Zurich Maintains Commitment to Ambitious Goals
Following its recent announcement of a steep drop in profit for the third quarter of 2012, Zurich Insurance Group AG used investor-day presentations by senior management to reassure investors about the company’s ability to reach a number of ambitious goals that it had previously set.
Zurich CEO Martin Senn told investors that the company is still aiming for an after-tax return on equity of 16%, but he acknowledged that actual results could fall short of that target by 2%.
Senn also reiterated Zurich’s commitment to several other goals that it had recently announced, including a 3% to 4% improvement in combined ratio relative to the competition, a $500 million reduction in costs by 2013 and a continued ranking among the five Europe-based companies with the greatest value of new business.
“These are very ambitious targets given that the environment in which we are operating has become even more challenging in 2012,” Senn said.
Senn also reaffirmed Zurich’s commitment to derive 30% of new business value from Latin America, the Middle East and the Asia-Pacific Region, including Australia, telling investors that the company expects to meet that goal handily.
On November 15, Zurich announced that its third-quarter net profit had dropped 62% in comparison to the previous year’s third-quarter profit. Profits for the nine months ending 30 September 2012 were $2.7 billion, 16% below the company’s profit of $3.2 billion for the corresponding period in 2011.
Zurich attributed the disappointing results to “reserve adjustments” in its German operations. Losses caused by a drought in the United States earlier in 2012 also affected performance, and those losses may continue to be felt during the fourth quarter of 2012. In addition, the impact of Hurricane Sandy on the company’s results has yet to be determined, according to Zurich Head of General Insurance Mike Kerner.
Nonetheless, Zurich maintains that its capital position remains strong, and Senn expects the company to continue to pay “an attractive and sustainable dividend” for 2012.
Zurich has been a presence in Australia since 1961, when it took over Commonwealth General Assurance Corporation. Today, the company’s Australian arm calls itself “the only global financial services company operating in Australia under a single brand in our core lines of business - general insurance, life risk, investment and superannuation products.”