James J. Schiro took over one of the toughest jobs in European finance when he became chief executive of Zurich Financial Services (ZFS) in May, 2002. A costly expansion by Schiro's predecessor, Rolf Hüppi, had been a disaster, and the Swiss insurer was not only hemorrhaging money but also was losing its standing in the market. ZFS went on to lose $3.4 billion in 2002. Having slumped 50% in 2001, the share price tumbled a further 30% as investors headed for the exits.
Enter Schiro, the highly regarded former CEO of accounting firm PricewaterhouseCoopers, where he worked for three decades. The Brooklyn-born Schiro, 58, lost no time in cutting costs, buttressing the balance sheet, and improving credibility in the financial markets. By the end of 2003 he had laid off 4,500 staffers and raised a total of $5.1 billion through a rights issue, a subordinated debt issue, and the sale of noncore businesses, such as London-based Threadneedle Asset Management. The company turned a profit of $2.1 billion last year. Its return on equity for the first quarter was 16.2%, up from 12.9% in the same period of 2003. "[We] are creating a culture that will allow us to grow profitably," Schiro says.
A graduate of New York's St. John's University and of Dartmouth College's executive program, Schiro says that now that ZFS has solved many of its problems, the time may be right to expand. "And that could involve making acquisitions," he notes. "We will engage in such transactions from a position of internal strength." Of course, the fact that ZFS once again has some internal strength to work with can be credited to its American CEO.