Da FInancial Times di Venerdì 6 Dicembre 2013
By James Shotter in Zürich
Zurich Insurance has cut its profitability target for the next three years, in the latest sign of the strain that persistently low interest rates around the world are putting on insurance companies.
In 2007, the Swiss group set itself a target of a 16 per cent return on equity. However, in the aftermath of the financial crisis bond yields in key markets hit or came close to historic lows, squeezing insurers’ profits, and prompting Zurich to say in 2011 that a range of 13 to 15 per cent was more realistic.
“If you compare our results with what we had expected in 2010, there has been a roughly negative 1 percentage point impact on our return on equity,” said Vibhu Sharma, Zurich’s interim chief financial officer, at the group’s investor day in Zurich on Thursday.
As a result, Zurich has cut its target further, and will now aim for an ROE of 12 to 14 per cent over the next three years, excluding realised gains and losses. Marc Thiele, an analyst at Mediobanca, said that the exclusion of realised gains and losses was positive, as their inclusion had distorted the benchmark.
In the first nine months of this year, Zurich has managed a ROE of 12.1 per cent. However, Martin Senn, chief executive, said that the group would not be satisfied with maintaining this level. “If in three years’ time, we are still at the low end of our range, that would be rather disappointing,” he said.
Mr Senn, who is working to shore up investor confidence after a difficult summer during which the group’s CFO committed suicide, sparking a chain of events that also led to the departure of Zurich’s chairman, said that the insurer would boost its profitability by intensifying its focus on the markets in which it has a strong position, and improving or exiting those where it was less well placed.
He declined to give further details on exits, but said that they were more likely to relate to specific business lines in certain markets, rather than wholesale withdrawals from countries.
Mr Senn also said that the company intended to improve its ability to implement its plans, as he conceded that some of the targets it had set itself for the three-year period ending this December would not be achieved.
“We have to promote a culture of accountability and delivery throughout the organisation,” he said, adding that while Zurich would hit its cost savings targets, it would miss others for its general insurance and Farmers divisions.
Shares in the company were up 2.04 per cent at SFr249.70 in early morning trading in Zürich.

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