Trevor Matthews stuns City as he quits Friends for Aviva UK

In a major shake up for the industry, Mark Hodges, the current chief executive of Aviva UK, has resigned with immediate effect and will join privately held rival Towergate Insurance.

Matthews, who will move from Friends Life to Aviva "as soon as possible", announced in January he would step down as chief executive of Friends. Andy Briggs, head of Lloyds Banking Group's general insurance business was hired to replace him ahead of a proposed stock market flotation in two or three years.

Matthews, formally gave up the role of Friends chief executive on Wednesday to become its vice-chairman, but instead accepted the role at Aviva in what appeared to be a last-minute decision.

Speculation emerged that Matthews did not see eye to eye with Clive Cowdery, founder of Resolution, the consolidation vehicle and owner of Friends Life.

Matthews, who left his job as head of Standard Life's UK life and pensions business to run Friends Provident, initially fought Cowdery's takeover bid in 2009 but stayed to spearhead the group's expansion. During his tenure, Resolution acquired the UK life business of Axa and Bupa Health Insurance and merged them with Friends.

Eamonn Flanagan, an analyst at Shore Capital, said: "I always said at the time that him and Clive Cowdery were very odd bedfellows. I suspect there was a clash of personalities.

"(Aviva] is a much bigger business and gives him worldwide exposure. It raises his profile quite materially. He is the man for it, it is a top appointment."

Part of the rationale announced for Matthews' departure from Friends in January was that he planned to relocate to his native Australia in the next three years. But he admitted the chance to run Aviva UK changed his mind about his relocation plans.

"The world changes and you change your mind on things," he told The Scotsman. "This is a big opportunity for me, it's a fabulous business - a big life insurance business and a general insurance business. I'm very pleased about it."

It is thought that Hodges was frozen out of the succession plan for the top job at Aviva, held by Andrew Moss. Aviva is also currently searching for a chairman to replace Lord Sharman who is to retire in 2013.

Moss said he was "sorry to see Mark leave" but "delighted" to welcome Matthews. He said: "Trevor has an outstanding track record of achievement globally and will be a strong addition to the leadership team."

Hodges said the opportunity to lead Towergate was "irresistible." The company is expected to be sold or floated by private equity owner Advent International.

Towergate said Hodges will take over as chief executive in October, replacing retiring Andy Homer, who will remain as a non-executive director.