Europe's fifth largest insurer by premiums, Zurich Financial Services, has reported a $3.4 billion (SFr4.6 billion) net loss for 2002.This content was published on February 27, 2003 - 13:08
The results were well down on last year's $387 million loss and reflected the industry-wide slump brought about by crumbling stock markets.
The plunging value of Zurich's equity portfolio led to a 24 per cent reduction in net investment income to $5 billion.
The insurer also announced that it was slashing its dividend from SFr8 in 2001 to SFr1
To restore profitability, Zurich has ditched its global ambitions and concentrated on the booming non-life insurance sector with the help of a $2.5 billion capital increase.
Plans for the rights issue were announced in September last year when Zurich posted a first-half loss of SFr3 billion and said it would shed 4,500 jobs worldwide - including 500 in Switzerland.
"While our non-life business is benefiting from the best pricing environment we have seen in 15 years, weak and fragile equity markets and record low interest rates are negatively affecting our life business and investment result," said CEO James Schiro.
"However, we are beginning to see the impact of the action programme announced on September 5... our restructuring is laying the foundation for achieving strong and sustainable earnings."
The group posted operating profit of $1.1 billion, up from $217 billion in 2001. This was on the back of an improved performance in its non-life business which increased 27 per cent to $29.8 billion.
Chief financial officer Thomas Buess said plans to raise $1 billion by selling assets remained on track, but he declined to say whether Zurich would offload its Threadneedle funds business.
Earlier this month, the company agreed to sell its Rüd, Blass & Cie private banking unit to Deutsche Bank for an undisclosed amount.
Zurich's decision to concentrate on core markets and activities also saw it sell its large US Zurich Scudder funds arm to Deutsche Bank in April 2002.
The full-year loss was in line with analysts' expectations, which had ranged between $3 million and $3.5 million.
"It looks alright, in as much as a $3.5 billion loss can be alright," commented Tim Dawson, an analyst at Pictet & Cie.
swissinfo with agencies
Zurich Financial 2002 results
Zurich Financial Services was founded in 1872.
The company has offices in more than 60 countries
It employs more than 70,000 staff.
Its key markets are in North America, Britain, Continental Europe and Switzerland.
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