Zurich announces share offer
Zurich Financial Services has said it is to issue 86.4 million new shares worth up to SFr3.8 billion ($2.5 billion) to shore up its depleted finances.
The loss-making insurer has set the share price at a minimum of SFr65, which is in line with market expectations for the rights offering.
Shareholders have been invited to an extraordinary meeting on October 11 in which the definitive pricing of the new shares and the exact number of stock to be issued will be announced.
In a statement, the company said its proposed capital increase had been formally underwritten by a syndicate of banks led by Credit Suisse, Goldman Sachs International, Schroder Salomon Smith Barney and UBS.
Chief executive James Schiro said the capital increase was the cornerstone in Zurich’s drive to raise its capital by up to SFr7.6 billion.
“We believe this capital will enable us to generate sustainable and profitable growth,” he said.
Plans for the rights issue were announced earlier this month when Zurich posted a first-half loss of SFr3 billion and said it would shed 4,500 jobs worldwide. Around 500 jobs are expected to go in Switzerland.
Tough year
The market value of the company has fallen by more than two-thirds this year to about SFr10.8 billion, while the company’s stock is trading at its lowest level in more than ten years.
Analysts say they expect Zurich to withdraw from the global asset business, which is seen as falling outside the company’s core operations, especially in light of the recently announced sale of private equity unit Gresham trust Plc.
Zurich has declined to comment on the businesses it aims to sell, beyond saying it aims to raise about $1 billion with divestments in its bid to restore profits in the next 18 months.
Europe’s third largest insurer has already sold its large US Zurich Scudder funds arm to Deutsche Bank, and analysts see its UK Threadneedle funds business as a further candidate for sale.
In a separate development, former Zurich boss, Rolf Hüppi is reported to have accepted a golden handshake of SFr6.2 million after resigning as CEO in April this year.
swissinfo with agencies
Zurich Financial Services is to issue 86.4 million new shares worth up to SFr3.8 billion ($2.5 billion) to shore up its depleted finances.
The minimum share price will be SFr65.
Shareholders have been invited to an extraordinary meeting on October 11 where the definitive pricing of the new shares and the exact number of stock will be announced.
Zurich posted a first-half loss of SFr3 billion and is to shed 4,500 jobs worldwide, of which 500 jobs in Switzerland.
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