Switzerland’s biggest insurer reported that net income attributable to shareholders was $1.8bn (£1.25, €1.6bn) in 2015, down 53% compared with the previous year.
Chairman and interim chief executive Tom de Swaan said: “This is a disappointing result, reflecting the previously announced challenges in our General Insurance business and restructuring charges, and we have taken rigorous actions to improve profitability.”
De Swann also announced that new chief executive Mario Greco would now join Zurich on March 7, following the news from his previous employer Generali on Tuesday that it had severed all relations with its former chief executive.
Tough job
Greco’s new job is set to be challenging from day one as de Swaan said that based on current performance the company is unlikely to achieve its target of a business operating profit after tax return on equity of 12-14% in 2016.
However, an “efficiency programme” is already underway which is targeting cost savings of $300m for 2016, on its way to achieving group-wide cost savings of more than $1bn by the end of 2018.
The company is also forecasting job losses of 8,000 by the end of 2018.
Pressure building
Zurich has been under pressure since late last year when it pulled out of the proposed £5.6bn acquisition of UK insurer RSA. It has said it was hit hard by the explosions at the port of Tianjin in China and in December Martin Senn stepped down as chief executive.
However, its problems are largely concentrated in the General Insurance while Zurich’s Global Life operations have achieved good growth in new business value and business operating profit, meeting expectations for 2015, despite market headwinds and the challenges of a low yield environment.
Life profitable
The Global Life division’s business operating profit was $1.3bn, up 2% in US dollar terms or 16% on a local currency basis in 2015.
Gross written premiums, policy fees and insurance deposits fell by $2.8bn to $29bn, or 9% in US dollar terms, but rose 6% in local currency, in part due to increased sales of individual savings products in Italy and Spain, and of protection products through Zurich Santander in Latin America.
Zurich said bank joint ventures continued to show steady growth throughout the year and Global Life had already achieved its 2016 goal of a run-rate improvement in business operating profit of more than $80m from in-force management initiatives.
Structural actions such as the sale of Seven Investment Management and the UK annuities book to Rothesay Life had also helped generate cash remittances of $900m, well ahead of expectation.
In addition, Global Life closed its Singapore business to new customers in December and will effectively exit its general insurance businesses in the Middle East by the end of 2016 or as soon as possible thereafter.
