No new boss in sight for Zurich
Financial markets were disappointed on Thursday after Zurich Financial Services failed to name a replacement for CEO Rolf Hüppi.
Hüppi is to step down later this year as head of the troubled group, which earlier this month announced a loss of $387million (SFr651) – largely due to insurance claims from the September 11 terror attacks.
But equity markets have also taken a dim view of the company’s now-abandoned expansion plans, more than halving the share price in the last 12 months.
Much of the criticism for Zurich’s ill-fated attempts in recent years to broaden its business has been directed at Hüppi.
On Thursday, Zurich again detailed the moves it has taken to reposition itself, such as the sale of its loss-making reinsurance business, which is now Converium.
The group also revealed that shareholder equity at December 31, 2001 had fallen by $2.9 billion to $17.7 billion (down SFr4.8million to SFr28.32million).
Zurich’s board of directors have proposed an SFr8 per share dividend, down by more than 50 per cent from last year’s SFr17.15.
Old news
Thursday’s annual press conference fleshed out much of the bad news the group has already made public.
What most market watchers were awaiting for was news of Hüppi’s replacement.
Stocks in the company rallied after news of Hüppi’s resignation hit trading floors in February. Since then, the stock price has fallen to between SFr351 and SFr371.
As board chairman and CEO, Hüppi has been heavily criticised for holding both posts, and last year survived a vote of no confidence at the group’s annual shareholders’ meeting.
To date, the company has only indicated it would name a successor “at the appropriate time”.
Future shaky
In the report, Hüppi said Zurich was taking a cautious view of future earnings.
“We are disappointed by the poor underwriting and operating results in 2001,” Hüppi said in a media release.
“Along with the entire industry, our Group was adversely affected by the events of September 11 and by weak equity markets.
“These developments overshadowed the significant progress made in repositioning the Group.
“Zurich has a portfolio of strong businesses and is well positioned to take advantage of favourable conditions in life and non-life [insurance], but remains cautious in light of the uncertain risk environment and economic conditions.”
Most of Zurich’s losses stem from its reinsurance business, which reported a loss of $460 million, despite a capital gain of $298 million from the sale of Converium – a former Zurich third party insurer. The loss includes $424 million in after tax red ink related to September 11 claims.
Hüppi has been board chairman since 1995, and CEO since 1991. He joined the company in 1963.
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