This article is from The Telegraph’s City Intelligence newsletter. Sign up here for incisive analysis of the day's biggest corporate story from our chief City commentator Ben Marlow.
If the board and shareholders of Aviva wanted decisive action after the inertia of Maurice Tulloch’s short-lived reign then they’ve certainly got it under successor Amanda Blanc.
The departure of the Brit-Canadian was the right decision in the wrong circumstances. Tulloch left after just over a year in charge to care for his ill wife, but it followed widespread discontent with his “play-it-safe” strategy.
The approach was bemusing given Aviva’s disparate overseas empire and a share price that had gone precisely nowhere in two decades. Tulloch seemed either too scared to take radical steps or unsure of how to tackle the big problems. Perhaps it was both.
Blanc has quickly grasped the nettle, offloading its Singaporean arm, which Tulloch decided to cling onto, and operations in Italy, for a combined £2bn (£1.5bn). A for sale sign has also been hoisted over sub-par interests in France, Poland and Vietnam, which would leave Aviva focused on core markets in the UK, Ireland, and Canada.
A decision to reinstate but rebase the dividend at the same time, is even bolder. The move suggests regulatory pressure has eased, at least behind the scenes, paving the way for other insurers to follow suit.
Banks may have to wait for an official green light, even though the financial system is now awash with capital, and high street lenders have never been stronger thanks to strict new regulations introduced after the financial crisis.
Existing shareholders probably feel aggrieved at the prospect of payouts falling from 30p in 2018 to 21p next year – the shares fell 2pc on the news – but against the backdrop of a global pandemic, you could argue that it’s generous.
Indeed, analysts at Jefferies describe the new level as “surprisingly high”, and there is also the promise of excess capital being returned to investors, once debt has been paid down.
Yet there will still be some who feel Blanc should go even further with a full break-up of the £13bn insurer. The City has long salivated over such a prospect.
A £5bn approach from RSA for its general insurance arm a decade ago prompted expectation that it would be separated from the life division, and although talks quickly fizzled out, it hasn’t stopped speculation that such a radical carve-up could one day occur.
That seems no more likely today. Though there is actually little similarity between the two, separation would be extremely complex, hindered by the task of allocating capital to the respective parts.
But what about the likelihood of Blanc turning the tables on its former suitor and preventing the unceremonious dismemberment of the RSA at the hands of an overseas consortium?
It’s a tantalising idea. The RSA, whose roots stretch back more than 300 years, would be preserved, and it would finally silence accusations that Aviva is subscale and lacks ambition. The opportunity won’t come around again.
Yet that too feels like a step too far for someone only in the job a few months. If Tulloch was guilty of failing to throw a punch, the risk is that Blanc, in her eagerness to make a mark, overcompensates and punches herself out.
Boffins can take comfort
After the fanfare that greeted vaccine announcements from across the Atlantic, the mood in AstraZeneca’s Cambridge headquarters must be one of bemusement.
AstraZeneca’s shares have fallen more than 6pc – equivalent to £7bn of value – since the FTSE 100 drug maker published its Covid vaccine trial data on Monday morning, despite some obvious advantages over two other jabs that are in the advanced stages of testing.
It has pledged to distribute its vaccine at cost, which means it will go a long way to fighting the pandemic globally, particularly in the developing world. In that sense, it is an undisputed triumph.
In contrast, the share prices of Pfizer, BioNTech, and Moderna have made sizeable gains after their announcements.
The revelation that a manufacturing error has skewed the results of AstraZeneca’s ChAdOx1 vaccine hasn’t helped on the PR front. Nor the news that some volunteers who had accidentally been given half doses produced higher efficacy rates than those that had double doses administered.
Yet in some ways the odd misstep is to be expected. It’s like building planes in wartime. Corners have to be cut to quickly achieve mass production, and perhaps one of two might even drop out of the sky, but building lots of planes quickly is better than building none at all.
Perhaps the boffins in Cambridge and Oxford will take some comfort from other great discoveries in medical science.
Alexander Fleming effectively invented penicillin by accident, and it was chance that led Louis Pasteur to create a vaccine for chicken cholera, that then became the basis for jabs against anthrax and rabies. Looked at like that, Britain’s coronavirus scientists are standing on the shoulders of giants.
Leveson not all the fashion
Has the message about taking standards seriously finally got through to the board of Boohoo? The fashion site has appointed Sir Brian Leveson to scrutinise its supply chain. The former High Court judge is unlikely to have shopped at brands like Nasty Gal but he knows a thing or two about big inquiries, as Her Majesty’s press knows only too well.