The chairman of Britain’s biggest insurance company was forced to defend the reputation of his chief executive last night after it emerged that he had admitted to a potentially compromising office romance.

Andrew Moss, 51, the chief executive of Aviva, which owns Norwich Union, told Lord Sharman that he had been having an affair with a junior member of staff whom he had seconded to his office.

Mr Moss, a father of four who received £2.2 million in salary and bonuses last year, was having an affair with Deirdre Moffat, 45, a former member of Aviva’s human resources department.

News that details of the affair were beginning to leak prompted Lord Sharman, the Aviva chairman, to make a statement to The Times last night.

He said that Mr Moss, promoted to the top job from finance director 2½ years ago, had behaved appropriately over the affair, which is now a firm relationship. He said he was happy that Mr Moss had broken no company rules on conduct over internal relationships.

Lord Sharman said: “Andrew has been very open with me and I am clear that there has been no breach of company rules.

“I am completely satisfied that this has in no way impacted his role as chief executive and he retains my full confidence.”

It emerged yesterday that Mr Moss, who owns a family home near Tunbridge Wells and a flat in Wapping, East London, had embarked on a relationship with Ms Moffat.

Ms Moffat was a director in Aviva’s human resources department and the liaison began several months ago after she had been seconded to his office on a company project.

While there, Ms Moffat, who now goes by the name of Deirdre Galvin, reported directly to Mr Moss in her day-to-day duties.

Ms Galvin, who was head of HR for Aviva Investors, the insurer’s fund management division, was married to Andrew Moffat, the head of HR for Aviva in Europe. She did not report directly to her husband, who did not report directly to Mr Moss.

Relationships with company colleagues are often frowned on because of fears that the more senior staff member might abuse their power. There can also be suggestions of conflict of interest, particularly when direct reporting lines are involved.

Aviva is valued at £12.2 billion and is the largest provider of household insurance cover in the UK. It owns the RAC roadside recovery division.

Similar to other blue chips, it has a policy forbidding long-term relationships with fellow workers who report directly to each other.

Ms Galvin would usually report to John Ainley, Aviva’s group HR director, while her husband reported to Andrea Moneta, the chief executive of Aviva in Europe.

When Ms Galvin began working with him, Mr Moss and his wife of 25 years, Susan, were facing marital difficulties, according to company insiders.

It is understood that the relationship between Ms Galvin and Mr Moffat had also turned sour and the two were poised to separate. Mr Moss and Ms Galvin are now a couple. The Aviva boss, a former finance director at the Lloyd’s of London insurance market, has left his wife and the family home. Ms Galvin and Mr Moffat have also separated.

By mutual agreement and in order to avoid any apparent conflict, Ms Galvin has left the company. It is understood that she resigned with immediate effect about ten days ago. The terms of her departure were negotiated, independently of Mr Moss, by the head of the remuneration committee.

Mr Moffat remains at Aviva in the same role.

It is understood that, as soon as the relationship became serious, Mr Moss immediately informed Lord Sharman and members of his executive team. Aviva declined to comment beyond Lord Sharman’s statement yesterday.

Mr Moss has transformed Aviva since he took charge in July 2006. He dispensed with the Norwich Union name, employing a Hollywood-style, high-profile television campaign.

Mr Moss, who allayed investors’ fears earlier this year about Aviva’s capital strength, is poised to raise almost £1 billion floating Delta Lloyd, Aviva’s Dutch division.

Aviva shares closed up 1.3p at 440.8p yesterday.

Costly affairs

Harry Stonecipher, the chief executive of Boeing, violated his company’s code of conduct when he sent a female executive a sexually explicit e-mail. He resigned

Brian Staples, chief executive of United Utilities, set up home with the secretary to Sir Desmond Pitcher, the company chairman. Staples was forced out and sued for wrongful dismissal and Sir Desmond countersued. The issue was settled out of court

Mark Palios, chief executive of the Football Association, and Sven-Göran Eriksson, the England manager, had affairs with Faria Alam, secretary to the executive director. Mr Palios resigned. Ms Alam lost an unfair dismissal and sexual discrimination claim

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