Zurich Insurance Group AG, Switzerland’s largest insurer, lowered its profit goal as Chief Executive Officer Martin Senn signaled he’s ready to sell some businesses to bolster earnings growth.
Zurich Insurance said it targets return on equity, a measure of profitability, of 12 percent to 14 percent in the three years through 2016, according to a statement on its website today. That’s down from a previous 16 percent. Senn declined to comment on possible divestments at a meeting with investors about the company’s new strategy today.
“We are very strong in some areas but we lack scale or profitability in others,” Senn said in the statement. “Based on a rigorous portfolio review, we will invest in priority markets but manage other businesses for value. This will mean improving the profitability of certain businesses, while we will either turn around or exit those that are under-performing.”
The shares increased 1.4 percent to 248 Swiss francs ($275) at 9:57 a.m. in Zurich. They have risen 1.9 percent this year, while the Bloomberg Europe 500 Insurance Index rose 21 percent.
Senn has been seeking to restore investor confidence in the company’s financial strength following the suicide of Chief Financial Officer Pierre Wauthier in August. While the insurer said last month that third-quarter net income rose to $1.1 billion from $672 million a year earlier, beating analyst estimates, it said targets for its general insurance and home and auto units would be “more challenging.”
The company “remains on track to achieve some, but not all, of the 2010-2013 targets,” it said.
–Editors: Simone Meier, Mark Bentley