Zurich Insurance Group AG reported a worse-than-expected loss in the fourth quarter as the company makes plans to turn around its unprofitable general insurance unit.
The net loss was $424 million compared with a profit of $860 million a year earlier, Switzerland’s biggest insurer said in a statement. That compares with an expected loss of $261 million, the average of seven analyst estimates compiled by Bloomberg. The proposed full-year dividend is unchanged at 17 Swiss francs ($17.49).
Zurich is reshaping general insurance and revamping its top management after a year that saw the company abandon a high-profile takeover bid for RSA Insurance Group Plc following unexpectedly high claims. Chief Executive Officer Martin Senn stepped down in December and Assicurazioni Generali SpA head Mario Greco is set to take over in March, earlier than previously expected.
The company said it has no plans to return additional capital to investors at this time. Zurich had about $3 billion in excess cash following the dropped RSA bid. It spent about $1.05 billion of that acquiring a U.S. crop insurance business in December.
The stock was down 3.1 per cent at 201.2 francs as of 9:18 a.m. in Zurich trading. The shares have dropped 21 percent this year, in line with the STOXX Europe 600 Insurance Index.
“It’s understandable that they’re not doing a buyback given the current
situation,” said Stefan Schuermann, a Zurich-based analyst at Vontobel Holding AG. “That they’re keeping the dividend at 17 francs is positive.”
“Our key priorities in 2016 will be turning around our general insurance business and continuing actions to position the group for 2017 and beyond, including enhancing efficiency and sharpening the group’s retail footprint,” Chairman and acting CEO Tom de Swaan said in the statement. The company said it plans to cut costs by more than $300 million this year.
The combined ratio in general insurance was 103.6 percent, according to the statement. A measure of more than 100 means the unit is paying out more in claims and costs than it’s collecting in premiums.
Source: Guardian News