Following a review started in March 2013, Aviva’s financial strength rating has been cut from A1 to Aa3 by the rating agency Moody’s.
The reason for the downgrade was the likelihood of the insurer’s profit remaining ‘suppressed’ in the near future. Moody’s does concede however that Aviva is on track in its transformation plan to boost its capital base, but states that improving its profit margins will cause the company to grow more slowly that its Aa rated peers.
There also remains the possibility of a further downgrade if its capital or profitability deteriorates, or European creditworthiness drops.
Aviva hit the headlines recently for planning to move 600 jobs to India as part of cost-cutting exercises.