Aviva has outlined plans to cut jobs following its takeover of Friends Life.
The two insurance firms have been in talks over a potential merger in a deal valued at around £5.6 billion since November. As it edges closer, Aviva is already preparing changes with an estimated 1,500 jobs set to be lost by the end of 2017. The move is designed to generate £225 million in its annual cost savings programme.
Aviva explained that the cuts will come from the enlarged 31,500 staff members made thanks to the merger of the two companies. The firm noted that the plans were still very much in the early stage and it was not able to identify which specific teams, roles and locations would be affected by the changes.
A spokesperson for the insurer said: "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.
"When we are clearer on this [specific roles], following completion of the deal, we will fully engage and consult with employees and their representative bodies."
Following months of advanced talks between Aviva and Friends Life, shareholders will be able to vote on the deal on March 26th. If approved, as expected, then the newly formed company will come into existence from April 13th.
The merger makes sense for Friends Life which was hit hard by the government's decision to overhaul the pensions market in April 2014. It saw the end of compulsory purchase of annuities meaning what was once a lucrative product for insurance firms was taken away, resulting in falling revenues.
Aviva's £5.6 billion merger will provide a fresh start for Friends Life and will create the largest insurance company in the UK.
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