Zurich to Cut 800 Jobs Worldwide, Aims to Save $250 Million by 2015
March 12, 2014 by Fran Matso Lysiak
ZURICH – Zurich Insurance Group will cut up to 800 jobs globally as part of the multiline insurer’s plan to streamline its structure to reduce costs in its effort to meet its “strategic priorities” through 2016.
The proposed changes, in which Zurich must consult with employees and their representatives, would lead to about US$250 million in annual savings by the end of 2015, the company said in a statement. Zurich has more than 55,000 employees worldwide.
“We continue to make significant progress toward our strategic goal to make Zurich a focused and more profitable business,” said Martin Senn, chief executive officer, in a statement. “This latest initiative empowers our people to act decisively in delivering first-class services to our customers while also minimizing overheads.”
In December, Zurich — which was shaken last year by the apparent suicide of its chief financial officer and the abrupt resignation of its chairman — unveiled the three-year strategic plan that emphasizes its role as a “global and composite insurer.” In a presentation to investors, the insurer said it may dispose of poorly performing operations while concentrating on its strengths (Best’s News Service, Dec. 5, 2013). In outlining its plan, Zurich identified three priority areas — corporate, commercial mid-market, and retail — which, it said, absorb 62% of its capital.
By the end of 2016, Zurich hopes to remit more than US$9 billion to its holding company, Senn said in December.
In its latest statement, Zurich said the group continues to invest in “priority markets” while reducing the cost of its global structure. The initiative will remove management layers between the group and the business units.
The insurer made headlines in August 2013, when Pierre Wauthier, its 53-year-old CFO, was found dead, an apparent suicide. This discovery was followed by the resignation of Chairman Josef Ackermann, amid suggestions that Wauthier blamed Ackermann for putting excessive pressure on him. The turmoil left Zurich with the need to recruit a CFO and a chief operating officer.
Switzerland’s financial services regulator later announced two investigations cleared the company of any improprieties in Wauthier’s death.
In December, the company appointed George Quinn its new CFO and member of the group executive committee, effective May 1. Quinn has been Group CFO for Swiss Re for the past five years.
Despite a decline in shareholders’ funds as at the third quarter of 2013, A.M. Best Co. said in November the group’s capital and surplus decreased by 7% to US$32 billion due to the impact of unrealized losses and dividend payments. However, this factor was largely negated by the US$1.9 billion of total debt raised during the year, of which partial credit is given within A.M. Best’s analysis of Zurich Insurance Co. Ltd.’s capital adequacy.
Zurich saw a 4% rise in net income attributable to shareholders in 2013 to $4.03 billion and business operating profit jumped 15% to $4.68 billion.
Zurich Insurance Co. Ltd., the main operating company of Zurich Insurance Group Ltd., currently has a Best’s Financial Strength Rating of A+ (Superior).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)