Swiss Re and Aviva to slash thousands of insurance jobs

Norwich Union group to cut UK workforce by 1,69

The insurers are both cutting posts as the downturn takes its toll on their businesses, and insurers face pressure to maximise the amount of cash on their balance sheets – if needs be by cutting costs.

Aviva said it would cut its UK workforce by 1,690 over the year. The London-based company, which operates under brands including Norwich Union, plans to reduce its permanent staff by 1,100 in 2009, and also eliminate about 590 temporary contracts. Of the 1,100 staff cuts, however, the company hopes to be able to achieve 300 through natural attrition, meaning it would then only need to make 800 redundancies.

At the end of last year, Aviva had 28,424 employees in the UK and a global workforce of about 54,758, according to figures published in its annual report.

Aviva said its sites at York and Norwich would be most affected by the latest round of cuts, shedding about 349 and 226 permanent jobs respectively.

The company said the job losses mark the culmination of a three-year programme to simplify its UK life and pensions operation. Most of the targeted positions are in the group's business change and IT divisions, it added.

Separately, the Zurich-based reinsurer Swiss Re, which also employs thousands in the UK, said it will reduce its global workforce by 10 per cent. It is as yet unclear how many UK staff will be axed, and a spokesman declined to give a number when asked, but said the company still plans to have a substantial presence in the UK.

"The UK is still a very important location for Swiss Re, being the second largest market for the firm, and it will remain a key business base," the spokesman said.

Swiss Re said in February it was targeting Sfr400m (£239m) of cost cuts by 2010. The world's second-largest reinsurer plans to shrink costs by decimating its 11,560 global staff over the next year after an about-turn on recent strategic moves that were designed to boost growth but which have spectacularly backfired.

Swiss Re, which ousted its chief executive Jacques Aigrain in February, is trying to reorganise its business after losing Sfr1bn (£600m) and taking a Sfr6bn writedown on toxic assets last year. This forced the company to accept a Sfr3bn injection from the US investor Warren Buffett. Last month, the reinsurer announced that Walter Kielholz, a former Swiss Re chief executive and its then vice-chairman, would become its new chairman.

The appointment of Mr Kielholz, who is also the chairman of Credit Suisse – one of the Swiss financial companies least hurt in the credit crunch – came after a disastrous and mistimed foray into investment banking brought Swiss Re close to collapse.