AVIVA'S shares tumbled 12.5% after it reported a £3 billion loss and cut its annual dividend from 26 pence to 19 pence to concentrate on repaying debt.

Chief executive Mark Wilson, who joined the business in December after predecessor Andrew Moss quit following a shareholder rebellion over pay and performance, said 2012 had been a year of transition but the company was now better placed for a turnaround.

The insurer's loss, compared to a £60 million profit in 2011, was triggered by a £3.3bn write-down on the £1.1bn sale of its US operations.

That deal was overseen by Scots-born chairman John McFarlane as he stepped in to run the business while hunting for Mr Moss's replacement.

The results also showed underlying operating profit in 2012 dipped from £1.86bn to £1.78bn.

In the UK, the company's life and pensions arm posted a 3% drop in operating profits to £887m, but long-term sales were up at £11.95bn helped by areas such as annuities and equity release.

Aviva said there will be no bonuses for executive directors in relation to 2012 or pay rises for this year.

A separate stock market announcement confirmed a share award for former Standard Life executive Trevor Matthews.

Mr Matthews, given a £2m golden hello to join Aviva in December 2011 but who is now leaving in the next few months, was awarded 113,646 shares which were worth more than £350,000 at yesterday's closing price.

The shares ended the day down 45p to 314.8p.