EUR 850.00 For Business Accounts Only

Morningstar | Andale Aviva for Asset Management and Canadian General Insurance

Aviva is a midmarket insurer that has had its fair share of problems with leverage, unfocused capital allocation, and substandard controls. A largely undifferentiated composite insurer, it has missed opportunities to differentiate itself by expanding asset management. But this seems to be a focus of management, and with the change of guard, we expect this to continue. We think the second main focus is its digital strategy, which centres on MyAviva, and the business is having good success here. This digital strategy is reducing paperwork and administration and also improving the control environment.This control environment is particularly important because Aviva has a poor record when it comes to process controls and customer service, exemplified by the 2015 technical errors and fixed-income trade allocation failings between 2007 and 2012. Digital is helping to resolve these issues by taking out the risk of human error. And within customer service, the reliance on a digital platform lowers the risk of incorrect or incomplete advice and speeds up the processes. While we see historical problems recurring, poor service that leads to costly compensation is being addressed. Improved systems and controls are also helping the business find its way in the institutional client environment.The reputation of Aviva fund management has also historically been poor in terms of both processes and performance. There has been limited specialist focus, and overall, policyholders have not been delivered fair or competitive returns, though this is largely typical of a captive asset manager. However, with the recruitment of Euan Munro as chief executive officer of Aviva Investors, we think new life is being breathed into the division. There is a parallel focus on institutional fund management, and this will help drive the performance of the retail funds. The unit is experiencing some short-term volatility in terms of performance and assets under management, but the former is to be expected with this outcome-oriented style of funds. Also, investment in building out the offering is still taking place. Overall, we think progress is decent.