Insurance giant, Aviva announced its decision to reduce the final dividend to 9 p from 16 p, resulting in lower total dividend for 2102.

The company had distributed a dividend of 26p during the previous year to its shareholders and the total dividend for 2012 is 27 per cent lower at 19p. The company said that it had reduced the dividend in order to provide certainty to the shareholders, reduce debt and ensure that the company has a sound position for the future.

Mark Wilson, Aviva's new chief executive said that the it was a difficult decision to reduce the dividend for the year but also pointed out that it was necessary for the company to provide certainty to its shareholders. He claimed that the company had enough liquidity to pay its dividend level but said that lower cash flow from the business made it difficult to offer high dividends.

Mr. Wilson said, "It's like walking up an escalator that's going down. It's possible to climb up, but eventually the escalator wins. Today, we've stopped the escalator."

He said that he is working to ensure that the company has simple business and a stable balance sheet that can provide sustainable cash flows and growth.