CGNU Cuts Dividend, Announces Rebranding as Aviva

February 28, 2002

U.K.-based global insurer CGNU plans on renaming itself Aviva Plc, and also announced that, even though it had achieved a remarkable 41 percent growth in operating profits last year, it planned on reducing its dividend from 38 pence (54 cents) a share to 23 pence (32.7 cents) in order to conserve cash resources to assure continued growth.

The results, £2.004 billion ($2.845 billion) in pre-tax operating profit, were among the industry’s best in a difficult year, but the company indicated that in order to achieve its target of continued growth in the 5 percent range it needed save money. The dividend cut is expected to yield around £350 million ($497 million).

As for the name change group Chief Executive Richard Harvey explained that it would create “a new and powerful international financial services brand.” He explained that the name CGNU, adopted when CGU merged with Norwich Union, was “a pragmatic solution that was right for its time, but it was never part of our longer term plan,”

The change, which requires shareholder approval is aimed at creating synergies throughout the group to make its corporate brand better known, and its marketing efforts more effective. Harvey also stated that “The new name will make it easier for the group to enter new markets, as a result of heightened awareness of Aviva in markets where the group is already well established, and it will create a stronger sense of belonging for our 64,000 employees around the world.”

With some exceptions, notably in the Netherlands, Poland, Ireland and New Zealand, where local brands such as Commercial Union are well known,all of the Group’s units will adopt the new name.

Editor’s Comment:
The current fashionable exercise, practiced by a number of companies, to rebrand themselves with generic or otherwise meaningless names is hopefully a fad that will eventually pass. Names ought to have some historical context, evoking links with the past, and expressing the company’s present identity. They shouldn’t be driven solely by the demands of the marketing department and the advertising agency. I’m sorry, but Aviva sounds more like a cheer at a Latin American soccer game than an insurance company.

Any readers who’d like to express an opinion on this are cordially invited to do so.

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