Business

Aviva plans 1,500 job cuts after Friends Life takeover

British insurance giant Aviva"s headquarters in London Image copyright AFP

UK insurance giant Aviva plans to cut around 1,500 jobs by the end of 2017, following its acquisition of pensions company Friends Life.

The details emerged in a circular for the £5.6bn takeover deal distributed to shareholders.

The job cuts are part of the insurer's plans to generate £225m in annual cost savings by the end of 2017.

The cuts would come from the enlarged group of approximately 31,500 people following the tie-up.

Shareholders will vote on the deal on 26 March, which is expected to go through on 13 April.

"We appreciate that this news may be disconcerting for employees and we would look to ensure that any redundancies are kept to a minimum wherever possible, by using vacancies and natural turnover, for example," an Aviva spokesperson said.

Aviva said it was too early to identify specific teams, roles or locations for the job cuts.

"When we are clearer on this, following completion of the deal, we will fully engage and consult with employees and their representative bodies," the spokesperson added.

UK giant

The takeover, announced last year, will create the UK's largest insurance, savings and asset management firm.

Friends Life was formed in 2011 after the amalgamation of Friends Provident, the majority of Axa UK Life and Bupa Health Assurance.

Like other UK annuity providers, Friends Life has faced an uncertain future since April following the government's radical overhaul of the pensions market.

The reforms are ending the compulsory purchase of annuities - products which provide an income in retirement. As a result, sales of annuities - one of life insurers' most lucrative products - have dropped sharply.

The takeover is the first undertaken by Aviva's chief executive Mark Wilson, who took the helm in January 2013.

Aviva has spent the past two and half years disposing of various businesses, including its annuity provider Aviva US, which it sold to Athene Holdings in October in 2013 for $2.3bn (£1.5bn).

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