Zurich Financial Services saw its shares slide sharply to fresh lows as net profit dropped by 5.5 per cent to $2.096 billion in 2000 (SFr3.587 billion). The fall was worse than the company had forecast in a February profit warning.
Shares in Zurich dropped more than 20 per cent at SFr548, a drop of SFr142 at one stage on the Zurich Stock Market. Stocks in the company crashed through a three year low, as traders marked the insurance to banking group lower.
Zurich had said that one-off factors totalling some $500 million would push earnings down by no more than five per cent below the 1999 level of $2.218 billion.
The unexpected charges included extra reserves for the reinsurance business, claims for unusually severe weather in Europe, and costs for the streamlining of the organisation.
Zurich Financial Services was formed in September 1998 through the merger of Switzerland's Zurich Group and the financial services business of Britain's BAT Industries.
Now Europe's sixth largest insurance group, the company warned that net profit in 2001 was likely to be even lower than the figure seen in 2000.
Zurich said it expected normalised net profit in 2001 of between $1.8 and $2.0 billion, adding that it was taking measures to boost profitability.
Speaking at a media conference, Zurich's ever-optimistic chairman and chief executive, Rolf Hüppi, said he expects sales of non-core assets and the spin-off of its Zurich Reinsurance business to raise up to $4 billion.
Hüppi also pointed out that the divestment programme did not include Zurich's stake in medium sized Swiss insurance group Bâloise, in which it holds almost 30 per cent.
Hüppi said he expected the company to be back on its 10 to 15 per cent annual growth track by 2002.
Zurich said on Wednesday that its US unit, Farmers Insurance, had agreed a lucrative deal to sell its products and services to US trade union members through an agreement with Ulico Insurance Group.
This latest agreement follows on from banking and insurance ventures announced recently with Bank of Scotland and with Bank of America.
Zurich still plans to go ahead with a listing on the New York Stock Exchange.
swissinfo with agencies