Aviva, a Company in Reboot

Aviva, the U.K.'s largest insurer, has a new boss at the helm and a new strategy.

But is the company ready for a new dawn and worth a look at for investors, who have been battered over the years on the back of several self-inflicted wounds, not to mention a tough economic environment ?

The shares themselves are doing 'ok' so far this year, up just over 8 percent, though over two years they're off around 20 percent — and are still 60 percent below where they were five years ago.

But a not so quiet revolution is going on over at Aviva.

The executive chairman John McFarlane has started the reboot of the company, which lost its way under the stewardship of Andrew Moss, the now former chief executive, who left the company after a heated row about pay and performance earlier this year.

McFarlane is a tough-talking Scottish banker by trade who has already had a big impact at Aviva. For him, it's simple, look after your capital position and don't mess around with underperforming units.

To get the shareholders back on-side he's ditching 16 underperforming units, cutting out several layers of management and concentrating on being a U.K. insurer with international operations, rather than trying to spread the company too thinly with a massive geographic spread.

I caught up with him this week in Norwich, the historical City at the heart of the company's roots, and he was honest about the massive challenge facing the group, especially given the fact that the markets he's now going to focus on are pretty low growth, especially compared with Asia and the emerging economies of the East.

The problem is that boat has sailed and gaining traction through big acquisitions in those markets would be expensive and a massive headache to execute.

Even Aviva's greatest rival, Prudential, failed to pull off that trade when it conceded defeat a couple of years back on the AIA deal.

For now shareholders are giving McFarlane and the management team the benefit of the doubt on the turnaround strategy, but the company hasn't yet replaced Moss as CEO and a lot of questions remain, including the timing, or indeed confirmation, that the U.S. operations are soon to be offloaded.

As I said to McFarlane though, Aviva is a company that is well down the counseling path, it has gone through the self-analysis stage, it didn't like what it saw and is doing its best to find a better way forward.