Euan Munro has taken his unit’s third-party business into double-digit territory

It is hard to push Euan Munro out of his comfort zone.

The chief executive of Aviva Investors is unfazed when I arrive for our interview an hour early, laughing off suggestions that his passion is karaoke. His comments to the contrary at an industry event days previously had been a joke, he says in a meeting room next to his City of London office.

He flashes a smile when asked if he has an ambition to succeed Mark Wilson as chief executive of FTSE 100 insurer Aviva, his parent company. The group’s top brass have had a turbulent year, including the debacle over a now-abandoned plan to cancel £450m of preference shares. Investors were also annoyed when Mr Wilson joined the board of BlackRock, the biggest fund manager. It is a rival to Aviva Investors, whose five-year turnround is incomplete.

Mr Munro says rising to the top is “a very moot point at the minute” as more work is needed to build his unit into a leading franchise.

“I am an investor and I’m an asset management person,” the 48-year-old Scotsman says, adding: “That’s the industry I am most likely to want to lead in, so I’ve got plenty of road ahead of me in this firm.”

Mr Munro won acclaim for being the architect of Standard Life Investments’ absolute return Gars strategy before joining Aviva Investors in 2014. At the time his new charge was in the doghouse, generating “inadequate” profits of £68m of the wider group’s £2bn total.

There had been criticism, too, that it had failed to increase the assets managed for third parties, which languished at just 20 per cent of total assets. Mr Munro was set a target to increase the proportion to 30 per cent over five years. “We might have had that as a vision,” he admits.

Although third-party assets grew nearly a third last year to just under £75bn, when profits rose to £168m, they still represented just over a fifth of overall assets of £353bn in December.

“We bought in Friends Life, [which] came in at £60bn of captive or internal money, so our third-party book has certainly grown. It’s just that the internal book through Friends Life and the Aviva book has also grown,” he says.

Yet Mr Munro has achieved what his two predecessors struggled to do, taking the unit’s third-party business into double-digit territory. “He has been innovative in the fixed income space,” says one industry analyst.

Mr Munro focused on fixing the business in his first four years by “getting the right leadership team, building the right investment teams to drive the business . . . and we have a couple of flagship products getting scale”, he says. Aviva’s Aims strategies, a competitor to the Gars offering of his former employer, have attracted £12bn since launch.

Mr Munro says that, based on a multiple of 10 times earnings, Aviva Investors was worth about £700m when he arrived.

“Most people now would have it sitting somewhere between £2bn and £2.5bn on a sum-of-the-parts valuation,” he says. “It’s got a higher level of profitability and it’s been exhibiting a reasonable level of growth, so it’s in a higher multiple.”

His mission is to drive that number even higher.

“What my team and I would like to build is an asset management business that would be valued closer to £5bn, so almost another doubling of value and putting more value on the share price of Aviva.”

The reason he cites this 2022 target is because he says ambitious people want to work at an ambitious company.

“We’re now moving into a phase we’ve called internally diversified excellence, where we open up new fronts and start to win business in other areas. I think you’ve got to put that in the context of where you’re trying to take the business.”

He uses US president John F Kennedy’s space programme as an analogy to describe how Aviva plans to hit its target.

“At the start of the 1960s JFK said we’re going to put a man on the moon. From that point it had to be planned backwards in terms of launching a module and then to be operational six months before that and then complete the design the year before that,” he says.

One way Aviva will succeed is by attracting and retaining talented professionals.

It poached a handful of staff for its Edinburgh office from Standard Life Aberdeen, shortly after tempting David Cumming, the former head of the Scottish group’s equities business.

Aviva Investors is well-positioned for Brexit, says Euan Munro

“Let’s be clear. We’re trying to eat the industry’s lunch, not any competitor in particular,” he says, adding that mergers, such as last year’s combination of Standard Life with Aberdeen Asset Management, create uncertainty and the chance to lure talent.

“David came from that house and knew a lot of the people but we have hired people from other places that we’re folding into the equity business.”

On Britain’s looming exit from the EU, Mr Munro says Aviva Investors is well positioned.

“I have a fully functioning French asset management business with €100bn under management. We have a Luxembourg Sicav [an open-ended collective investment scheme] company. So, we have substance in Europe and it wouldn’t require a great deal of change for us to adapt to [an] almost sensible [Brexit] variant that’s being discussed.”

He warns, though, that companies passing fully manufactured or partially manufactured goods back and forth between the UK and EU could have major problems.

“[Brexit] might blow up the business model for specific companies. The way that it will manifest itself is in the credit markets, which are much more vulnerable to a messy Brexit now,” he says.

“In credit land, big defaults are a big problem, and we do have a lot of defined benefit pension plans that think they’re totally insulated against all market eventualities because they’ve hedged their duration and they’ve dealt with the interest-rate consequences. But if they start seeing defaults on their bond book, that might be quite a problem for them.”

As the interview draws to a close, Mr Munro finds himself raking over old coals, including a dealing incident at Aviva in 2013 when the company was forced to pay an £18m penalty and £132m compensation after rogue trading was discovered.

“I needed to reset the business. I wanted a fresh executive leadership team that would drive the business forward. Essentially, that meant that there was very little opportunity for people within the firm to progress into executive roles as I was going through that fix phase. Now the really important message is we have internal candidates that we are promoting.”

If all that translates into growth in Aviva Investors’ third-party assets, Mr Munro may be in line for a promotion of his own.


Born 1970


1991 Bachelor of engineering degree in physics and electronics, Edinburgh University

1992 Postgraduate diploma in actuarial sciences, Heriot-Watt University


1995-2013 Started as a fixed income fund manager, rose to become global head of multi-asset investing and fixed income, Standard Life Investments

2014 Chief executive, Aviva Investors

Aviva Investors

Founded Traces roots back to Geoffrey Morley and Partners, founded in 1971

Headquarters London

Assets under management £348bn (on June 30 2018)

Employees 1,450

Ownership Wholly owned by London-listed Aviva

This article has been amended to correct the date of the 2013 dealing incident.

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