By Simon Jessop and Carolyn Cohn
LONDON (Reuters) - Two insiders are favorites to be the next CEO of Aviva (LON:AV) according to sources, potentially disappointing some expectations for a major strategic re-think at Britain's second biggest insurer.
Andy Briggs, head of the company's UK insurance business, or Maurice Tulloch, who leads its international insurance arm, are frontrunners to land the job, which one source said was expected to be decided by the board on Feb. 4.
Aviva's decision in October to replace chief executive Mark Wilson prompted analysts and investors to speculate this might mean a major shift from the company's "composite" model under which it sells everything from life to car insurance.
That broad strategy has so far failed to deliver the same shareholder returns as more focused rivals like Prudential (LON:PRU) and Legal and General.
Some in the market had speculated Wilson's exit could spur more radical change, such as hiving off general insurance, selling off closed life insurance books or by reassessing the international businesses.
But Briggs and Tulloch are seen, in the short-term at least, as being committed to the status quo. The pair, both board members, are currently running the company, in conjunction with Chairman Adrian Montague and Chief Financial Officer Tom Stoddard.
Aviva declined to comment.
Salvatore Cavallaro of executive search firm Spencer Stuart, hired by Aviva to find the new CEO, said the process was ongoing but declined to comment further.
External candidates who have been considered include Bruce Hemphill, who oversaw the break-up last year of Old Mutual, the Anglo-South African financial services group, and former Lloyd's of London commercial insurance market boss Inga Beale, four sources said.
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Aviva, with a market capitalization of around 16.8 billion pounds ($22.06 billion), is second only to Prudential in size, but has a much larger proportion of its business - around 60 percent of revenues - in Brexit-bound Britain, which is run by Briggs.
Tulloch's focus, meanwhile, has been on general insurance. He is currently based in Canada and is also chairman of Aviva's global insurance business.
Of the two, Briggs would be the person least likely to change things dramatically, one industry source said, whereas Tulloch may put more emphasis on non-life, as he has been in that area longer.
"He's from Canada which has had a few issues in more recent years, and maybe offers a fresher face with a number of different ideas."
The company has previously flagged higher auto insurance claims in Canada as one factor impacting group performance.
Unlike its UK rivals, Aviva has a much broader array of insurance products, similar to European insurers Allianz (DE:ALVG), AXA and Generali (MI:GASI), banking on selling each customer more than one product - something most companies have struggled to do at scale.
"There's not a huge amount of cross-selling between life and general insurance," said Paul De'Ath, analyst at Shore Capital. "In theory it should work. In practice there has not been a huge amount of evidence that it has helped."
The emphasis on cross-selling may have been a factor contributing to the company's long-term underperformance against rivals, which hastened the demise of Wilson.
Since a post-financial crisis low in 2009, Aviva's shares have risen around 150 percent while shares in rival Legal & General have risen ten times as much.
As a result, whoever gets the top job will have to consider if there is a need to change tack.
But one investor who has spoken to the board said it was focused on improving on the current strategy's execution and explaining its success to the market more effectively rather than wholesale change.
A second investor said Wilson had led a broad restructuring of the company through selling non-core operations, particularly overseas, and cutting debt. But this investor also said the problem that the stock market had had with Aviva was one of lack of growth and that Wilson struggled to change that perception.
"This is something the new CEO will need to address ... the company does have growth – Canada, UK pensions etc. Let's see that showcased."