Aviva has been hit with a rating downgrade by Standard & Poor's (S&P) amid concerns its strategic plan will create "significant risks and costs".
S&P lowered the rating for Aviva Plc by one notch to A- from A and the agency also opted to cut the financial strength ratings on all of the group's core operating subsidiaries to A+ from AA-.
Commenting on the downgrades, S&P's credit analyst Simon Ashworth said: "The ratings actions reflect our view of the significant risk and costs associated with Aviva delivering on its strategic plan.
"These risks and costs could be elevated given the current state of macroeconomic uncertainty."
He continued: "In addition, the on-going pressures from financial market volatility continue to delay the fulfilment of our expectation of improvement in Aviva's financial risk profile."
S&P said the disposal phase of the strategic plan would initially ‘strain' other elements of the group's financial risk profile.
However, the agency admitted it did see the ‘positive objectives' of Aviva's strategic plan, but raised concerns that it ‘may take significant time' to see the benefits reflected in the insurer's financial performance.
Negative
The agency warned that it would take further negative rating action if the group's financial profile deteriorated further or if the strategic plan fails to boost Aviva's business performance.
S&P said, as a result of the downgrades, the outlook on Aviva had now been upgraded to stable from negative.
And Mr Ashworth added: "The stable outlook on the core operating entities of the group reflects our expectation that the group will maintain its current very strong competitive position and strong capital adequacy."
Furthermore, Aviva Canada saw its rating cut from A+ to A while the short-term counterparty rating on Aviva Insurance was also reduced to A-1 from A-1+.
