and committed the com-
pany to cutting costs but some in-
vestors have been frustrated that
he did not have more dramatic
plans to sell underperforming
businesses or divisions which ab-
sorb a lot of capital, such as its
legacy UK life insurance business.
Coronavirus has led to £500,000
in travel insurance claims from
500 customers and the storms last
month created £70 million of
claims for Aviva. The virus
“presents a new uncertainty in
2020”, Mr Tulloch said, but would
be manageable because of Aviva’s
“scale, diversity and the strength of
our balance”, he added.
Aviva is one of Britain’s largest
insurance companies with a
market capitalisation of almost
£14 billion. It operates in life and
general insurance and has
33.4 million customers, up 2 per
cent, with operations in Europe,
Canada and Asia as well as the UK.Mr Tulloch, 50, announced in
June last year that the company
would cut 1,800 jobs over the next
three years and separate its life and
general insurance business in the
UK in an attempt to boost its re-
turns. The job cuts were out of its
30,000 global workforce. It em-ploys 16,000 people in Britain.
Aviva is trying to make savings of
£300 million a year by cutting jobs
and expenditure on contractors
and consultants.
Aviva’s value of new business
rose 2 per cent to £1.2 billion while
its general insurance net writtenEY looks increasingly likely to ap-
point its first female managing
partner, with two women among
the four frontrunners for the role.
The Big Four accountancy firm
kicked off a leadership contest to
find a new managing partner for
Britain and Ireland in January.
Contenders include Lynn Ratti-
gan, 54, UK chief operating officer,
who has spent her entire career in
professional services and has been
a partner since 2001. Alison Kay,
Relief for Aviva chief after profits edge up
Katherine Griffiths Banking Editor
Aviva has been tackling problems including coronavirus and storms and its new chief is under pressure to deliver higher profitsBRENDAN MORAN/SPORTSFILE/GETTY IMAGES
premiums were also up 2 per cent
to £9.3 billion.
Its Canadian business returned
to profitability, achieving a com-
bined ratio of 97.8 per cent in 2019
compared with 103 per cent in- The ratio compares claims
and other expenses to premiums,
and the lower the number the
more profitable the business. Avi-
va’s combined ratio for the group
was 97.5 per cent, a slight deteriora-
tion from 97.2 per cent last time.
Mr Tulloch was picked as chief
executive after pressure from in-
vestors for higher profits and reve-
nues. He replaced Mark Wilson,
who was ousted in October 2018.
Mr Wilson was popular at first
among shareholders for closing
businesses and pushing others to
boost returns but his initiatives
were later seen as having run out of
steam. Sir Adrian Montague, 72,
will retire this year after five years
as chairman.
Barrie Cornes, an analyst at
Panmure Gordon, said: “There is a
lot going on at Aviva. The chal-
lenge will be to see if the cost cut-
ting, reorganisation and refocus
deliver increased profitability.”
A scion of the Schroders family is
stepping down from the FTSE 100
business it controls after 24 years
and handing his non-executive di-
rectorship to his older sister.
Philip Mallinckrodt, 57, is to retire
after the annual meeting on April
30 and will be succeeded by Claire
Fitzalan Howard, 59, subject to her
election at the annual meeting.
Schroders reported a 4 per cent
fall in a pre-tax profit to £624.6 mil-
lion for 2019, hit by narrowing
margins and outflows from its core
division managing investment for
traditional pension funds.
It had net inflows of £43.4 billion
overall thanks to a large mandate
from Lloyds Bank and was encour-
aged by its private assets, solutions
and wealth management divisions.
The final dividend was held at 79p,
making an unchanged total of 114p.
Patrick Hosking Financial Editor
Lynn Rattigan, a
partner since 2001,
is in contentionWomen among frontrunners for EY’s top job
48, global accounts committee
chairwoman, is also in the race.
She joined EY in 2007 after an 18-
year career in the utilities sector.
The duo are competing against
Hywel Ball, 57, head of UK
audit and assurance man-
aging partner. He has
worked at EY for 35 years
and has been a partner
for 25 years. Mike
McKerr, 55, chairman ofEY Ireland, is also on the shortlist.
He was appointed Ireland manag-
ing partner in 2009 as the com-
pany began to face criticism for its
auditing of Anglo Irish Bank,
which was rescued by the
Irish government that year.
Formerly known as
Ernst & Young, the group
employs about 15,000
people in Britain and Ire-
land providing services
including audit, tax, con-
sulting and advisory.
The audit
watchdog hascriticised accountancy firms for
the dominance of “white men” in
senior roles.
Steve Varley, 51, who has held
the UK & Ireland managing part-
ner post since 2011, is stepping
down from the role but retaining
his post as UK chairman. He has
also taken on a newly created
global role as vice-chairman of
sustainability.
Partners are expected to vote on
who they want to become the next
managing partner later this month
so that the successful candidate
can be in post in April.Louisa Clarence-Smith,
Richard Fletcher
Inequality has widened since the
EU referendum, with the poorest
families suffering the sharpest fall
in income, official figures show.
Although Britain is enjoying
record low unemployment and
sustained wage growth, poorer
families have been hit by benefit
freezes. While disposable incomes
rose by an average of 0.4 per cent a
year between 2017 and 2019, the
median income of the poorest fifth
of people fell by 4.3 per cent a year.
The Office for National Statis-
tics said that some working-age
benefits, such as income support
and child benefits, remained at
their 2016 levels.
The analysis is based on a re-
vised methodology that uses data
from HM Revenue & Customs. It is
likely to be more accurate thanSchroders board seats
are kept in the family
The pair are the children of Govi
Mallinckrodt, who married into
the Schroders family and built the
fund management and banking
group into a major force in the
1980s and 1990s as chairman.
Mrs Fitzalan Howard joins her
cousin Leonie Schroder, 45, in the
boardroom. The appointment of
Ms Schroder last year after the
death of her father, Bruno Schro-
der, was opposed by some advisers
but shareholders supported her.
About 15 family members con-
trol 48 per cent of the voting shares
in Schroder through a number of
trusts. Traditionally they have held
two board seats. Their wealth is es-
timated at £4.02 billion in the latest
Sunday Times Rich List.
Philip Mallinckrodt joined the
company in 1994 and was an exec-
utive director from 2009 to 2017.
The shares fell by 108p, or 3.7 per
cent, to £27.76 in a tumbling market.Inequality rises as poor
miss out on wage growth
previous estimates because tax
data better captures the incomes of
top earners, who tend to under-
report their incomes in surveys.
Over the past two years declin-
ing incomes among the poorest
have been accompanied by rising
inequality. On the most commonly
used statistical measure, the Gini
coefficient, disposable income in-
equality increased by 1.3 per cent
over the past two years to reach
34.7 per cent in 2019. Despite this
recent increase, inequality levels
are lower than they were before
the 2008 financial crisis.
While the poorest households
have suffered the most, income
growth across the country has
been weak. At £30,000 per year,
the median household income is
only about 6 per cent higher than it
was in 2007-08. The figures reflect
a period of stagnating real wages
since the financial crisis.Gurpreet Narwan
Economics Correspondent