Hüppi wins confidence vote

Hüppi has been under pressure due to the company's poor performance Keystone Archive

Shareholders in the troubled insurance company, Zurich Financial Services, have backed the chairman and chief executive, Rolf Hüppi, in a formal confidence vote held at the company's annual general meeting on Thursday.

Hüppi came through the motion with a two-to-one majority despite fierce criticism from many shareholders upset by a drop in earnings in 2000 and poor prospects for the current year.

Hüppi did not hide the fact that the company faced further challenges ahead. He told shareholders that although its insurance arm had performed well in the first four months of the year, asset management continued to be a problem.

“Asset management is weighed down by volatile equities’ markets and business so far does not meet our expectations,” said Hüppi.

The less than optimistic statement comes on the back of a poor set of results for the year 2000. Net profit compared to 1999 fell 5.5 per cent to SFr3.63 billion ($2.1 billion). The news caused shares to lose around 50 per cent of their value.

Hüppi has blamed the strength of the dollar for the company’s woes, as well as a one-off charge for severe weather damage and extraordinary additions to reinsurance reserves.

Earnings this year are expected to show a further slight decline.

Hüppi conceded that the company had also made mistakes in its information policy but said that many European insurers had seen their share price fall.

Zurich Financial Services has now embarked on a series of divestments and cost-cutting measures, including shedding 600 jobs at its Zurich headquarters over the next two years. That amounts to more than half of all staff.

Another 170 jobs are to be lost in Britain.

Zurich Financial Services is Europe’s third largest insurance company and was formed three years ago by the merger of Zurich Insurance and the financial services arm of British American Tobacco.

swissinfo with agencies