* To double excess cashflow to 800 mln stg in 2016
* To cut debt, restructuring costs, boost growth
* To use cash to pay down debt, fund dividend
* Sets out plan to go digital, focus on core markets
* Shares down 4.3 pct, second-biggest FTSE 100 faller (Updates shares, adds analyst comment, background)
By Simon Jessop
LONDON, July 9 (Reuters) - UK insurer Aviva said it aimed to double the amount of excess cash it generates during the next stage of a turnaround plan, but its shares fell on concerns the plan did not go far enough.
Aviva has laid off staff, spun off some businesses and shaken up its asset management arm. By promising bigger returns from those measures, the company is trying to satisfy income hunting investors who are an important part of its shareholder base.
Aviva said on Wednesday it aimed to double annual excess cashflow to 800 million pounds ($1.36 billion) by the end of 2016 and lower its ratio of operating expenses to operating income to below 50 percent over the same period, from 54 percent at the end of 2013.
It wants to accelerate growth at fund arm Aviva Investors, where it is launching several investment products, manage its back book of life insurance business better, cut debt repayments and reduce restructuring costs, among other measures.
The changes at Aviva are Chief Executive Mark Wilson's answer to disgruntled investors who rebelled against previous management after a run of poor returns, forcing out the company's former CEO and chairman.
But the latest changes failed to ignite Aviva's share price. By 0901 GMT, the stock was down 4.3 percent at 490 pence, putting it on course for its biggest daily fall in four months. Aviva was the second-biggest decliner in Britain's blue-chip FTSE 100 index, which was down 0.5 percent.
Eamonn Flanagan, an analyst at Shore Capital, said that while the targets were "good", they were not "overly challenging", especially when compared with those of Aviva's rival Prudential over recent years.
"We sense the market may well be expecting a much more ambitious delivery, whilst the de-leveraging targets exclude a date for the achievement of the external leverage, which is disappointing," he added.
Flanagan reiterated a "sell" recommendation in a note to clients, citing the stock's valuation relative to peers.
Aviva said it was sticking to plans to cut debt to 2.2 billion pounds by the end of 2015 from 4.1 billion at the end of February and reduce its gross external leverage ratio to below 40 percent of tangible capital over "the medium term".
In its most recent trading update, Aviva showed a mixed performance, with a 22 percent fall in new business in the UK offset by strong growth overseas, particularly in Asia, Italy, Spain and Ireland.
The company said one area to improve was the way it managed its back book of life insurance business - policies that are no longer sold but still generate premiums - which in the UK is worth some 7.4 billion pounds.
It said it would continue to offer all forms of insurance, a market position it said would give it a competitive advantage as more customers access insurance services directly online rather than through a broker. ($1 = 0.5877 British Pounds) (Reporting by Simon Jessop; editing by Steve Slater and Tom Pfeiffer)