New Aviva chief Amanda Blanc decides against splitting life and general insurance but signals foreign retrenchment

Aviva's new chief executive, the rugby loving Welshwoman Amanda Blanc, today reported a "robust" set of half-year profits but declared the troubled insurance giant must now only focus on businesses where it is big enough and profitable enough to generate major shareholder returns.

While that will see no split up of its huge general and life insurance businesses, it is expected to see potential exits from overseas operations in countries such as France, Italy, Poland and Asia, which will be put under close scrutiny. The future dividend policy is also up for review with a cut now likely.

Blanc, who was appointed only a month ago after her predecessor quit after just a year in the job amid dissatisfaction from shareholders, signalled a flurry of disposals of businesses to focus on UK, Ireland and Canada.

She said: "We are going to focus on those businesses where we have the necessary size, capability and brilliant customer service to generate superior shareholder returns. This is where we will invest and grow. where we cannot meet our strategic objectives, we will take decisive action we will withdraw capital."

"We must transform our performance and improve efficiency," she said.

Speaking to the Evening Standard, she confirmed there would be no breakup of UK life and general businesses, saying: "My ambition is to be the UK's leading insurer. The UK market is at the heart of this business. We do not believe a break up is the right thing to do."

She stressed there were major benefits in keeping the two sides of the company together in terms of the amount of capital Aviva has to hold back to satisfy regulators that it can pay its claims but also said there were major potential benefits in keeping the business together as a combined operation, particularly if it uses its brand better.

Shareholders have argued that the two businesses would each command higher valuations if they were separate, but Blanc disagreed: "We fundamentally believe we can create the value by being competitive. We will be focused on the UK, Ireland and Canada where we have leading market positions and we are talking today about withdrawing capital from other countries."

Operating profit for the first half of 2020 was £1.2 billion, down from £1.39 billion a year earlier and the company is pressing ahead with a 6p-a-share dividend, although the policy on dividends would be reviewed in the light of Aviva's big debt pile and future restructuring plans. That was taken as a signal of future cuts.

Blanc's predecessor Maurice Tulloch did not cut the dividend, although his three predecessors all did.

Tulloch quit little over a year into the job due to his wife's ill health and his successor Blanc quickly made clear that she would be reassessing his strategy, which included the decision not to break up the business.

Tulloch's strategic review had left shareholders underwhelmed as he decided to keep the business's life and general insurance arms together against many of their wishes. Blanc appears to have decided that he was right, due to the benefits of keeping the two sides of the company together. For regulatory reasons, having the combined operation means Aviva needs to set aside less capital to cover both life and general insurance policies.

Blanc's arrival meant Aviva had both a new chairman and chief executive within the space of little over a month after George Culmer replaced Sir Adrian Montagu on 27 May.

Aviva has struggled with its chief executives' popularity among investors, having seen Tulloch's predecessor Mark Wilson ousted over perceptions of poor performance. After a strong start to his rein with the acquisition of Friends Life and a retrenchment from sprawling global operations, he found it a struggle to grow the vast business's sales. The share price drifted and shareholders questioned whether the public will ever want a one-stop shop for products as different as life insurance and cover for their pets and cars.