491 lines
20 KiB
Plaintext
Executable File
491 lines
20 KiB
Plaintext
Executable File
finance
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newsbysector
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banksandfinance
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insurance
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6423818
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-----
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# Viva Aviva - Chief executive Andrew Moss sees a bright future for the
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insurer
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## Aviva's boss tells Jamie Dunkley of a challenging year in the glare of
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media scrutiny for both him and his company.
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5:54PM BST 24 Oct 2009
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[Comments][1]
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If Andrew Moss was the Queen, he would probably not describe 2009 as his
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"annus horribilis" but rather his "year of contrasts", one that has seen both
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Mr Moss and Aviva, the company he heads, hit the headlines for a variety of
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reasons. Some good and others not so good.
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![Andrew Moss, Aviva chief executive][2]
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Andrew Moss, Aviva chief executive
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On Thursday, the British insurance group announced the streamlining of its
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European business to a single base in Ireland - the latest in a run of
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restructuring measures. However, another piece of news was dominating the
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media after it emerged that Mr Moss had left his wife of 25 years and mother
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of their four children following an affair with a senior employee, who was
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married to one of his senior executives.
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After a difficult day that has seen reporters and photographers camped outside
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his London and Kent homes, Mr Moss is keen to avoid talk of extramarital
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affairs. However, he is resolute in his determination to focus on Aviva and
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see through the five-year restructuring plan he started in 2007.
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"It's a private matter and as far as I'm concerned it doesn't impinge on the
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job that I do at Aviva at all. I'm 100pc committed to managing the company,"
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he says - wearing the look of a man whose personal life has been splashed
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across the newspapers remarkably well. "As far as the matter is concerned, I
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have acted properly in relation to disclosing it and the way it's been
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managed."
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Mr Moss is now living with the twice-married Deirdre Galvin in his London
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flat. Before resigning almost two weeks ago, she had worked as his business
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director and had been married to Aviva's head of human resources for Europe,
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Andrew Moffat. Although there were mutterings that the company's rule book
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forbid senior figures from entering into relationships with each other,
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Aviva's chairman made it clear he did not believe Mr Moss had transgressed any
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guidelines.
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"Andrew has been very open with me and I am clear there has been no breach of
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company rules," Lord Sharman said.
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So, having started 2009 with an advertising campaign to mark the company's
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global rebranding, which spelt the end of its Norwich Union name, Aviva is
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entering the final quarter of the calendar year back in the spotlight.
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Mr Moss is relaxed as we begin to talk about the multi-million-pound change
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for Aviva and his misfortune at never meeting Bruce Willis or Ringo Starr, who
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both featured in Aviva's adverts. Much more solid ground for an insurance
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chief executive.
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"We announced we were going to rebrand Norwich Union to Aviva last year and it
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was a huge project," he said. "The reason we did it was because we are known
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as Aviva across the world and wanted to fall under one brand. The advertising
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campaign cost us between £10m and £20m pounds - but it was worth every penny."
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The first few months of 2009 were testing for Aviva, which felt the impact of
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the economic downturn as it continued to haunt the financial services sector.
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This was characterised by its full-year results in March, when the insurer's
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decision to maintain its full-year dividend payout helped send its shares down
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43pc in one week.
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Mr Moss says concerns over the company's level of capital were a "huge
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overreaction".
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"The 2008 full-year reporting season was always going to be tricky for
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insurers, because we'd just seen the biggest fall in financial markets any of
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us can remember. We reported first and the whole sector moved downwards as a
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result. There was some concern at the time that capital would need to be
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raised but we were convinced that was not the case and the capital position of
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the group has steadily improved since."
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Aviva also found itself at the centre of a debate over the insurance
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accounting measure, market consistent embedded value (MCEV), which the
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industry was meant to adopt this year. Fellow UK insurers queued up to
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distance themselves from a measure they described as being confusing, but
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Aviva signed up.
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"You have to put it into context, 13 of the 18 largest insurers in Europe use
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MCEV and we decided to take that route. Over time all of them will need to and
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we decided that this was as good a time as any to do it," Mr Moss said. "I
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don't think fundamentally that had a major effect. Given what had happened in
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the financial markets it meant the embedded value of what was in the company
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was volatile. I'm very happy with the decision we made to report in MCEV."
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The accounting measure was suspended until 2011 and Aviva announced that
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Philip Scott, chairman of the Forum of European finance directors and finance
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director at Aviva, would be standing down from his role a couple of months
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later.
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Mr Moss denies Scott was the fall-guy for the results and insists he was not
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feeling the pressure himself. "Philip has worked for the company for 36 years
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and he and I agreed it would be good to have a change on the CFO position but
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I'd like to go on record as thanking him for his contribution over an entire
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career.
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"I think we'd steered Aviva through the financial crisis and into really great
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shape. At the year end we made some provisions for potential losses that might
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come down the track but haven't come through. We took a very conservative
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approach and that's proved to be the right thing to do."
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Aviva's mid-year results seemed to be a turning point for the company,
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although the insurer reversed its dividend policy by cutting its interim
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payout by 31pc. The news of the day was a planned partial flotation of its
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Dutch subsidiary, Delta Lloyd, which is estimated to raise the company about
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£1.1bn.
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This, alongside the sale of its Australian operations to National Australia
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Bank, set the tone of a busy period of restructuring at the company.
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"At the half-year people started to see evidence of delivery," Mr Moss said.
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"We set out on a five-year journey - One Aviva, twice the value - in the
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middle of 2007 and results are starting to show. The cost base of the group at
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the half-year was down 9pc year-on-year and the internal rates of return on
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new business have started to go up. Wherever you look there is evidence
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changes are starting to come through."
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Alongside the flotation of Delta Lloyd the company has also settled the long-
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running reattribution of funds from its inherited estate. Mr Moss says the
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company is delighted at being able to repay £470m to customers.
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Last week, Aviva also completed its listing on the New York Stock Exchange,
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which Mr Moss describes as a "truly great moment", having rang the bell as the
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exchange opened last Tuesday.
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So where does Mr Moss see as an area for growth? Will it look to compete with
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Prudential in Asia, which has based most of its recent growth across the
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region.
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"Our UK and European business dwarves our Asian operations," Mr Moss said. "We
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operate in nine countries in Asia and over time we invested over £700m in Asia
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in terms of capital investment. If you were to cash out of those businesses
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then you'd get between £1.5bn and £2bn - so it's been a huge investment for us
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over five to six years.
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"We don't want to do that because in some markets like China we have created a
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position that is growing extremely fast and it's the second largest foreign
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life insurer in China. It's going to go on growing really fast given the power
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of the demographics and a population that is growing richer and is using more
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insurance products.
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"We will continue to invest in Asia and believe having a large business out
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there will benefit us, but we are certainly not thinking about a listing [in
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Asia] at this time." He adds that the US and continental Europe will also
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continue to be core growth areas.
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"In the US we've seen very strong growth over the last couple of years and the
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business we bought (AmerUs) has broadly doubled in size. The US is the biggest
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savings market in the world, with 30pc of the world's savings, so growing our
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presence in the US is important to us. Then you come back to Europe, which
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also has excellent growth characteristics. We have an excellent joint venture
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in Turkey, for example, and in other places like France and Italy we can
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benefit as people save more."
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After a testing year, Mr Moss says staff at Aviva can all "look in the mirror
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and be proud". He says the company will continue to push its strategy through
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and shape key industry issues.
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One of these is Solvency II, new regulations that will govern the European
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insurance industry. He says he is confident the industry will "come to a
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sensible landing" on the issue and describes suggestions that insurers will be
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forced into large-scale capital raisings as "no more than scaremongering".
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He is also coy about Clive Cowdery's pursuit of consolidation in the life
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industry, having previously warned not to rule out Aviva.
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"We're a very big player in the UK market in both the life and general
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insurance market. If you're looking at merger and acquisition activity - and
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we're not at the moment - then we've probably got more synergies than anybody
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else. If there were to be a shift in the landscape then that's something we'd
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look at.
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"[In Europe] if you look at Aviva's history, then we have a history of small
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bolt-on acquisitions and we're moving back into a phase after the financial
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crisis when there may be opportunities to do that. That's one of the reasons
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we've been building capital strength at the centre of the group. There are
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certainly opportunities in US, Europe and Asia but we take a hard-nosed
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financial view."
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Finally, he insists the UK government must not subject the insurance industry
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to a "regulatory backlash" and says the company is happy to stay domiciled in
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the UK, despite basing its other European operationsin Ireland - a tax haven
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that is attractive to insurers.
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"That was not about our overall domicile as this is a business already written
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outside of the UK, which we think will be more tax efficient to run out of a
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company from Ireland than using a branch structure. We have looked at leaving
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the UK in the past but we are very content here and sure that it is the place
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for us.
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"I think the biggest risk policymakers pose is over-regulation because of
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what's happened over the last couple of years. Certainly in insurance this is
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a concern, because insurance companies have come through this relatively well
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compared to banks. We don't want to be regulated like banks because we're
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different.
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"In the longer term, developing a saving culture is a real issue and exploring
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how the insurance industry can offer solutions and save money from the public
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purse. That must be a debate that's worth having and there has been a great
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deal of interest since we published the Insurance Industry Working Group
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report earlier this year."
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So what now for Mr Moss - after such as memorable year.
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"We're two years into a five-year programme. It's great to see the results
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coming through, but there is still a lot of work to do. For me that's the
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time-frame I set out to deliver and there's clearly still lots to come."
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**Facts**
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**?** Aviva is the world's fifth-largest insurance group. It can trace its
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heritage back to 1797 when Norwich Union
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was founded.
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**?** Famous customers have included Sir Isaac Newton, Sir Winston Churchill
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and John F Kennedy.
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**£51.4bn** - Worldwide sales in 2008
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**£11.8bn** - Market capitalisation of the insurance group
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**£1.69bn** - Operating profit on an MCEV basis for the first six months of
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2009
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**£470m** - The amount 805,000 customers will share from the reattribution of
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its inherited estate
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**£1.1bn** - The amount the company is expected to raise from the Delta Lloyds
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IPO
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**?** Aviva's history is steeped in the city of Norwich. The company currently
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sponsors Norwich City Football
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Club and incorporates Norwich Cathedral in its logo.
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**Andrew Moss CV**
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**Born** March 1958
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**Education** degree in law from Christ Church, Oxford
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**Career**
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Trainee accountant, Coopers & Lybrand
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**1988-89** vice-president and head of fiduciary compliance, Citibank
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**1989-95** assistant director, group treasury, Midland Montagu/HSBC Markets
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**1995-97** head of group assets & liability management HSBC Group
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**1997-2000** chief financial officer, investment banking and treasury, HSBC
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**2000-04 **director of finance, risk management and operations, Lloyd's of
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London
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**2004-07** group finance director, Aviva
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**2007** chief executive, Aviva
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## [Insurance][8]
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= "Financial Advisor / Investment Advisor"; var description = "North Bay,
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"http://jobs.telegraph.co.uk/job/673812/permanent/north-bay-ontario-on
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'bodyText':description, 'link':link, 'imageUrl':imageUrl, 'weight':adWeight});
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York On Application"; var link =
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"http://jobs.telegraph.co.uk/job/673761/permanent/new-york/sr~2E-sap-bw-lead-
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'headline':headline, 'bodyText':description, 'link':link, 'imageUrl':imageUrl,
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