Zurich Financial Services announces equity boost
Zurich Financial Services says it plans to raise around SFr600 million ($362 million) by issuing new securities that may be converted to shares in three years.
A spokeswoman for the company said on Tuesday the move was “best for the firm and for investors as well”.
But the markets took a different view and pushed the company’s shares lower amid worries that the new issue would dilute future shareholder payouts.
The move comes just days after the group abandoned plans to sell its United States life insurance business after failing to attract the asking price.
The equity boost is the latest in a string of moves aimed at cutting debt and restoring growth. Most recently Zurich made SFr3.3 billion through the flotation of its re-insurance arm now known as Converium.
Divestment drive
The divestment drive has earned around SFr8.3 billion in all to help pay off debt which had ballooned because of an ambitious expansion programme.
Zurich said the money from the issue would be used for further growth.
“We want to take advantage of the huge growth opportunities in commercial insurance in the United States in particular,” said Zurich’s senior investor relations officer, Reinhard Stary.
The company played down the dilution effect of the issue and said it was convinced its shares would outperform the Swiss Market Index over the next three years.
Zurich’s share price plunged 60 per cent in 2001 on the back of several profit warnings.
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