British insurer Aviva is planning to change its legal structure in Ireland to once again become a full-fledged subsidiary of its UK parent, its global chief executive Mark Wilson has said.

The move comes in the wake of the Brexit vote in the United Kingdom and reverses changes in recent years that resulted in Aviva Ireland becoming a branch of the UK business for general insurance in 2012, and for life insurance in 2015.

Ireland is currently the only one of Aviva’s overseas businesses that is not a subsidiary.

"Ireland is the exception to that but only because we branched them out of the UK," Mr Wilson told The Irish Times at Aviva's offices in Dublin.

“It didn’t make any difference to staff or how we ran it, it just made some difference in terms of where we had the capital . . . and the balance sheet. So now we have to go and resubsidarise it. We already have entities here so it’s not that big a deal but it will take a couple of years to do it.”

Mr Wilson said the additional capital that would be employed here might be “tens of millions, modest amounts not material to what we do.

It will be a legal structure more than anything else”.

Mr Wilson said Aviva has gone from having one of the weakest balance sheets of any UK insurer to having one of the strongest in the world over the past four years, with about £10 billion in surplus capital above regulatory requirements.

During that period, Aviva Ireland’s business has been significantly restructured in a bid to turn around its financial performance.

Dreamland

Commenting on the changes, Mr Wilson said: “Ireland four years ago I described as a ‘dog’. The team were living in a dreamland. There were too many people who had been here too long.

“We were massively overstaffed. The business was shrinking at a big rate and expenses were totally out of control. It was governed by hubris rather than good business logic.

“Because we were part of a big group, we didn’t have the scandals and the massive losses but from an investor’s perspective it was a dog.

“We changed a lot of the team, we sold some parts of the business, we got a new strategy. When I came in there were questions about whether we’d keep it. Now, it has become the poster child for turnaround for us.

“The Irish market was irrational, too, which played its part. We sold our health business [to Irish Life] because the Government did destroy the health insurance market here and it didn’t make sense to us.

“The team here slashed expenses, they cut the product range back and made some good business decisions and it’s become, at Aviva, one of the poster children for a turnaround.”

In 2012, Aviva reduced its employee headcount by 55 per cent and closed all its branches. It also removed a third of its motor portfolio that same year, withdrawing from certain segments of the market.

And while the health insurance unit made money for Aviva, the company decided that the capital could be better utilised in other areas of the business.

New jobs

The sale of Aviva Health has funded the 50 new jobs announced recently for a digital hub in Galway, along with the €20 million that it plans to invest in digital and new IT systems over the next three years.

On the wider issues facing the motor insurance market here, including soaring motor premiums and insurers going bust, Mr Wilson said Ireland had been “living in dreamland”.

“Ireland will not be the financial services hub it wants to be if it keeps letting companies get into trouble. You have to make a profit from underwriting and the regulator has to make sure that happens.

“Secondly, whiplash is a major problem here and there’s a huge amount of fraud from it. The answer is that the Government must change the legislation or you will continue to have high premiums here. It should be about rehabilitation not [financial] compensation.”

Mr Wilson welcomed moves by the Government here to institute reforms in a bid to halt spiralling premium costs.

“I applaud what the Government and regulators are doing on motor rates now. We can’t have more companies go bust here . . . it’s really bad for Ireland’s reputation.”