Zurich Chairman Sees `Better' Results as Greco Reviews Focusby
Cost cutting and unit overhaul `going according to plan'
Greco seeks to rebuild confidence with `clear strategy'
Zurich Insurance Group AG will see improving results this year after taking steps to cut costs and overhaul units following unexpected losses at its general insurance unit, according to Chairman Tom de Swaan.
“The implementation of these measures is going according to plan,” he said at the company’s annual general meeting on Wednesday. “I am convinced that they will result in our once again realizing significantly better results this year. ”
Zurich is also looking at possible acquisitions and disposals to boost returns, De Swaan said. Switzerland’s biggest insurer said in February it won’t achieve its return on equity target for after-tax business profit because of the challenges in the general insurance unit.
Chief Executive Officer Mario Greco, speaking at his first general meeting in that role, said he’s talking to employees, brokers and customers as he seeks “a clear and simple strategy’’ to rebuild confidence in Switzerland’s largest insurer. “I need to develop a deeper understanding of the root causes of recent underperformance and to find a way forward for the company,” he said.
Greco, the former head of Italy’s Assicurazioni Generali SpA, took over Zurich in March after the company had started an overhaul of its general insurance unit and announced plans to achieve cost savings of more than $ 1 billion by the end of 2018. Losses in general insurance led the company to abandon a high-profile takeover bid for the U.K.’s RSA Insurance Group Plc. Greco’s predecessor, Martin Senn, resigned in December.
De Swaan, who served as acting CEO before Greco arrived, said that the company is on track to achieve its cost-cutting targets, which will affect about 8,000 employees. Zurich has replaced managers, renegotiated-loss making contracts and abandoned businesses seen as less important, he said.
“Based on what I have seen so far and on what I know of Zurich, I am confident that we will be able to improve shareholders returns and Group profitability,” Greco said.
While Greco is shaping the strategy for 2017 and beyond, pressure from shareholders is increasing. The stock has fallen 16 percent since the company abandoned its bid for RSA. The Stoxx Europe 600 Insurance index decreased 5 percent during that time. Though they approved all the items on the board’s agenda yesterday, shareholders voiced concerns over the company’s risk models, the dividend and executive pay.
Zurich Insurance has started a process to sell its units in South Africa and Morocco as it works toward turning around its money-losing insurance operations, people familiar with the matter said in February.